ChevronTexaco supports Dynegy-Enron merger

Steve Sutherlin

ChevronTexaco Corp. said Nov. 9 it has committed $2.5 billion of new equity in Dynegy Inc. to support Dynegy’s planned merger with Enron.

ChevronTexaco currently owns approximately 26 percent of Dynegy’s outstanding common stock, and will invest $1.5 billion in convertible preferred shares in Dynegy to fund Dynegy’s equity infusion into Enron. The $1 billion balance of ChevronTexaco’s equity purchase of Dynegy common stock would be made upon closing of the Dynegy-Enron merger.

Following closing of the merger, ChevronTexaco would maintain its 26 percent of Dynegy’s outstanding common stock, and would maintain its three seats on the Dynegy board. ChevronTexaco will be granted warrants to purchase an additional $1.5 billion of Dynegy common stock over a period of up to three years from the merger.

If the Dynegy-Enron merger falls through, ChevronTexaco can redeem its convertible preferred shares for $1.5 billion in cash or convert to common shares. In the latter event, ChevronTexaco would own an approximate 36 percent equity interest in Dynegy.