Shares of Dynegy, which is being investigated for its accounting and energy trading, rose by twenty three percent after the company said that it may sell assets and tap loans to raise a billion dollars to avoid a cash crunch at the group.
The stock, which has lost eighty five percent of its value in the past year, gained $1.58 to $8.60 yesterday. The Chief Executive Officer Chuck Watson made the announcement on assets and financing at the company's annual meeting on Friday.
Dynegy's “plans are giving some reassurance to investors that the company will be able to move forward,” said Matt Wright, who manages the $169 million First Investors Utilities Income Fund. He recently sold his shares of Dynegy. “As the company reshuffles the deck, it warrants another look. There is asset value. It's not a house of cards.”
Dynegy may face credit downgrades as US regulators examine natural gas deals that inflated how much cash the company generated from operations and sham power transactions. Dynegy and its rivals also are under scrutiny for power trading in California following the release of Enron Corp. memos suggesting the market was manipulated.