Dynegy reaches agreement in principle with most creditors

Earlier this week, Dynegy Holdings LLC said it has reached an agreement in principle with most creditors; the only group excluded is the subordinated notes. Under the preliminary pact, HoldCo unsecured bonds will get 99% of the equity and current shareholders will get 1%, with warrants to buy additional shares for a total ownership stake of 13.5%. The owners of the Roseton and Danskammer secured lease obligation bonds will receive a $540 million claim plus half the proceeds from the sale of the plants for a maximum total recovery of $571 million.
However, not all note holders have signed on to the plan and subordinated bondholders support the appointment of a chapter 11 trustee to oversee the bankruptcy. I believe it is likely the Judge will order the appointment of an Independent chapter 11 trustee because current management was discredited in the examiner’s report. ┬áPlease email me if you are interested in discussing further.