PSEG subsidiaries file suit against Dynegy to halt transfer of coal, gas power assets

Source: Public Service Enterprise Group

Roseton OL, LLC and Danskammer OL, LLC, indirect subsidiaries of Public Service Enterprise Group (NYSE:PEG) (the PSEG Entities), have filed suit against Dynegy Holdings Inc. (DHI) in the Delaware Court of Chancery to halt DHI's proposed transfer of certain of its coal and natural gas power assets to new "bankruptcy remote" subsidiaries. The PSEG entities are owner-lessors of the Danskammer and Roseton electric generating facilities. The lessees are indirect subsidiaries of Dynegy, Inc. and Dynegy Holdings, LLC (DHI). DHI has guaranteed to the PSEG entities the obligations of the lessees under the leases. As of March 31, 2011, the PSEG Entities had a gross equity investment at risk in the Roseton and Danskammer leases of $270 million. 

DHI announced on July 11, 2011 that it intended to transfer certain of its coal and natural gas power assets to bankruptcy remote entities, while transferring its Roseton and Danskammer generating stations lessee interests to an ordinary subsidiary under DHI. The plaintiffs contend that the proposed DHI transfer of its assets is a violation of the DHI guaranty and are therefore seeking a temporary restraining order and permanent injunction preventing DHI from consummating these proposed transfers. 

The 491 MW natural gas, oil and coal fired Danskammer Generating Station is located on the shore of the Hudson River in the Town of Newburgh, New York.

The 1,200 MW natural gas and oil fired Roseton Generating Station is also located in Newburgh along the Hudson River, approximately half a mile upstream from the Danskammer Generating Station.

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