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Dynegy to Pay Enron $25M to Settle Lawsuit Over Failed Merger

Dynegy Inc., which backed out of a November merger with Houston-based rival energy marketer Enron Corp., has agreed to pay Enron $25 million in exchange for a release from Enron of all claims related to the terminated merger, the companies said. Dynegy also agreed not to pursue any claims related to its acquisition from Enron of its Northern Natural Gas Co. pipeline. Enron's bankruptcy judge in New York still must approve the terms.

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Dynegy Inc., which backed out of a November merger with rival Houston-based energy marketer Enron Corp., has agreed to pay Enron $25 million, the companies said. In the settlement, Enron agreed to release Dynegy from all claims related to the terminated merger. Both companies’ boards approved the settlement, but Enron’s bankruptcy judge in New York still must approve the terms. In turn, Dynegy agreed not to pursue any claims related to its acquisition from Enron of its Northern Natural Gas Co. pipeline in the merger breakup aftermath. “We are pleased to have reached a settlement that enables both companies to move forward without the shadow of protracted litigation,” Enron interim chief executive Stephen F. Cooper said Thursday. Dan Dienstbier, interim chief executive officer of Dynegy Inc., said the deal paves the way for the company’s pending $928 million sale of the Northern Natural pipeline company to MidAmerican Energy. “This settlement resolves a matter that has been weighing on our company and our stakeholders, and we are pleased to have done so on terms that are reasonable for Dynegy,” he said. In a filing Wednesday with the Securities and Exchange Commission, Dynegy warned it might also have to declare bankruptcy if the pipeline sale is delayed. The energy company still expects to complete the sale this month, it said. Dynegy walked away from its planned $8 billion merger deal with Enron on Nov. 28, saying the company failed to fully disclose the scope of its financial woes. Enron filed for Chapter 11 bankruptcy Dec. 2 and laid off thousands of employees. Enron also sued Dynegy for $10 billion, claiming its smaller rival illegally abandoned the merger. Dynegy acquired Northern Natural Gas, the largest of Enron’s four pipelines, in exchange for a $1.5 billion investment in Enron before a merger of the two Houston-based companies collapsed last November. Copyright 2002 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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