IRVING, Texas and
HOUSTON, Oct. 30, 2017 /PRNewswire/ -- Vistra Energy
(NYSE: VST), the parent company for TXU Energy and Luminant, and
Dynegy Inc. (NYSE: DYN) today announced that their Boards of
Directors have approved, and the companies have executed, a
definitive merger agreement pursuant to which Dynegy will merge
with and into Vistra Energy in a tax-free, all-stock transaction,
creating the leading integrated power company across the key
competitive power markets in the United
States. The resulting company is projected to have a
combined market capitalization in excess of $10 billion and a combined enterprise value
greater than $20 billion.
Under the terms of the agreement, Dynegy shareholders will
receive 0.652 shares of Vistra Energy common stock for each share
of Dynegy common stock they own, resulting in Vistra Energy and
Dynegy shareholders owning approximately 79 percent and 21 percent,
respectively, of the combined company. Based on Vistra Energy's
closing share price of $20.30 on
October 27, 2017 and the
aforementioned exchange ratio, Dynegy shareholders would receive
$13.24 per Dynegy share. Through the
all-stock transaction, both Vistra Energy and Dynegy shareholders
are expected to benefit from an estimated $350 million in projected annual run-rate EBITDA
value levers, additional annual free cash flow value levers of
approximately $65 million (after
tax), and approximately $500-600
million in projected net present value benefit from tax
synergies.
The combination of Dynegy's generation capacity and existing
retail footprint with Vistra Energy's integrated ERCOT model is
expected to create the lowest-cost integrated power company in the
industry and to position the combined company as the leading
integrated retail and generation platform throughout key
competitive power markets in the U.S. Together with Dynegy, Vistra
Energy will serve approximately 240,000 commercial and industrial
(C&I) customers and 2.7 million residential customers in five
top retail states, with estimated retail sales of 75 terawatt (TWh)
hours in 2018. The combined company will also own approximately 40
GW of installed generation capacity. Of that capacity, more than 60
percent is natural gas-fueled, and 84 percent is in the ERCOT, PJM,
and ISO-NE competitive power markets.
Vistra Energy President and Chief Executive Officer Curt Morgan said, "This combination represents a
transformative opportunity to create the leading integrated power
company in the United States.
Combining Vistra Energy's leading retail and commercial operations
with Dynegy's leading CCGT fleet and geographically diverse
portfolio is expected to create a company with significant earnings
diversification and scale. The resulting combined enterprise is
projected to have the lowest-cost structure in the industry and
will benefit from weather and market diversification that, when
combined with Vistra Energy's balance sheet strength, will provide
a platform for future growth. The result will be a leading
integrated power company with significant scale in the key U.S.
competitive markets. We look forward to building on Vistra Energy
and Dynegy's highly attractive business mix and asset quality to
deliver enhanced value to current shareholders of both companies
and attract and retain new investors on a long-term, sustainable
basis."
Dynegy President and Chief Executive Officer Bob Flexon stated, "Our combination with Vistra
Energy accelerates Dynegy's strategic initiatives of strengthening
our balance sheet while creating the preeminent integrated power
company. Vistra Energy's strength in retail combined with Dynegy's
infrastructure and generation capabilities will provide an
unmatched, highly efficient integrated business in key competitive
markets. The premium offered to Dynegy shareholders reflects the
quality of our generation assets and the retail business we have
built over the past five years. In addition, with the all-stock
transaction, shareholders of both companies will benefit from the
significant projected synergies and financial flexibility enabled
by the combined company's strong balance sheet and cash flow
profile. We at Dynegy are proud of what we have accomplished, and
we look forward to this exciting next step in the company's
evolution."
Projected Strategic and Financial Benefits of the
Combination
- Creates Leading Integrated Retail and Generation
Platform: The combined company will have approximately 40
gigawatts (GW) of high-quality, low-cost, environmentally compliant
power generation assets concentrated in ERCOT, PJM, and ISO-NE, the
most desirable competitive markets in the U.S. Complementing the
12-state generation portfolio is a combined retail platform serving
more than 2.9 million retail customers with an estimated 75 TWhs of
electricity sales in 2018. The combined company's premier wholesale
generation portfolio will serve as a platform for accelerated
growth of this retail business. Approximately half of the combined
company's gross margin is projected to be derived from capacity
revenues and retail margin.
- Significant Value Creation Opportunity Projected to Total
Nearly $4 Billion: The combined
company is projected to achieve approximately $350 million in annual run-rate EBITDA value
levers by streamlining general and administrative costs,
implementing fleet-wide best-in-class operating practices, driving
procurement efficiencies, and eliminating other duplicative costs.
Vistra Energy estimates the full run-rate of EBITDA value levers
will be achieved in approximately 12 months of closing. In
addition, the combined company is expected to benefit from
approximately $65 million (after tax)
of incremental annual run-rate free cash flow benefits from balance
sheet and capital expenditure efficiencies. Finally, the combined
company is expected to benefit from the utilization of
approximately $2.0-2.5 billion of
legacy Dynegy Net Operating Losses (NOLs) with an estimated net
present value of approximately $500-600
million.
- Strong Financial Profile: The combined company is
expected to have a strong financial profile with projected proforma
liquidity of approximately $3.9
billion as of April 30, 2018
and gross debt to EBITDA declining to the company's targeted 3
times by year-end 2019 (with net debt to EBITDA of 2.6 times by
year-end 2019). With approximately $14
billion of adjusted EBITDA expected to be generated between
2018 and 2022, the combined company is projected to have
approximately $5.5 billion in excess
capital available for allocation toward balance sheet improvements
(including any debt repayments required to achieve the company's 3
times gross debt to EBITDA target), growth investments, and other
value accretive opportunities.
Management, Board of Directors and Headquarters
Following the close of the transaction, the combined company
will be led by Curt Morgan as
President and Chief Executive Officer. Bill
Holden will serve as the Chief Financial Officer with
Jim Burke as the Chief Operating
Officer.
The Board of Directors is expected to have a total of 11
directors consisting of the current eight members of the Vistra
Energy Board and three members from Dynegy's Board.
The Dynegy Board of Directors and Mr. Flexon have mutually
agreed to extend his employment as permitted under the terms of his
existing employment agreement for one year. Mr. Flexon will
continue to serve as President and Chief Executive Officer of
Dynegy through April 30, 2019 or the
date the transaction closes, whichever comes first.
The combined company's headquarters will be in Irving, Texas. In addition, the combined
entity has retail offices in Houston,
Texas, Cincinnati, Ohio,
and Collinsville,
Illinois.
Conditions and Timing
The companies anticipate closing the transaction in the second
quarter of 2018.
The transaction is subject to certain regulatory approvals,
including expiration or termination of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act, and
approval by the Federal Energy Regulatory Commission, the Federal
Communications Commission, the Public Utility Commission of
Texas, the New York Public Service
Commission, and other customary closing conditions. The transaction
is subject to approval by the shareholders of Vistra Energy and
Dynegy. In addition, the transaction will not require any
refinancing of Vistra Energy's or Dynegy's debt, but preserves
flexibility for opportunistic refinancing at, or after,
closing.
Advisors
Citi is serving as financial advisor, Credit Suisse is serving
as capital markets advisor, and Simpson Thacher & Bartlett LLP
is serving as legal advisor to Vistra Energy.
PJT Partners and Morgan Stanley are serving as financial
advisors and Skadden, Arps, Slate, Meagher & Flom LLP is
serving as legal advisor to Dynegy.
Conference Call/Webcast
Vistra Energy and Dynegy will host a joint conference call to
discuss the merger today at 8:30 am
ET (7:30 am CT). The call will
be webcast live at www.vistraenergy.com and www.dynegy.com.
Alternatively, callers may dial (844) 579-6824 within the United States or (763) 488-9145 from
outside the U.S. utilizing the Conference ID 3685219. It is
recommended that participants call 20 minutes ahead of the
scheduled start time.
Shortly before the conference call begins, slides will be posted
under the investor relations sections of each company's website
that will be referred to during the call.
A webcast replay and transcript of the call will be available
approximately 24 hours following the call at www.vistraenergy.com
and www.dynegy.com.
ABOUT DYNEGY
Throughout the Northeast, Mid-Atlantic,
Midwest, and Texas, Dynegy
operates 27,000 megawatts (MW) of power generating facilities
capable of producing enough energy to supply more than 22 million
American homes. With 17,000 MW fueled by natural gas and more than
9,000 MW fueled by coal, our plants can generate enough electricity
to power more than 17 million homes. We generate power safely and
responsibly for 1.2 million electricity customers who depend on
that energy to grow and thrive.
ABOUT VISTRA ENERGY
Vistra Energy is a premier
Texas-based energy company focused
on the competitive energy and power generation markets through
operation as the largest retailer and generator of electricity in
the growing Texas market. Our
integrated portfolio of competitive businesses consists primarily
of TXU Energy and Luminant. TXU Energy sells retail electricity and
value-added services (primarily through our market-leading TXU
Energy™ brand) to approximately 1.7 million residential and
business customers in Texas.
Luminant generates and sells electricity and related products from
our diverse fleet of generation facilities totaling approximately
18,000 MW of generation in Texas,
including 2,300 MW fueled by nuclear power, 8,000 MW fueled by
coal, and 7,500 MW fueled by natural gas, and is a large purchaser
of renewable power including wind and solar-generated electricity.
The company is currently developing one of the largest solar
facilities in Texas by
capacity.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The information presented herein includes forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements, which are
based on current expectations, estimates and projections about the
industry and markets in which Vistra Energy and Dynegy operate and
beliefs of and assumptions made by Vistra Energy's management and
Dynegy's management, involve risks and uncertainties, which are
difficult to predict and are not guarantees of future performances,
that could significantly affect the financial results of Vistra
Energy or Dynegy or the combined company. All statements, other
than statements of historical facts, are forward-looking
statements. These statements are often, but not always, made
through the use of words or phrases such as "may," "might",
"should," "could," "predict," "potential," "believe," "will likely
result," "expect," "continue," "will," "shall," "anticipate,"
"seek," "estimate," "intend," "plan," "project," "forecast,"
"goal," "target," "would," "guidance," and "outlook," or the
negative variations of those words or other comparable words of a
future or forward-looking nature. Readers are cautioned not to
place undue reliance on forward-looking statements. Although Vistra
Energy and Dynegy believe that in making any such forward-looking
statement, Vistra Energy's and Dynegy's expectations are based on
reasonable assumptions, any such forward-looking statement involves
uncertainties and risks that could cause results to differ
materially from those projected in or implied by any such
forward-looking statement, including but not limited to (i) the
failure to consummate or delay in consummating the proposed
transaction; (ii) the risk that a condition to closing of the
proposed transaction may not be satisfied; (iii) the risk that a
regulatory approval that may be required for the proposed
transaction is delayed, is not obtained, or is obtained subject to
conditions that are not anticipated or that cause the parties to
abandon the proposed transaction; (iv) the effect of the
announcement of the proposed transaction on Vistra Energy's and
Dynegy's relationships with their respective customers and their
operating results and businesses generally (including the diversion
of management time on transaction-related issues); (v) the risk
that the credit ratings of the combined company or its subsidiaries
are different from what Vistra Energy and Dynegy expect; (vi)
adverse changes in general economic or market conditions (including
changes in interest rates) or changes in political conditions or
federal or state laws and regulations; (vii) the ability of the
combined company to execute upon the strategic and performance
initiatives contemplated herein (including the risk that Vistra
Energy's and Dynegy's respective businesses will not be integrated
successfully or that the cost savings, synergies and growth from
the proposed transaction will not be fully realized or may take
longer to realize than expected); (viii) there may be changes in
the trading prices of Vistra Energy's and Dynegy's common stock
prior to the closing of the proposed transaction; and (ix) those
additional risks and factors discussed in reports filed with the
Securities and Exchange Commission ("SEC") by Vistra Energy and
Dynegy from time to time, including (a) the uncertainties and risks
discussed in the sections entitled "Risk Factors" and "Special Note
Regarding Forward-Looking Statements" in the Vistra Energy's
prospectus filed with the SEC pursuant to Rule 424(b) of the
Securities Act on May 9, 2017 (as
supplemented), and (b) the uncertainties and risks discussed in the
sections entitled "Risk Factors" and "Forward-Looking Statements"
in the Dynegy's annual report on Form 10-K for the fiscal year
ended December 31, 2016.
Any forward-looking statement speaks only at the date on which
it is made, and except as may be required by law, neither Vistra
Energy nor Dynegy undertake any obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which it is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it
is not possible to predict all of them; nor can Vistra Energy or
Dynegy assess the impact of each such factor or the extent to which
any factor, or combination of factors, may cause results to differ
materially from those contained in any forward-looking
statement.
ADDITIONAL INFORMATION ABOUT THE TRANSACTION AND WHERE TO
FIND IT
This communication relates to the proposed merger
pursuant to the terms of the Agreement and Plan of Merger, dated as
of October 29, 2017, by and between
Vistra Energy and Dynegy. The proposed transaction will be
submitted to the respective stockholders of Dynegy and Vistra
Energy for their consideration. In connection with the proposed
merger, Vistra Energy expects to file with the SEC a registration
statement on Form S-4 that will include a joint proxy statement of
Vistra Energy and Dynegy that also constitutes a prospectus of
Vistra Energy (the "joint proxy statement"), which joint proxy
statement will be mailed or otherwise disseminated to Vistra Energy
stockholders and Dynegy stockholders when it becomes available.
Vistra Energy and Dynegy also plan to file other relevant documents
with the SEC regarding the proposed transaction. INVESTORS ARE
URGED TO READ THE JOINT PROXY STATEMENT AND OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT VISTRA
ENERGY, DYNEGY, THE PROPOSED MERGER AND RELATED MATTERS. You may
obtain a free copy of the joint proxy statement and other relevant
documents (if and when they become available) filed by Vistra
Energy and Dynegy with the SEC at the SEC's website at www.sec.gov.
Copies of the documents filed by Vistra Energy with the SEC will be
available free of charge on Vistra Energy's website at
www.vistraenergy.com or by contacting Vistra Energy Investor
Relations at 214-812-0046 or at investor@vistraenergy.com. Copies
of the documents filed by Dynegy with the SEC will be available
free of charge on Dynegy's website at www.dynegy.com or by
contacting Dynegy Investor Relations at (713) 507-6466 or at
ir@dynegy.com.
CERTAIN INFORMATION REGARDING PARTICIPANTS IN THE
SOLICITATION
Vistra Energy and Dynegy and certain of their
respective directors and executive officers and other members of
management and employees may be deemed to be participants in the
solicitation of proxies in respect of the proposed merger. You can
find information about Vistra Energy's directors and executive
officers in Vistra Energy's prospectus filed with the SEC pursuant
to Rule 424(b) of the Securities Act on May
9, 2017 (as supplemented), and on its website at
www.vistraenergy.com. You can find information about Dynegy's
directors and executive officers in its proxy statement for its
2017 annual meeting of stockholders, which was filed with the SEC
on March 30, 2017, and on its website
at www.dynegy.com. Additional information regarding the interests
of such potential participants will be included in the joint proxy
statement and other relevant documents filed with the SEC if and
when they become available. You may obtain free copies of these
documents from Vistra Energy or Dynegy using the sources indicated
above.
NO OFFER OF SOLICITATION
This document shall not
constitute an offer to sell or the solicitation of an offer to buy
any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the U.S. Securities Act of 1933, as
amended.
VISTRA ENERGY CONTACTS
Media
Allan Koenig
214-875-8004
Media.Relations@vistraenergy.com
Analysts
Molly Sorg
Investor@vistraenergy.com
DYNEGY CONTACTS
Media
713-767-5800
Investors
713-507-6466
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SOURCE Vistra Energy; Dynegy Inc.