Dynegy
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Dynegy (NYSE: DYN) is a large owner and operator of power plants and a player in the natural gas liquids business, based in Houston, Texas. Once known as The Natural Gas Clearinghouse, the company adopted the more vibrant "New Economy" branding in 1998. In the years following, the company became eerily similar to Enron, launching several business ventures that closely duplicated those of its larger rival, including an online trading platform and broadband communications services. Dynegy, along with Enron, El Paso, Reliant and several other energy companies, was accused of price manipulation and other fraudulent practices during the California energy crisis in 2000. In 2001, the company made an unsuccessful takeover bid for Enron, pulling out at the last minute following an unexpected restatement of earnings by Enron. Shortly after the pull-out, Enron filed for Chapter 11 and sued Dynegy. One aspect of the takeover deal that did survive, however, was Dynegy's acquisition of the Northern Natural Gas Company pipeline, Enron's most lucrative pipeline asset.
Unfortunately for Dynegy's shareholders and employees, these events did nothing to prevent Dynegy itself from lapsing into a crisis similar to that of Enron in late 2002. Amid accusations of accounting fraud and other misdoings, founder Charles Watson resigned, and the company was forced to sell the Northern Natural Gas pipeline to a consortium of investors led by noted billionaire Warren Buffett. Following these incidents, the company hired Bruce Williamson, a former Duke Energy executive, who began a program of cost cutting, elimination of unprofitable businesses and financial restructuring that was successful in averting a bankruptcy filing. The company disposed of all of its businesses with the exception of its core merchant power and natural gas liquids businesses. Refocused on these core businesses, and managed with a strong emphasis on efficiency and cost control, Dynegy was able to stabilize its financial position.
In late 2005, Dynegy continued its restructuring by selling its natural gas liquids business to Targa Resources, a company owned by private equity firm Warburg Pincus. This move transformed Dynegy into a pure-play operator of electricity generating plants, altogether a dramatically different enterprise from the Dynegy of just a few years ago. CEO Bruce Williamson has stated that Dynegy is likely to participate in further industry consolidation.
