Dynegy will cut its dividend by half and sell stakes in a pipeline acquired from Enron Corp., a UK natural gas terminal and other assets to raise as much as two billion dollars to preserve an investment-grade credit rating.
Second quarter profit will fall to around break even, partly because of a slump in energy trading, the groups Chief Operating Officer Steve Bergstrom said on a conference call with investors. Dynegy expects $300 million in costs from its communications unit and $150 million in severance payments and other expenses.
Fitch cut Dynegy's debt to a “BB+” junk rating, and other services are considering downgrades. Shares of Dynegy and its rivals have fallen with energy prices and as Enron's collapse eroded investor confidence in such firms. Dynegy's chief executive quit last month as regulators probed its energy trading and accounting.
Dynegy “is in survival mode,” said Edward Paik, who helps manage seven billion dollars in assets at FleetBoston's Liberty Funds Group, including Williams Cos. and Xcel Energy Inc. “They need to do what they say they'll do as quickly as possible.”
Russia has delivered three divisions of anti-aircraft missile systems S-300PM-2 to Syria. These systems differ from the classic S-300