Tuesday, November 23, 2010

Dynegy (NYSE: DYN): Grow or Die

Shareholders overwhelmingly rejected the Blackstone Bid.

However, the fact remains that Dynegy Board of Directors and Management continue on a very destructive course. They have already attempted a scorched earth policy and that failed. Now they have adopted a poison pill in an attempt to stop shareholders from gaining control of the company, replacing the Board and Management and turning the company around.

While it may not be illegal, it is obstruction and abuse of fiduciary duty and shareholders will to grow the Company. What makes this so egregious is the fact that Dynegy management and board spent months telling shareholders the sky was falling, the Company was an orphan, they could not execute on a business plan and the best course of action was to sell the company at a discount to Blackstone Group.

After it became apparent that Shareholders rejected that proposal as not valid, all of the sudden management and the board want to keep their jobs and create shareholder value and conduct a complete diagnostic analysis of the company they have been trying to sell for well over two years.

The shareholders have spoken. Dynegy management and board appear persona non grata, and have no credibility in the energy markets, capital markets, and no credibility with shareholders, as evidenced by the fact that shareholders rejected the proposal to sell the company at a discount to Blackstone.

Shareholders must quickly clean house, bring in new management/board and focus on growth, or die. The alternative is a higher bid for the Company by current shareholders, which remains a possibility.

Mr. Miller has advocated bringing in a co-investment partner for quite some time, so if Seneca/Icahn and new capital are prepared to move, they need to do so very quickly, as the Company is dying a very painful death with the current management and board.

Shareholders are the victims

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