Dynegy Inc.'s top management announced their resignations after failing to sell the company for the second time in a year.
The power company terminated its $665 million deal to sell itself to Carl Icahn because the billionaire investor was unable to convince shareholders to agree to the $5.50-a-share cash bid on the table. Dynegy shares closed Friday at $6.01 — 9.3 percent above Icahn's bid.
Bruce Williamson will resign as president and CEO, effective March 11. Williamson has also resigned as a director and chairman of the board, effective immediately.
David Biegler, currently an independent Dynegy director, has been appointed interim president and CEO. Patricia Hammick, previously lead director of Dynegy, now serves as chairman, the company said.
CFO Holli Nichols also plans to resign on March 11, according to the company. Charles Cook, Dynegy's Executive Vice President in charge of commercial operations and market analytics, will serve as interim CFO.
The company said its current board of directors does not plan to stand for reelection at its next annual meeting, which is anticipated to be held in June.
Icahn's bid came under fire from hedge fund Seneca Capital, Dynegy's second-largest shareholder, which believes the company has more value.
Dynegy said an insufficient number of shares were tendered in the Icahn offer, but it did not elaborate. Icahn had said he would walk away from the deal if he was unable to convince 35 percent of Dynegy's shareholders to tender their shares 5 p.m. Eastern Time on Friday, Feb 18.
Icahn, the power company's largest shareholder, and Dynegy reached their deal in December. But Seneca remained opposed to the sale, arguing that Dynegy's management has consistently undervalued the company, which the hedge fund believes is currently worth $7.50 to $8.50 a share.
Seneca could not be immediately reached for comment Monday.
Dynegy said its board has met with and offered a director seat to a Seneca nominee, and has also contacted Icahn Associates to discuss appointing an Icahn designee to the board.
Dynegy said the board's nominating committee is expected to consist of new directors. It will begin identifying qualified director nominees to be appointed as soon as possible to stand for election at the annual meeting.
"The board is positioning Dynegy for a new management and board structure as soon as prudent. We are open to stockholder suggestions as to additional independent directors," Hammick said in a statement. "We expect the new members of the board to take the lead ... selecting a new chief executive officer."
Dynegy had already had one attempt to sell itself scuttled. Investors voted down a deal the company had reached with private equity firm Blackstone Group in November, with Icahn and Seneca teaming up to oppose the offer.
In that deal, Blackstone originally offered Dynegy shareholders $4.50 a share and bumped its bid up to $5 a share at the last minute.
Dynegy's management, and Williamson in particular, have been under fire from Seneca since the Blackstone deal was launched. The hedge fund was already working to have him as well as another director replaced on the company's board, and has asked that all of the company's senior management be reviewed.
Dynegy, which sells power at competitive rates into the open market, has tried to sell itself in the face of weak natural gas prices, which often dictate power prices.
Natural gas oversupply, driven by new production from U.S. shale formations, has driven down the value of the fuel and is expected by many to keep prices low for years to come.
Dynegy has argued that it faces serious risks if it remains a stand-alone company, saying that weak market conditions could force the power company into a liquidity crisis if the deal was not completed.
"Given Dynegy's cash flow position, we believe there are serious questions as to whether Dynegy will have sufficient liquidity available to reach eventual market recovery," a special committee of Dynegy's board of directors said in a letter to investors earlier this month.
Icahn Enterprises LP has said that if he is not successful in closing the deal, Icahn Enterprises may seek to discuss with Dynegy the potential for debt or equity financing.
Dynegy also said it amended the stockholder rights plan, or so-called "poison pill," to increase the trigger to 20 percent from 10 percent. The rights plan will expire unless approved by Dynegy stockholders at the next annual meeting.
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