Jul 30, 2002 2 min read

HOUSTON (AP) – Dynegy Inc. announced Monday it has sold its 16,600-mile natural gas pipeline, acquired from its failed merger with Enron Corp., to MidAmerican Energy Holdings Co. for $928 million in cash. The Houston-based energy trader had previously said it was trying to sell at least part of the pipeline, Northern Natural Gas Co., as part of a plan to raise $2 billion and shore up its finances.

The company has posted losses in the last two quarters, ousted its chief executive and chief financial officer, shut down its online trading platform and laid off 340 workers.

Dynegy leads a pack of energy traders battered by questions of their own wobbly finances. Also looming are federal investigations of the company’s accounting.

“The closing of this sale will improve our liquidity position and help us serve our customers,” said Dan Dienstbier, interim chief executive officer of Dynegy. “We are committed to achieve a level of financial viability that will create a renewed sense of market and customer confidence in our company.”

In trading Monday morning, shares of Dynegy were up 44 cents, or nearly 65 percent, to $1.12. Last week, Dynegy’s shares traded at less than a dollar, down from a one-year high of $48.

Under the terms of the sale, Des Moines, Iowa, based MidAmerican Energy will acquire all of the common and preferred stock of Northern Natural Gas and will assume $950 million of its debt. The transaction is expected to close in August 2002.

Elimination of the Northern Natural Gas debt leaves Dynegy with only a $300 million debt due in November and no other significant debt due until May 2003.

Once the deal is complete, approximately 1,100 Dynegy employees working for the pipeline will become MidAmerican Energy employees.

“The fact that we were able to achieve a 100 percent sale of (Northern Natural) is a testament to the quality of its employees and the safety and efficiency of its operations, and will provide us with a greater source of funds than originally planned,” Dienstbier said.

Dynegy had acquired the pipeline in exchange for a $1.5 billion investment in Enron before a merger of the two companies collapsed last November.

Northern Natural Gas’ pipeline extends from the Permian Basin in Texas to the upper Midwest.