SOURCE: Brower Piven, A Professional Corporation

February 02, 2011 18:34 ET

Brower Piven Encourages Investors Who Hold Substantial Shares of Dynegy Inc. to Inquire About the Lead Plaintiff Position in Securities Fraud Class Action Lawsuit Before the April 4, 2011 Lead Plaintiff Deadline

STEVENSON, MD--(Marketwire - February 2, 2011) - The law firm of Brower Piven, A Professional Corporation, today announced that the firm filed on February 1, 2011 a class action in the United States District Court for the Southern District of Texas, Houston Division, on behalf of all persons who own shares of the common stock of Dynegy Inc. ("Dynegy") (NYSE: DYN), against Dynegy and members of its Board of Directors for violations of Sections 14 and 20 of the Securities Exchange Act of 1934 ("1934 Act") and for breaches of fiduciary duties to Dynegy shareholders in connection with a tender offer by IEH Merger Sub LLC, which is owned and controlled by Icahn Enterprises Holdings LP ("Icahn"), to purchase Dynegy for $5.50 per share ("Tender Offer").

Dynegy produces and sells electric energy, capacity and ancillary services in the US. The complaint alleges that in August 2010, Dynegy told investors to accept a buyout offer from The Blackstone Group LP ("Blackstone") or the company would face dire consequences. However, the complaint alleges that Dynegy's investors had a drastically different view about the company's future. For example, the complaint alleges that Icahn and hedge fund Seneca Capital Investments LP, the two largest stakeholders of Dynegy, rejected Blackstone's original offer of $603 million (or $4.50 per share) citing gross undervaluation, and the company's excellent position to reap the benefits of a recovery in electricity prices. The complaint alleges that even though Blackstone raised its offer to a "best and final" $5 per share on November 16, 2010, the deal collapsed on November 23, 2010 after it failed to gain enough shareholder support. That same day, the complaint states, Dynegy told investors that it "intends to immediately commence an open strategic alternatives process to solicit proposals from potentially interested parties and carefully review its standalone restructuring alternatives." However, the complaint alleges that Dynegy's Board of Directors quickly abandoned its promise of a "careful standalone review" in favor of yet another sale agreement and ill-timed auction for Dynegy during the middle of the holiday season. The complaint states that on December 15, 2010, Dynegy announced that it had accepted a buyout offer of $665 million ($5.50 per share), excluding debt, from Icahn. The complaint states that Dynegy publicly disclosed that the Board of Directors had approved a definitive agreement under which IEH will acquire Dynegy in a tender offer followed by a merger for $5.50 cash per share. However, the complaint alleges that the Board's pledge to form a special committee and then engage an independent restructuring advisor to explore standalone, value-enhancing options, including asset sales, debt restructuring, and cost-cutting amounted to nothing more than lip service. The complaint alleges that senior management at Dynegy stands to benefit from $38 million in change-of-control severance payments (approximately 6% of Dynegy's equity value) that are largely irrespective of the deal price.

The complaint alleges that Dynegy failed to disclose material information in Tender Offer materials filed with the SEC and publicly disseminated in connection with the Tender Offer by IEH for Dynegy. According to the complaint, the Tender Offer materials were materially false and misleading because they fail to provide shareholders with adequate disclosure about the sales process or the financial calculations used to justify the merger price. Specifically, according to the complaint, the Tender Offer materials omit and/or misrepresent material information in contravention of Sections 14 and 20 of the 1934 Act and/or defendants' fiduciary duty of disclosure under state law.

Not later than April 4, 2011, any member of the purported class may move the court to serve as lead plaintiff of the purported class. If you are a Dynegy shareholder and you wish to serve as lead plaintiff, wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, Brower Piven, at 410/415-6616 or by email at hoffman@browerpiven.com. If you choose to retain counsel, you may retain Brower Piven without financial obligation or cost to you, or you may retain other counsel of your choice. 

Plaintiff seeks to recover damages and secure other relief on behalf of all holders of Dynegy common stock (the "Class"). The plaintiff is represented by Brower Piven, whose attorneys have combined experience litigating securities and class action cases of over 60 years. The Brower Piven website (www.browerpiven.com) has more information about the firm.

Contact Information

  • CONTACT:
    Brower Piven, A Professional Corporation
    Stevenson, Maryland
    Charles J. Piven
    410/415-6616
    Email Contact