December 08, 2011 - 9:33pm EST by
2011 2012
Price: 101.00 EPS $0.00 $0.00
Shares Out. (in M): 1 P/E 0.0x 0.0x
Market Cap (in $M): 1,100 P/FCF 0.0x 0.0x
Net Debt (in $M): 0 EBIT 0 0
TEV ($): 0 TEV/EBIT 0.0x 0.0x

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Dynegy's $1.1bn GasCo Senior Secured 1st Lien Term Loan Facility offers the opportunity to create gas-fired power plants cheaply with significant downside protection, a floating interest rate, a LIBOR floor and an attractive current yield of 9.25% (~8.75% YTM). The loan is L+775 with a LIBOR floor of 1.50%. 
Short story, Dynegy went and separated its Gas assets and its Coal assets.The structure was undertaken to ring-fence the two power portfolios and make them bankruptcy-remote.  Dynegy then did an end around the DHI bond debt and completely removed the credit support of the coal assets.  Additional background can be found at http://www.scribd.com/doc/72405419/Creditors-motion-in-re-Dynegy-Holdings .  Although many investors instincitively run when they hear fraudulent transfer, the initial restructuring creating the bankruptcy-remote power asset portfolios was not enjoined by the Delaware Chancery Court.  http://business-finance-restructuring.weil.com/financing/be-careful-what-you-draft-for-delaware-chancery-court-blesses-dynegy%E2%80%99s-reorganization/  
At a construction cost of $1,000/kw for combined cycle gas turbine plants (in July of this year Calpine told the City of Dover, Delaware utility committee that a CCGT facility can be built in 2015 for $1,100/kw) and $800/kw for simple cycle gas turbine plants, the 6,771 MW portfolio is worth ~$6.3 billion.  The term loan is creating the gas power portfolio at 18 cents/dollar.  NRG previously agreed to buy 57% of this portfolio (Moss Landing, Morro Bay, Oakland, and Casco Bay) for $1.36 billion, implying asset coverage of 1.2x and assuming no value for the other 43% of the portfolio.  The NRG offer implies a value of $2.37 billion for the total gas portfolio, meaning the term loan is creating the gas power portfolio at 15 cents/dollar.


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