HOUSTON, April 2, 2003 — Dynegy Inc.’s subsidiary, Dynegy Holdings Inc. (DHI), has entered into a new $1.66 billion bank credit facility.
The financing consists of:
— A $1.1 billion secured revolving credit facility (“Revolving Facility”) that matures on Feb. 15, 2005;
— A $200 million secured term loan (“Term Loan A”) that also matures on Feb. 15, 2005; and
— 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,” 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 on the company’s web site (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.
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 guidance of $0.08 to $0.15 per share or cash flow guidance of $1.2 to $1.3 billion from its generation, natural gas liquids and regulated energy delivery segments, as the company expects earnings from these businesses to offset the incremental costs due to a favorable pricing environment.
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.