Morro Bay Power Plant sold amid allegations of illegalities

August 14, 2010

NRG Energy agreed to purchase the Morro Bay Power Plant along with three additional energy facilities for nearly $1.9 billion on Friday in a complicated agreement in which allegations of breach of fiduciary duty have already been leveled.

NRG Energy signed a definitive agreement with an affiliate of the Blackstone Group who earlier in the day agreed to purchase the Morro Bay facility from its current owner, Dynegy. The purchase is contingent on the Blackstone Group’s agreement with Dynegy being finalized and federal regulatory approval. [Reuters]

The Blackstone Group signed a $542.7 million agreement to purchase Dynegy Inc. and take it private in a three-way deal that includes selling the Morro Bay, Moss Landing and Oakland facilities in California and the Casco Bay facility in Maine to NRG Energy Inc. Blackstone also agreed to take on more than $4 billion in Dynegy debt, on Friday.

Shortly after the agreement was signed, at least three attorney firms announced they had mounted investigations into potential claims against Dynegy’s board of directors related to the pending acquisition. The litigators asked that Dynegy shareholders contact them to discuss “the legal ramifications of the proposed transaction.” [MarketWatch]

The investigations pertain to alleged breaches of fiduciary duty and other violations of state law. The transaction between Dynegy and the Blackstone Group is being called unfair, in part, because Dynegy stock was trading at $5.15 a share as recently as June 3, and was trading at $9.95 a share on January 6.

Under the terms of Friday’s agreement, Dynegy shareholders would receive $4.50 per share.

During the past 12 months, Dynegy shares have plummeted 79 percent. Dynegy owns power plants around the country and sells electricity primarily to wholesale markets in New York, California and the Midwest.

Continued operations at the Morro Bay plant are subject to a new California policy that restricts and phases out the use of estuary, delta and ocean water for cooling coastal power plants. A year ago, Dynegy, announced plans to stop using ocean water for cooling in 2015.

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What a crock. The ”story” on Matketwatch is an advertisement placed by lawyers trying to get Dynegy shareholders to join a lawsuit.

Much of this story has been reported in the national press and even been reported internationally ! What’s with the local press? Is CCN the only local media outlet keeping us informed, are we living in a bubble or something?

Thanks CCN

This might bring closer to fruition Betty Winholtz’s dream of bankrupting the city.

Why is this issue being kept so quiet? Has this county gone to the dogs, literally?

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