April 2, 2003
Media: John Sousa or David Byford
(713) 767-5800
Analysts: Katie Pipkin or Christina Cavarretta
(713) 507-6466
DYNEGY COMPLETES $1.66 BILLION BANK REFINANCING
Existing maturities extended to 2005
HOUSTON (April 2, 2003) - Dynegy Inc. (NYSE: DYN) today announced that its
subsidiary, Dynegy Holdings Inc. (DHI), has entered into a new $1.66 billion
bank credit facility consisting of:
o A $1.1 billion secured revolving credit facility ("Revolving
Facility") that matures on Feb. 15, 2005;
o A $200 million secured term loan ("Term Loan A") that also matures on
Feb. 15, 2005; and
o A $360 million secured term loan ("Term Loan B") that matures on Dec.
15, 2005.
This new credit facility replaces DHI's existing $900 million and $400
million revolving credit facilities that were scheduled to mature on April 28
and May 27, 2003, respectively, and a $360 million communications lease, which
was scheduled to mature in December 2005. The new facility, which requires no
scheduled amortization of principal, will provide funding for the ongoing
collateral needs of existing businesses and general corporate purposes. The
facility also preserves the commitments of the 21 lenders in the former DHI
revolvers and communications lease financings.
"Today's announcement is more than a significant milestone that solidifies
our ability to serve and deliver value to our stakeholders for the long-term.
These bank facilities represent the defining point where we transition from
building a new Dynegy to operating as the new Dynegy,"
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DYNEGY COMPLETES $1.66 BILLION BANK REFINANCING
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said Bruce A. Williamson, president and chief executive officer of Dynegy Inc.
"We are extremely pleased that, with the full support of our bank team, we were
able to complete our refinancing arrangements on acceptable terms well in
advance of the maturity dates. Importantly, these new facilities preserve our
substantial liquidity, allow us to continue to restore confidence with our
employees, customers and suppliers, and provide us with flexibility to build
shareholder value," he added.
As detailed in the attachments to this news release, the restructured debt
is secured by a substantial portion of the available assets and stock of the
company's direct and indirect subsidiaries, excluding Illinois Power and Dynegy
Global Communications. Other key terms and conditions of the credit facility,
including pricing and covenants, are also outlined in the attachments. The
credit agreement will be filed in its entirety as an exhibit in Dynegy's 2002
Form 10-K filing. In addition, Dynegy is filing a Form 8-K today that includes
the discussion from the 10-K related to the credit agreement.
Credit Suisse First Boston, Morgan Stanley and Greenhill & Company were
financial advisors to the company. Co-lead arrangers for the lenders were
Salomon Smith Barney Inc., Banc of America Securities LLC, and Bank One, NA.
2003 Guidance
Interest costs for 2003 are expected to increase above the company's
previous estimate of $417 million due to a combination of higher than
anticipated interest costs associated with the new facility and an increase in
collateral requirements for existing businesses, resulting from the rise in
commodity prices. Dynegy's new interest estimate ranges from $450 to $465
million. Despite this increase in interest expense, Dynegy is not revising its
previous earnings and cash flow guidance from its generation, natural gas
liquids and regulated energy delivery segments, as the company expects these
earnings from its asset businesses to offset these incremental costs.
First Quarter 2003 Results
Dynegy will announce first quarter 2003 results on Tuesday, April 29, 2003,
prior to the opening of the New York Stock Exchange. The company will host an
analyst conference call to review first quarter results during the morning of
April 29.
About Dynegy Inc.
Dynegy Inc. owns operating divisions engaged in power generation, natural
gas liquids and regulated energy delivery. Through these business units, the
company serves customers by delivering value-added solutions to meet their
energy needs.
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DYNEGY COMPLETES $1.66 BILLION BANK REFINANCING
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Dynegy Inc.
$1.66 Billion Credit Facility
Summary Term Sheet
- --------------------------------------------------------------------------------
Borrower o Dynegy Holdings Inc. ("DHI")
- --------------------------------------------------------------------------------
Guarantors o Dynegy Inc. ("DYN") and all direct/indirect
subsidiaries, except Illinois Power, Dynegy
Global Communications and certain foreign and
immaterial subsidiaries
- --------------------------------------------------------------------------------
Facilities o $1,100 million revolving credit facility
(Revolver)
o $200 million Term A Loan
o $360 million Term B Loan
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Maturities o Revolver and Term A Loan - Feb. 15, 2005
o Term B Loan - Dec. 15, 2005
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Security o Revolver and Term A Loan - first priority
lien on substantially all of DHI's
available assets including generation and
midstream facilities, stock of
subsidiaries, cash and other current
assets, subject to pre-existing liens and
contractual restrictions
o Term B Loan - second priority lien on DHI
assets, also subject to pre-existing liens
and contractual restrictions
- --------------------------------------------------------------------------------
Pricing o Advances under Revolver, Term A Loan,
Term B Loan: LIBOR + 475 bps or Base
Rate + 375 bps
o Letters of credit outstanding under
Revolver: 475 bps
- --------------------------------------------------------------------------------
Mandatory Prepayments o 100% of the net cash proceeds of all
non-ordinary course asset sales or other
dispositions and issuances of senior debt
[_] Exception for the first $100 million
of net cash proceeds from asset
sales and proceeds from the sale of
Hackberry, which can be retained
o 50% of extraordinary receipts and issuances
of subordinated debt and/or equity
- --------------------------------------------------------------------------------
Financial Covenants o Minimum liquidity of $200 million
o Maximum secured debt-to-EBITDA ranging
from 7.8 to 1 on Sept. 30, 2003, to
5.6 to 1 on Dec. 31, 2004
[_] EBITDA excludes discontinued
operations, tolling agreements,
turbine cancellation payments,
disclosed litigation and any
impairment, abandonment,
restructuring or similar non-cash
expenses
o Maximum capital expenditures
- --------------------------------------------------------------------------------
Certain statements included in this news release are intended as
"forward-looking statements" under applicable SEC rules and regulations. These
statements include assumptions, expectations, predictions, intentions or beliefs
about future events, particularly the earnings that Dynegy expects from its
generation, natural gas liquids and regulated energy delivery segments in 2003.
Dynegy cautions that actual future results may vary materially from those
expressed or implied in any forward-looking statements. Some of the key factors
that could cause actual results to vary materially from those expected include
changes in commodity prices for power, natural gas or natural gas liquids;
Dynegy's ability to successfully execute its exit from third-party risk
management aspects of the marketing and trading business, and the costs that may
be associated with this business and Dynegy's exit therefrom; Dynegy's ability
to address the expected substantial increase in interest expense for 2003;
Dynegy's ability to achieve the operating and administrative expense reductions
it expects while operating its remaining assets and businesses in a
decentralized structure and with a reduced work force; the effect of any
operational issues that might arise with respect to Dynegy's assets and
businesses, including any outages or work stoppages affecting such assets and
businesses; and uncertainties regarding environmental regulations or litigation
and other legal or regulatory developments affecting Dynegy, including
litigation relating to the California power market and shareholder claims, as
well as the ongoing regulatory investigations primarily relating to Project
Alpha and Dynegy's trading practices. More information about the risks and
uncertainties relating to these forward-looking statements are found in Dynegy's
SEC filings, which are available free of charge on the SEC's web site at
http://www.sec.gov.
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