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Dynegy launches $1.2B cash tender offer, $600M senior note offering

Dynegy Inc. launched a cash tender offer to purchase up to $1.2 billion of its outstanding 6.75% senior notes due 2019.

The tender offer will expire at 11:59 p.m. ET on Sept. 1, unless extended by the company, according to an Aug. 7 release.

Holders who validly tender and do not subsequently validly withdraw their notes at or prior to 5 p.m. ET on Aug. 18 will receive a total consideration of $1,036 per $1,000 principal amount of the notes. The total consideration includes an early tender premium of $30.

If the aggregate principal amount of the validly tendered notes exceeds the tender cap amount, the company will accept the notes on a pro rata basis. "Dynegy reserves the right to increase or decrease the tender cap amount, at any time, subject to compliance with applicable law without extending withdrawal rights," the company said.

The tendered notes may be withdrawn from the offer at or prior to 5 p.m. ET on Aug. 18, unless extended.

The company also issued a conditional notice of redemption to redeem $1.2 billion of the securities, less the aggregate principal amount of notes purchased by the company in the tender offer. The transaction is conditioned upon the completion of a concurrent note offering. The notes are expected to be redeemed Sept. 6 at a price of 103.375% of the aggregate principal amount thereof plus accrued and unpaid interest.

Goldman Sachs & Co. LLC is serving as dealer manager, while D.F. King & Co. Inc. is acting as both the information and tender agent.

Also on Aug. 7, Dynegy commenced a $600 million private placement of its senior notes due 2026.

The company intends to use the sale proceeds, together with approximately $480 million of cash received from the sale of its Armstrong and Troy plants and approximately $195 million of other cash-on-hand, to fund the cash tender offer and/or a conditional notice of redemption to redeem the same principal amount of 2019 notes and for general corporate purposes.