formdefa14a.htm


SCHEDULE 14A
 
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
 
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
 
Check the appropriate box:
 
¨
Preliminary Proxy Statement
¨
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
¨
Definitive Proxy Statement
x
Definitive Additional Materials
¨
Soliciting Material Pursuant to Rule 14a-12
 
Dynegy Inc.
(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
Payment of Filing Fee (Check the appropriate box):
 
 
x
No fee required.
 
 
¨
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
 
(1)
Title of each class of securities to which transaction applies:
 

 
(2)
Aggregate number of securities to which transaction applies:
 

 
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 

 
(4)
Proposed maximum aggregate value of transaction:
 

 
(5)
Total fee paid:
 

 
¨
Fee paid previously with preliminary materials.
 
 
¨
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
 
(1)
Amount Previously Paid:
 

 
(2)
Form, Schedule or Registration Statement No.:
 

 
(3)
Filing Party:
 

 
(4)
Date Filed:
 

 


 
 

 

EXPLANATORY NOTE:

On October 27, 2010, Dynegy Inc. ("Dynegy") announced that members of Dynegy's management will meet with representatives of proxy advisory firms over the next few weeks to discuss the previously announced Agreement and Plan of Merger, dated as of August 13, 2010, providing for the acquisition of Dynegy by Denali Parent Inc., an affiliate of The Blackstone Group L.P.  Dynegy will use a presentation in its meetings with representatives of proxy advisory firms; a copy of the presentation and a press release announcing the filing of the presentation with the Securities and Exchange Commission are included below.
 
 
 

 
 

 
FOR IMMEDIATE RELEASE
NR10-22

DYNEGY INC. FILES INVESTOR PRESENTATION TO BE USED IN MEETINGS WITH PROXY ADVISORY FIRMS

Reiterates Recommendation of Dynegy Board that Stockholders of Dynegy Vote FOR the Merger Agreement with Blackstone by Voting the WHITE Proxy Card Today

HOUSTON – October 27, 2010 – Dynegy Inc. (NYSE: DYN) today announced that it is filing with the Securities and Exchange Commission (“SEC”) an investor presentation to be used in meetings it will have with certain proxy advisory firms. This presentation highlights a number of important facts pertaining to the previously announced merger agreement with an affiliate of The Blackstone Group L.P. under which the affiliate of Blackstone would acquire all of the outstanding shares of Dynegy common stock for $4.50 per share in cash.

The investor presentation and other communications materials related to the Blackstone transaction are available in the “Investor Relations” section of Dynegy’s website at www.dynegy.com and at the SEC’s website, www.sec.gov.

Dynegy’s Special Meeting of Stockholders is scheduled for November 17, 2010.  Dynegy stockholders of record as of the close of business on October 1, 2010 are entitled to notice of, and to vote at, the Special Meeting.  Dynegy’s Board of Directors recommends stockholders vote FOR the proposal to adopt the merger agreement today – by telephone, by Internet or by signing, dating and returning the Company’s WHITE proxy card.  A failure to vote will have the same effect as a vote AGAINST the proposal to adopt the merger agreement.

Stockholders who have any questions or need assistance voting their shares should contact MacKenzie Partners, Inc., Dynegy’s proxy solicitor, by calling toll-free at (800) 322-2885 or (212) 929-5500 (call collect) or by e-mailing dynegy@mackenziepartners.com.

 
 

 
 
If you have any questions, require assistance in voting your shares, or need
additional copies of Dynegy’s proxy materials, please call MacKenzie Partners at the phone numbers listed below.
 
 
105 Madison Avenue
New York, NY 10016
dynegy@mackenziepartners.com
(212) 929-5500 (call collect)
 
Or
 
TOLL-FREE (800) 322-2885

About Dynegy Inc.

Through its subsidiaries, Dynegy Inc. produces and sells electric energy capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. For more information, please visit www.dynegy.com.

Cautionary Statement Regarding Forward-Looking Statements

This release contains statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended as "forward-looking statements". All statements included or incorporated by reference in this release, other than statements of historical fact, that address activities, events or developments that we or our management expect, believe or anticipate will or may occur in the future are forward-looking statements. These statements represent our reasonable judgment on the future based on various factors and using numerous assumptions and are subject to known and unknown risks, uncertainties and other factors that could cause our actual results and financial position to differ materially from those contemplated by the statements. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as "anticipate", "estimate", "project", "forecast", "plan", "may", "will", "should", "expect" and other words of similar meaning. In particular, these include, but are not limited to, statements relating to the following: (i) the timing and anticipated benefits to be achieved through our 2010-2013 company-wide cost savings program; (ii) beliefs and assumptions relating to liquidity, available borrowing capacity and capital resources generally; (iii) expectations regarding environmental matters, including costs of compliance, availability and adequacy of emission credits, and the impact of ongoing proceedings and potential regulations or changes to current regulations, including those relating to climate change, air emissions, cooling water intake structures, coal combustion byproducts, and other laws and regulations to which we are, or could become, subject; (iv) beliefs about commodity pricing and generation volumes; (v) anticipated liquidity in the regional power and fuel markets in which we transact, including the extent to which such liquidity could be affected by poor economic and financial market conditions or new regulations and any resulting impacts on financial institutions and other current and potential counterparties; (vi) sufficiency of, access to and costs associated with coal, fuel oil and natural gas inventories and transportation thereof; (vii) beliefs and assumptions about market competition, generation capacity and regional supply and demand characteristics of the wholesale power generation market, including the potential for a market recovery over the longer term; (viii) the effectiveness of our strategies to capture opportunities presented by changes in commodity prices and to manage our exposure to energy price volatility; (ix) beliefs and assumptions about weather and general economic conditions; (x) beliefs regarding the U.S. economy, its trajectory and its impacts, as well as Dynegy’s stock price; (xi) projected operating or financial results, including anticipated cash flows from operations, revenues and profitability; (xii) beliefs and expectations regarding the Plum Point Project; (xiii) expectations regarding our revolver capacity, credit facility compliance, collateral demands, capital expenditures, interest expense and other payments; (xiv) our focus on safety and our ability to efficiently operate our assets so as to maximize our revenue generating opportunities and operating margins; (xv) beliefs about the outcome of legal, regulatory, administrative and legislative matters; (xvi) expectations and estimates regarding capital and maintenance expenditures, including the Midwest Consent Decree and its associated costs; and (xvii) uncertainties associated with the proposed merger of Dynegy and an affiliate of Blackstone (the “Merger”),  including uncertainties relating to the anticipated timing of filings and approvals relating to the Merger and the sale by an affiliate of Blackstone of certain assets to NRG Energy, Inc. (the "NRG Sale"), the outcome of legal proceedings that have been or may be instituted against Dynegy and/or others relating to the Merger and/or the NRG Sale, the expected timing of completion of the Merger and the NRG Sale, the satisfaction of the conditions to the consummation of the Merger and the NRG Sale and the ability to complete the Merger and the NRG Sale.

 
 

 


Any or all of our forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and other factors, many of which are beyond our control.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

In connection with the Merger, Dynegy filed a definitive proxy statement with the SEC on October 4, 2010, and commenced mailing the definitive proxy statement and form of proxy to the stockholders of Dynegy. BEFORE MAKING ANY VOTING DECISION, DYNEGY'S STOCKHOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT REGARDING THE MERGER CAREFULLY AND IN ITS ENTIRETY BECAUSE IT CONTAINS IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Dynegy’s stockholders are able to obtain, without charge, a copy of the definitive proxy statement and other relevant documents filed with the SEC from the SEC’s website at http://www.sec.gov. Dynegy’s stockholders are also able to obtain, without charge, a copy of the definitive proxy statement and other relevant documents by directing a request by mail or telephone to Dynegy Inc., Attn: Corporate Secretary, 1000 Louisiana Street, Suite 5800, Houston, Texas 77002, telephone: (713) 507-6400, or from Dynegy’s website, http://www.dynegy.com.

PARTICIPANTS IN THE SOLICITATION

Dynegy and its directors and officers may be deemed to be participants in the solicitation of proxies from Dynegy’s stockholders with respect to the Merger. Information about Dynegy’s directors and executive officers and their ownership of Dynegy’s common stock is set forth in the proxy statement for Dynegy’s 2010 Annual Meeting of Stockholders, which was filed with the SEC on April 2, 2010. Stockholders may obtain additional information regarding the interests of Dynegy and its directors and executive officers in the Merger, which may be different than those of Dynegy’s stockholders generally, by reading the definitive proxy statement filed with the SEC on October 4, 2010 and other relevant documents regarding the Merger when filed with the SEC.

CONTACT:

Media:
David Byford, 713-767-5800
 
Judy Wilkinson / Matt Sherman
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449
Analysts:
Laura Hrehor, 713-507-6466
 
Mark Harnett / Bob Marese
MacKenzie Partners, Inc.
212-929-5500

 
 

 
Dynegy Acquisition by
The Blackstone Group L.P.
Presentation to Proxy Advisory Firms
October 27, 2010
 
 

 
Cautionary Statement Regarding Forward-Looking Statements
This presentation contains statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended as “forward looking statements.”
Discussion of risks and uncertainties that could cause actual results to differ materially from current projections, forecasts, estimates and expectations of Dynegy Inc. (“Dynegy”) is contained in
Dynegy’s filings with the Securities and Exchange Commission (the “SEC”). Specifically, Dynegy makes reference to, and incorporates herein by reference, the section entitled “Risk Factors” in 
its most recent Form 10-K and subsequent reports on Form 10-Q, and the section entitled “Cautionary Statement Regarding Forward-Looking Statements” in its most recent definitive proxy 
statement filed with the SEC on October 4, 2010. In addition to the risks and uncertainties set forth in Dynegy’s SEC filings, the forward-looking statements described in this presentation
could be affected by, among other things, (i) the timing and anticipated benefits to be achieved through Dynegy’s 2010-2013 company-wide cost savings program; (ii) beliefs and assumptions
relating to liquidity, available borrowing capacity and capital resources generally; (iii) expectations regarding environmental matters, including costs of compliance, availability and adequacy
of emission credits, and the impact of ongoing proceedings and potential regulations or changes to current regulations, including those relating to climate change, air emissions, cooling water
intake structures, coal combustion byproducts, and other laws and regulations to which Dynegy is, or could become, subject; (iv) beliefs about commodity pricing and generation volumes; (v)
anticipated liquidity in the regional power and fuel markets in which Dynegy transacts, including the extent to which such liquidity could be affected by poor economic and financial market
conditions or new regulations and any resulting impacts on financial institutions and other current and potential counterparties; (vi) sufficiency of, access to and costs associated with coal,
fuel oil and natural gas inventories and transportation thereof; (vii) beliefs and assumptions about market competition, generation capacity and regional supply and demand characteristics of
the wholesale power generation market, including the potential for a market recovery over the longer term; (viii) the effectiveness of Dynegy’s strategies to capture opportunities presented
by changes in commodity prices and to manage its exposure to energy price volatility; (ix) beliefs and assumptions about weather and general economic conditions; (x) beliefs regarding the
U.S. economy, its trajectory and its impacts, as well as Dynegy’s stock price; (xi) projected operating or financial results, including anticipated cash flows from operations, revenues and
profitability; (xii) beliefs and expectations regarding the Plum Point Project; (xiii) expectations regarding Dynegy’s revolver capacity, credit facility compliance, collateral demands, capital
expenditures, interest expense and other payments; (xiv) Dynegy’s focus on safety and its ability to efficiently operate its assets so as to maximize its revenue generating opportunities and
operating margins; (xv) beliefs about the outcome of legal, regulatory, administrative and legislative matters; (xvi) expectations and estimates regarding capital and maintenance
expenditures, including the Midwest Consent Decree and its associated costs; and (xvii) uncertainties associated with the proposed transaction between Dynegy and an affiliate of Blackstone
(the “Merger”), including uncertainties relating to the anticipated timing of filings and approvals relating to the Merger and the sale by an affiliate of Blackstone of certain assets to NRG
Energy, Inc. (the “NRG Sale”), the outcome of legal proceedings that have been or may be instituted against Dynegy and/or others relating to the merger agreement and/or the NRG Sale, the
expected timing of completion of the Merger, the satisfaction of the conditions to the consummation of the Merger with an affiliate of Blackstone and the NRG Sale and the ability to
complete the Merger. Any or all of Dynegy’s forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks,
uncertainties and other factors, many of which are beyond Dynegy’s control. 
Non-GAAP Financial Measures: This presentation contains non-GAAP financial measures including Enterprise Value, EBITDA, Adjusted EBITDA, EBITDAR, Adjusted EBITDAR, Net Debt , Adjusted
Net Debt, Net Debt and Other Obligations and Adjusted Debt.  Reconciliations of these measures to the most directly comparable GAAP measures to the extent available without
unreasonable effort are contained herein. To the extent required, statements disclosing the definitions of such non-GAAP financial measures are included herein.
WHERE YOU CAN FIND MORE INFORMATION
In connection with the Merger, Dynegy filed a definitive proxy statement with the SEC on October 4, 2010 and commenced mailing the definitive proxy statement and form of proxy to the
stockholders of Dynegy. BEFORE MAKING ANY VOTING DECISION, DYNEGY’S STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT REGARDING THE MERGER CAREFULLY AND IN ITS
ENTIRETY BECAUSE IT CONTAINS IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Dynegy’s stockholders are able to obtain, without charge, a copy of the definitive proxy
statement and other relevant documents filed with the SEC from the SEC’s website at http://www.sec.gov. Dynegy’s stockholders are also able to obtain, without charge, a copy of the
definitive proxy statement and other relevant documents by directing a request by mail or telephone to Dynegy Inc., Attn: Corporate Secretary, 1000 Louisiana Street, Suite 5800, Houston,
Texas 77002, telephone: (713) 507-6400, or from the Dynegy’s website, http://www.dynegy.com.
 
PARTICIPANTS IN THE SOLICITATION
Dynegy and its directors and officers may be deemed to be participants in the solicitation of proxies from Dynegy’s stockholders with respect to the Merger. Information about Dynegy’s directors
and executive officers and their ownership of Dynegy’s common stock is set forth in the proxy statement for Dynegy’s 2010 Annual Meeting of Stockholders, which was filed with the SEC on
April 2, 2010. Stockholders may obtain additional information regarding the interests of Dynegy and its directors and executive officers in the Merger, which may be different than those of
Dynegy’s stockholders generally, by reading the definitive proxy statement and other relevant documents regarding the Merger.
Forward-Looking Statements/Additional Information/
Participants in Solicitation
2
 
 

 
3
Overview
 The Dynegy/Blackstone transaction is the result of a lengthy and extensive evaluation of
 strategic alternatives by Dynegy to maximize stockholder value
  Contacted 16 parties in the two years prior to announcement of the Blackstone transaction
  Evaluated potential asset sales and other alternatives, including a business combination with a
 strategic partner
  Contacted 42 parties in 2010 during the “Go-shop” process with no proposal, let alone a superior
 proposal, emerging
  This multi-year process has resulted in Blackstone’s current offer
 Dynegy believes Blackstone’s cash offer of $4.50 per share provides stockholders with
 immediate fair value in cash and removes risks associated with market conditions, ongoing
 regulatory uncertainties and Dynegy’s capitalization and cash requirements
 Dynegy’s substantial leverage and forecasted negative free cash flow create a very
 challenging liquidity position over time
 Dynegy’s Board has concluded that the risks of continuing to operate as a stand-alone public
 company significantly outweigh the potential upside of doing so
An affiliate of The Blackstone Group L.P. has agreed to acquire Dynegy Inc.
in an all-cash transaction valued at ~$4.7 billion, including the assumption
of existing debt
Dynegy’s stock price could trade at or below its pre-announcement
stock price if the Blackstone transaction is not completed
 
 

 
 $4.50 per share cash offer, representing a substantial
 premium to pre-announcement stock price
   Transaction was announced August 13, 2010
  ~62% premium to August 12, 2010 closing price
 ($2.78/share)
  ~26% premium to prior 30-day average closing
 price
 No financing conditions
 Board of Directors received written fairness opinions from
 Goldman, Sachs & Co. and Greenhill & Co., LLC(5)
 Path to completion
  Requested FERC approval by October 29, 2010
  California Public Utilities Commission (notice
 period ends November 11, 2010)
  Stockholder approval (meeting scheduled for
 November 17, 2010)
  New York Public Service Commission (expect to
 receive consent order on or about November 18,
 2010)
  Concurrent closing of NRG/Blackstone transaction
 Expect to close by end of November 2010
Key Transaction Terms
4
(1) Based on shares outstanding as of October 1, 2010. (2) As of June 30, 2010 and includes value of Central Hudson capitalized lease. (3) Based on Summary Financial Forecasts used by Dynegy’s Board of
Directors in evaluating the proposed transaction and does not represent Guidance estimates. Adjusted EBITDAR is calculated using estimated 2010, 2011 and 2012 Adjusted EBITDA of $517, $405 and $348
million, respectively, and adjusted to exclude Central Hudson lease expense of ~$50 million as it is included in net debt & other obligations. See definitive proxy statement for details surrounding assumptions.
(4) Merchant Power Peers reflect market-capitalization-weighted index which includes Calpine, Mirant, NRG Energy and RRI Energy performance as of October 20, 2010. (5) See definitive proxy statement for
the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Goldman Sachs and Greenhill & Co. in connection with their respective opinions. (6) Peer set
includes CPN, NRG and RRI (GenOn). CPN basic share count includes 44mm shares held in trust for settlement of future bankruptcy creditor claims and is pro forma for the Conectiv fleet acquisition and sale of
Colorado plants . RRI (GenOn) adjusted for merger of RRI Energy and Mirant at 2.835 fixed exchange ratio and includes $150mm of annual synergies per management forecast, with 0%, 50% and 100%
achieved in 2010, 2011 and 2012, respectively. NRG not pro forma for any recently announced but uncompleted acquisitions. 
 
 
Transaction Overview
 
 

 
The Blackstone Transaction is the Culmination of a
Lengthy and Extensive Evaluation of Strategic
Alternatives to Maximize Value for Dynegy Stockholders
 
 

 
 In connection with recommending the Blackstone transaction to stockholders, Dynegy’s Board of Directors, in
 consultation with its independent financial and legal advisors, undertook a comprehensive review of numerous
 strategic alternatives including:
  Continuing as a stand-alone entity
  A sale of Dynegy
  A business combination with a strategic partner
  A sale of Dynegy’s coal generating facilities or gas fired assets, including those gas fired assets located in the western region of the United
 States
  The proposal received from Blackstone
 Goldman, Sachs & Co. and Greenhill & Co., LLC each provided a written fairness opinion to the Board of Directors
 on August 13, 2010
 Financial analyses presented to the Dynegy Board included:
  Multiples of select companies and transactions
  Transaction premiums
  Discounted cash flow
  Sum-of-the-parts
  Research analysts’ stock price targets
  Historical share price
Thorough Board Evaluation
6
In connection with approving the transaction with Blackstone, Dynegy’s Board
analyzed numerous strategic alternatives and received written fairness opinions
Note: See definitive proxy statement for the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Goldman Sachs and Greenhill & Co. in
connection with their respective opinions.
 
 

 
 Over the past two years, Dynegy has explored a range of strategic alternatives in an
 effort to enhance value for stockholders:
  Fall 2008: Discussions with NRG Energy
  Late 2008/Early 2009: Dynegy and its advisors solicited interest from 16 potential
 acquirers or merger partners. Three parties engaged in preliminary discussions
 regarding a possible acquisition or merger of equals. No transaction materialized
  Summer/Fall 2009: Dynegy successfully completed the restructuring of LS Power’s
 ownership and governance rights positions, including the disposition of certain assets
  Late 2009/Early 2010: Dynegy reviewed strategic alternatives with the benefit of its
 simplified capital structure and governance positions, including stand-alone plans and
 potential business combinations or sale transactions
  Early 2010: Dynegy re-engaged in discussions with one of the companies with which
 Dynegy previously held preliminary discussions, but no transaction materialized
Lengthy & Extensive Board Process
7
 
 

 
  Spring/Summer 2010: Re-engaged with NRG, focusing on a transaction involving a
 potential subsequent sale by NRG of Dynegy’s coal assets. NRG expressed concern
 regarding its ability to dispose of the coal assets on acceptable terms and advised
 Dynegy that it did not want to proceed with an acquisition of Dynegy
  Summer 2010: Blackstone contacted Dynegy to inquire about performing due diligence
 to purchase Dynegy in an all-cash acquisition. Blackstone and NRG discussed the
 acquisition by NRG of certain Dynegy gas-fired assets concurrent with the proposed
 Dynegy/Blackstone transaction
  The Dynegy Board negotiated extensively with Blackstone to reach an agreement
Lengthy & Extensive Board Process (cont’d)
8
Blackstone’s offer, with its substantial premium, was the culmination
of a lengthy and extensive process and provides the greatest value for
Dynegy stockholders
 
 

 
 Dynegy and its financial advisors actively solicited superior offers for 40 days following the
 Blackstone announcement
  Solicited 42 parties and the opportunity was widely publicized
  8 confidentiality agreements were signed and extensive data was provided
  No proposals were received
  Merger agreement provides for a break-up fee of only 0.5% of total enterprise value during the “Go-
 shop” process
 § Post “Go-shop,” break-up fee represents 1.1% of total enterprise value
 Dynegy’s “Go-shop” process was a broad, public process that the financial and industry
 communities at large were aware of, and any interested party had every opportunity to submit
 what it felt constituted a superior offer to the Blackstone offer
 Despite the broad solicitation of potentially interested parties, no party made a proposal, let
 alone a superior proposal, during the “Go-shop” process
“Go-Shop” Process to Maximize Value
Blackstone’s offer is the only offer received and provides immediate
stockholder value, while eliminating risk
 
 

 
Dynegy will Continue to Face Significant Challenges and Its
Ability to Operate Could be Attended by Significant Risks
 
 

 
11
The Proposed Transaction with Blackstone Eliminates
the Substantial Risks of a Stand-Alone Strategy
Dynegy believes that while long-term fundamentals remain intact...
Anticipated timing to realize the upside of the sector has been significantly delayed due
to the recession and other factors.
There are several market and company-specific challenges in the near- to medium-
term, many of which are beyond Dynegy’s control, that pose a significant risk to
reaching a recovery.
 Low and declining commodity prices and a weak economy
 Weak financial conditions/prospects compound significant refinancing risk
 High leverage and fixed costs in a low commodity price environment
 Regulatory and environmental risk and uncertainty
 $1.1 billion negative cash flow through 2015 (per Summary Financial Forecasts); would be $1.6
 billion using September 7, 2010 commodity curves
   This $500 million increase in projected negative cash flow represents ~92% of Dynegy’s
 current equity value
 
Absent significant improvements in BOTH commodity prices and the
financial condition of Dynegy, operating as a stand-alone company involves
substantial risk to Dynegy stockholders
 
 

 
12
12
12
12
Source: Summary Financial Forecast, Bloomberg / CSI market data as of October 20, 2010, NYMEX. Commodity price curves through 2012 based upon price curves as of the applicable date and commodity price assumptions after 2012
were based upon price curves as of the applicable date and adjusted based upon management’s fundamental outlook. 5-year Natural Gas Forward Average reflects average of monthly forwards for the calendar years 2010 - 2015 as of
the applicable date. DYN share prices represent closing prices for August 12, 2010, June 7, 2010, September 25, 2009, and September 26, 2008 , as applicable. Following the transaction announcement, Dynegy’s stock price has not
correlated to the price decline in natural gas.
 
12
 Forward natural gas prices have
 fallen consistently over the last
 two years
  Decline of 42% in the 2010-2015
 average forward curve since Sep
 2008
  Decline of 15% since Jun 7, 2010
  Decline of 7% since transaction
 announcement
 Dynegy’s stock price is highly
 correlated with natural gas prices
 that continue to fall
 Dynegy’s high leverage increases
 its risk profile, which increases its
 stock price sensitivity to natural
 gas prices
 
Natural Gas Price (Henry Hub $/mmbtu)
Conditions have continued to deteriorate since Blackstone’s offer.
We believe focusing on closing the transaction is in stockholders’ best interest
Commodity Prices Continue to Fall
 
 

 
13
Adjusted EBITDA Highly Sensitive to Changes
in Commodity Price Environment
 Individual sensitivities are not necessarily additive
 Assumes an unhedged portfolio and is not representative of any particular year
 As hedges are not 100% perfect, and exposure post-2011 is essentially unhedged,
 significant commodity price exposure still exists
  2012 is ~25% hedged
 Reflects potential impact of changes in commodity prices on Dynegy’s portfolio
 
+ / - $1 per MMBtu Change in Natural Gas (1)
+ / - $0.50 per MMBtu Change in Delivered PRB Coal (2)
Adjusted EBITDA Sensitivities - Unhedged Portfolio ($ mm)
Source: Management estimates (1) Assumes completely unhedged portfolio. (2) Assumes only Baldwin, Havana and Wood River in operation.
 
 
 

 
 Rising CDS levels imply that the credit markets have an
 increasingly negative view of Dynegy
  Rising CDS levels are negatively correlated with the falling stock
 price
  Moody’s downgraded Dynegy to Caa1 from B3 on October 1, 2010,
 and stated its financial profile looks extremely fragile, especially in
 2011 and 2012
  S&P’s issuer rating on Dynegy is B-
 Negative free cash flows forecasted through 2014 are likely to
 make it increasingly difficult and more expensive to refinance
 Dynegy’s credit facilities
  Not expected to fully replace current levels under credit facilities
  Increased all-in cost
 Likely to amend, extend or refinance the credit facilities in the
 next 6 months
  Forecast suggests an inability to comply with certain financial ratios
 in 2011
  Absent a waiver, the credit facilities would need to be amended,
 likely with less availability and at a higher cost
 Absent the Blackstone transaction, Dynegy will be forced to
 seek financing alternative that may include:
  Equity or equity-linked securities such as preferred or
 convertible securities
  Asset sales which will limit recovery optionality and increase
 leverage
  Other restructuring alternatives which could dilute current
 holders
  Combinations of these options
Limited Access to Capital Markets
14
1. Represents rate for any drawn amount
Relationship between DYN Share Price and CDS (YTD 2010)
Source: Bloomberg market data as of October 20, 2010
 
 

 
Regulatory & Environmental Risks and
Uncertainties
A number of air, water, solid waste and financial reform regulations are
pending and the outcome is unknown. In many cases, the expected
outcome would likely result in a significant and adverse impact to Dynegy
in terms of capital expenditures and operating costs
 Federal Regulation of Greenhouse Gases - Pending EPA regulation of CO2 emissions; future
 legislation also possible
 Coal Combustion Residuals Regulation by EPA - Decision by EPA on hazardous or non-
 hazardous determination forthcoming; could impose new restrictions on coal ash disposal
 Clean Air Transport Rules - Intended to mandate new controls for the reduction of SO2,
 Nox, mercury and other emissions
 Financial Reform Legislation - New requirements for over-the-counter derivatives
 transactions potentially including those used by Dynegy to support risk management
 practices
 California and New York Water Intake Policies - New regulations specific to power plant
 once-through-cooling practices
Significant regulatory and environmental uncertainties have impacted Dynegy’s
perceived value and will likely result in higher capital and operating costs
 
 

 
Negative Cash Flow as a Stand-Alone Company
16
 Dynegy forecasts $1.1 billion of cumulative cash outflows in future years due to:
  Low commodity prices
  Assumed environmental investments, excluding any contingencies for future legislation/regulation, that may occur
  Assumed impact of replacing below market coal transportation contracts that expire at the end of 2013
  Assumed negative impact to Adjusted EBITDA from 2013 to 2014 is ~$140 mm, which also reflects the assumed retirement of
 Hennepin and Vermillion
  High fixed costs, including items such as maintenance capital expenditures and interest expense, which will likely increase
Note: The above is a summary of the financial forecasts prepared by management of Dynegy in connection with Board’s consideration of the Blackstone transaction and is not intended as a GAAP
reconciliation; reconciliation located in the Appendix. For additional information about these summary financial forecasts, including the assumptions Dynegy management made in preparing them, see the
“Summary Financial Forecasts” section of the definitive proxy statement. (1) Forecasted values. (2) Commodity pricing assumptions through 2012 were based upon June 7, 2010 price curves and
commodity pricing assumptions after 2012 were based upon June 7, 2010 price curves and adjusted based upon management’s fundamental outlook, which included the assumption of asset retirements
by which Dynegy would benefit. (3) Adjusted EBITDA means EBITDA plus other adjustments related to mark-to-market changes.
Based on updated commodity curves as of September 7, 2010, forecasted
cumulative cash outflows would be $1.6 billion, reflecting further deterioration
 
 

 
Risks to Dynegy Have Increased Since the
Announcement of the Blackstone Transaction
 
 

 
 Natural gas prices have fallen ~7%(1)
 Prices hit a 52 week low of $3.36/MMBtu
Since Announcing the Transaction, the Risks
to Dynegy have only Increased
18
Unrealistic and unsubstantiated market speculation could significantly harm
long-term stockholder value if the Blackstone transaction is not completed
Natural Gas
Prices
Capital
Markets
Environmental
Regulation
Stock Price
 Financial markets remain very difficult and volatile for a highly leveraged company
  Dynegy CDS trading in a range from 1150 to 1200
 Moody’s has dropped Dynegy’s credit rating to Caa1
 No additional clarity provided on future environmental legislation
 Inaccurate rumors have circulated regarding Dynegy’s stand-alone alternatives,
 including speculation that Dynegy could sell assets and pay a dividend
 Two stockholders have filed a Schedule 13D and one of those stockholders has
 filed a preliminary proxy statement to solicit votes against the transaction
 Stock price has traded, on average, $0.35 per share, or $42 million above the offer
 price, representing less than 1% of enterprise value
(1) Based on the five year forward average from August 12 to October 20, 2010.
 
 

 
Future Financial Position Could be even Worse
than Forecasted as Markets Continue to Deteriorate
19
Pricing:
 Commodity prices continue to decline with absence of any recovery in sight 
  Summary Financial Forecasts based on June 7, 2010 pricing
  Dynegy’s forecasted negative cash flow of $1.1 billion from 2011-2015 should therefore worsen
  Average 2010E - 2015E natural gas prices are down 15% since June 7th natural gas price levels, which was the basis of Dynegy’s
 forecast
  Based on updated commodity curves as of September 7, 2010, forecasted negative cash flow would be $1.6 billion, reflecting a
 deterioration due to pricing declines (1)
Coal & Rail Transportation Contracts:
  If coal & rail transportation contracts are priced more in-line with today’s market pricing, there will be a negative impact on EBITDA
  Summary Financial Forecasts assumed rail transportation contracts are negotiated at rates more favorable than today’s market
 pricing, when the current below-market contracts expire at the end of 2013
  If coal & rail transportation contracts are priced more in-line with today’s market pricing, EBITDA would be reduced an average of
 $135 million in both 2014 and 2015 (2)
Asset Retirements:
 Asset retirements in the market may not materialize as assumed; therefore, supply may continue to outstrip demand
  Summary Financial Forecasts assumed industry asset retirements beginning in 2013, which resulted in reduced reserve margins.
 Lower reserve margins improve the economics of Dynegy’s portfolio, particularly in the Midwest
  If assumed industry asset retirements are delayed, current excess capacity will persist
  If asset retirements do not materialize, EBITDA would be reduced by an average of $85 million each year from 2013-2015
Based on current gas prices, coal & rail transportation pricing and supply &
demand factors, Dynegy’s forecasted negative cash flow could be materially worse
 (1) In updating the cash flow estimates related to the June 7, 2010  pricing, the only assumption changed pertained to pricing impacts on gross margin. All other assumptions are the same.
 (2) Combination of increase in absolute rail transportation pricing and less dispatch due to assets being less economic.
 
 

 
As a Public Company, issuing a Dividend is Not Permitted nor
Prudent and Executing a Sale of Assets would Not Create Value.
Instead, it would Add Significant Financial and Operational Risk to
Dynegy and Its Stockholders
 
 

 
 As a public company, Dynegy’s current financial condition simply would not support paying
 a dividend
  No meaningful dividend would be permitted by Dynegy’s credit agreement
  Current high fixed-cost structure, projected negative cash flow and substantial debt obligations
 make issuing a dividend imprudent at best
  Dividends would not be permitted as a public company under Delaware law given Dynegy’s
 current financial forecasts
  Given Dynegy’s currently projected negative cash flow forecasts through 2015, Dynegy will be
 required to raise new capital to satisfy its obligations and operate its business as a going concern
  Dynegy’s leverage is ~10 x, compared to peer group leverage of ~3.5 x-6.5 x
  Dynegy is rated Caa1 by Moody’s
Dynegy is Not in a Position to Pay a Dividend
to Stockholders…
21
No public company in Dynegy’s condition should issue a dividend
Note: Based on Dynegy’s current financial condition and forecasts, Dynegy does not believe it presently has sufficient statutory surplus to support a dividend.
 
 

 
22
Asset Sales Would Not Create Stockholder Value
& Would Result in a Loss of $1.9 B in Credit Facilities
 Dynegy’s Board previously considered various asset sale
 packages and concluded that the Blackstone transaction is
 the best alternative for stockholders
  An asset sale similar to Blackstone’s agreed sale of assets to NRG
 Energy is not permitted, and would result in a loss of Dynegy’s
 existing $1.9 billion credit facility
  Proceeds of the asset sale would be needed to support existing
 collateral needs AND help fund ~$1.5 billion of currently
 projected negative cash flows over the next five years
 § Lost cash flow from assets sold, net of interest expense savings, would
 result in additional negative cash flow of ~$365 million above the $1.1
 billion, for a total negative cash flow of $1.5 billion over the next five
 years
 § Assuming September pricing (instead of June pricing), the $1.5 billion of
 negative cash flow would be $1.8 billion over the next five years
  Any asset sales would increase Dynegy’s leverage and further
 limit future access to capital markets
  Sale of assets would also increase Dynegy’s exposure to Midwest
 coal market, especially in terms of regulatory and environmental
 uncertainties and sensitivity to delivered coal costs
Under current market conditions, any assets sold today would add
significant risk and worsen Dynegy’s financial condition
Note: Calculation of liquidity sources assumes asset sale proceeds from the sale of the same asset package, including sales price, that is being sold by Blackstone to NRG Energy. Liquidity cushion needed
for working capital, collateral spikes, etc. “Lost cash flow on assets sold (2011-2015), net of interest expense savings” includes ~$830 million of cash flow associated with the four assets that are being sold
by Blackstone to NRG Energy and ~$465 million consisting primarily of interest expense savings due to no credit facility in place and less debt. Cash outflow of $1.1 billion is based on the financial forecasts
prepared by management of Dynegy in connection with the Board’s consideration of the Blackstone transaction and is based on June 7, 2010, pricing. See appendix for additional information.
Recovery in commodity prices needs to be higher and sooner than
forecasted if a meaningful amount of assets are to be sold in today’s market
 
 

 
Significant Risk of Negative Impact on Dynegy’s
Stock Price if Transaction is not Completed
  Average peer stock prices have fallen ~2% since August
 12, implying a potential 65% loss in value compared to
 Blackstone’s offer
  Dynegy’s higher leverage tends to amplify changes in its
 equity value
  Natural gas prices have continued to fall and shale gas
 appears to be a long term driver of prices
  Given these trends, and assuming the correlation
 between natural gas prices and Dynegy’s stock price
 returns, Dynegy’s stock price could trade at or below
 the pre-announcement price if the Blackstone
 transaction is not completed
 Cumulative cash outflows included in the Summary
 Financial Forecasts will decrease the company’s financial
 flexibility and reduce its access to traditional capital
 markets
 The company expects to restructure the balance sheet to
 reduce debt and thereby reduce fixed costs, which actions
 would be dilutive to stockholders
  Issuance of equity, equity linked securities, debt for
 equity swaps or combination of these
If the Blackstone transaction does not close, the stock price could trade
down to or below the pre-announcement price of $2.78 per share and
stockholders could lose significant value
Indexed Stock Performance Since Transaction Announcement
(1) Merchant Power Peers reflect market-capitalization-weighted index which includes Calpine, Mirant, NRG
Energy and RRI Energy performance as of October 20, 2010.
 
 
Go-Shop ends
Two 13D filers were buying Dynegy Stock
 
 

 
Dynegy Clarifies Misconceptions being Propagated
by Seneca Capital
 
 

 
 Seneca contends that the $4.50 merger consideration does not
 adequately reflect the long-term value of the Company
  Seneca’s ownership position was less than 1% before the transaction
 was announced
  Seneca sold 700,000 shares at $2.93/share the day before the
 transaction was announced at $4.50/share, which is a 54% premium
  Clearly Seneca believed - within the last two and a half months - that
 $4.50 per share is adequate, as it sold shares of Dynegy below that
 price
  Seneca continues to be an active trader in the stock, as it sold 500,000
 shares just weeks before it came out against the transaction
 Seneca, “an experienced power-industry investor,” does not believe
 Blackstone’s offer “captures the long-term intrinsic value of Dynegy’s
 business,” which Seneca believes is positioned to capture benefits of a
 recovery in electricity prices
  The natural gas forward curve represents the best estimate of future
 gas prices
  Pricing has deteriorated further since the Board approved the
 transaction, increasing forecasted negative cash flows through 2015
 by nearly 50%
  Seneca had the ability to make an offer during the 40 day “Go-shop”
 period and did not submit an offer, let alone sign a confidentiality
 agreement
  Seneca could still submit an offer, subject to only a 1.1% break-up fee
 (based on total enterprise value)
 Seneca contends prices are at an unsustainable low point in the cycle
  As stated above, the natural gas forward curve represents the best
 estimate of future gas prices and prices continue to deteriorate
  Timing of any recovery is uncertain
  Can Seneca answer, “When exactly will the recovery be?”
Seneca’s Interests are NOT aligned with
All Dynegy Stockholders
Natural Gas Price (Henry Hub $/mmbtu)
24-months Ago (Sep-2008)
12-months Ago (Sep-2009)
Summary Financial Forecast
(07-Jun-2010)
1-Day Prior to Transaction
Announcement (12-Aug-2010)
Current (20-Oct-2010)
Source: Seneca 13D. Summary Financial Forecast, Bloomberg
/ CSI market data as of October 20, 2010, NYMEX.
 
Dynegy does not know all of Seneca’s
interests, including whether it owns
any Dynegy debt securities or credit
default swaps
Seneca may be willing to wager on a quick
recovery of natural gas prices; however,
Dynegy believes this strategy is reckless
 
 

 
 Seneca contends the merger consideration values Dynegy’s assets at 1/3 of replacement cost
  As an “experienced power-industry investor,” Seneca should be aware that investors in this industry do NOT usually employ percent-
 of-replacement value as a means of valuing a company
  The Blackstone offer of $4.50/share compares favorably when measured under traditional financial analysis techniques, such as
 comparable market transaction and discounted cash flow
Seneca’s Interests are NOT aligned with
All Dynegy Stockholders
(cont’d)
26
Relative Enterprise Value - YTD 2010
Blackstone
Transaction
Announcement
 Seneca contends Dynegy has had an unjustified underperformance in stock price compared to its peer group
  Dynegy has conducted a thorough process over the past
 TWO years
  Dynegy stock price is highly correlated with natural gas
  Dynegy has substantially higher leverage than peers,
 magnifying the sensitivity of stock price to declining
 natural gas prices
  Dynegy’s enterprise value has fallen less than Mirant and
 RRI Energy since the beginning of the year
  Prior to the transaction announcement, Dynegy’s
 enterprise value had fallen ~18% during 2010, as
 compared to declines of ~27% and 25% at Mirant and
 RRI Energy, respectively, over the same time period
  Seneca also fails to recognize that over the timeframe it
 referenced in its filings, Dynegy’s total enterprise value
 fell only 1.7% versus the average of Dynegy’s peer group,
 which fell 2.6%; Dynegy did not “underperform” its
 peers during this timeframe
Source: Public filings and Bloomberg market data as of October 20, 2010. Unadjusted enterprise values reflected (does not include Central Hudson lease at Dynegy, nor leases at Mirant and
RRI Energy)
 
 
 

 
 Seneca contends Dynegy could pursue a sale of the four natural gas-fired assets proposed to
 be sold to NRG Energy
  Significant asset sales (using September pricing) would result in a loss of Dynegy’s existing $1.9 billion credit facility
  If Dynegy executed the NRG Energy asset sale itself, Dynegy’s projected negative cash flow of $1.1 billion (using June
 pricing) would increase by ~$400 million to $1.5 billion over the next five years
  Assuming September pricing (instead of June pricing), the $1.5 billion of negative cash flow would be $1.8 billion over
 the next five years
  Seneca has NOT offered Dynegy stockholders any go-forward plan that recognizes real and pressing liquidity issues
  “To the extent that the transactions with Blackstone and NRG are not completed, downward rating pressure at DHI
 and Dynegy will continue to exist given the weak financial prospects for the company over the next few years.” -
 
Moody’s
 Seneca believes Dynegy would not require incremental issuances of equity or equity-linked
 securities
  Using June commodity curves, projected negative cash flow over the next five years is $1.1 billion, which assumes
 § Below market rail transportation pricing
 § Industry asset retirements take place
 § Does not include future environmental investments; current environmental forecast primarily relates to required Illinois Consent
 Decree work
  Using September commodity curves, projected negative cash flow increases by ~$500 million or nearly 50% to $1.6
 billion over the next five years, exacerbating liquidity needs and requiring additional funding
27
Seneca’s Interests are NOT aligned with
All Dynegy Stockholders
(cont’d)
 
 

 
 Seneca contends management has a conflict of interest in advocating for the transaction
  There is NO conflict of interest between management and its stockholders
  The Board - NOT management - approved the Blackstone transaction
  Management has no arrangement in place to continue with Dynegy if it is acquired by Blackstone post-closing
  Dynegy’s management has standard change in control plans that were approved by the Board and have been in place
 and publicly disclosed for several years; plans are “double trigger” for severance purposes and are consistent with
 similarly situated public companies’ plans
  As described in the definitive proxy statement, Dynegy's Board reviewed the potential payments under these plans
 and concluded they were reasonable and would not affect the advice from, or work performed by, management
 Seneca contends that a termination fee of $50 million is excessive, implying it hinders another
 bidder from making an offer for Dynegy
  Based on total enterprise value that takes into account Dynegy’s outstanding debt, which is how a potential acquirer
 would value Dynegy given its substantial leverage, the $50 million post-“go shop” termination fee translates to 1.1% of
 total enterprise value, which would not be a hindrance for a potential party interested in acquiring Dynegy
  Dynegy has conducted a thorough solicitation of interest over the past TWO years, including a 40 day “go-shop” period
  During the “Go-shop” period, the termination fee represented only 0.5% of total enterprise value
  Despite the broad solicitation of potentially interested parties, no party made a proposal, let alone an offer that was
 superior to Blackstone’s offer
28
Seneca’s Interests are NOT aligned with
All Dynegy Stockholders
(cont’d)
 
 

 
Appendix
 
 

 
 
Image
                                                                    30
 
 

 
31
 Total balance sheet debt as of 6/30/10 is ~$4.8B
 Undrawn $1.08 billion revolving credit facility due 2012
 $850 million due in 2013 is a synthetic letter of credit facility supported by $850 million of
 restricted cash
 Excludes $633 million related to Central Hudson lease
Debt Maturity Profile (as of 6/30/10, $MM)
$998
 
 

 
32


Capital Structure
Debt & Other Obligations as of 6/30/2010
Dynegy Power Corp.
 Central Hudson(2)   $633
Dynegy Holdings Inc.
$1,080 Million Revolver(1)  $0
Term L/C Facility $850
Tranche B Term $68
Sr. Unsec. Notes/Debentures  $3,450
Sub.Cap.Inc.Sec (“SKIS”) $200
Dynegy Inc.
 Senior Debentures $257
Sithe Energies
TOTALS  ($ Million)
6/30/2010
Secured
$918
Secured Non-Recourse
$257
Unsecured
$3,650
Lease Obligation
$633
($ Million)
6/30/2010
Total Obligations
$5,458
 Less: Cash & short-term investments
501
 Less: Restricted cash(3)
850
Net Debt & Other Obligations
$4,107
 Less: Central Hudson Lease Obligation
633
Net Debt
$3,474
(1) Represents drawn amounts under the revolver; actual amount of revolver was $1.08 Billion as of 6/30/2010;
(2) Represents PV (10%) of future lease payments. Central Hudson lease payments are unsecured obligations of
Dynegy Inc., but are a secured obligation of an unrelated third party (“lessor”) under the lease. DHI has
guaranteed the lease payments on a senior unsecured basis;
(3) Restricted cash includes $850MM related to the
Synthetic Letter of Credit facility
 
 

 
33
Collateral Excluding Clearing Settlements
($MM)
3/31/2010
 
6/30/2010
 
8/2/2010
Generation
$ 421
 
$ 459
 
$ 481
Other
 103
 
88
 
88
Total
$ 524
 
$ 547
 
$ 569
 
 
 
 
 
 
Cash and short-term investments
$ 155
 
$ 112
 
$ 108
LCs
369
 
435
 
461
Total
$ 524
 
$ 547
 
$ 569
 Changes in LC’s from 3/31/10 to 6/30/10 due to initial margin posting to futures clearing manager and higher commodity prices
 Changes in cash and short-term investments due to LC posting to futures clearing manager utilized in lieu of cash
 Other collateral primarily includes Sithe Debt Service Reserve of $83 million
  Change in other collateral from 3/31/10 to 6/30/10 due to the drawing of a $15 million letter of credit supporting
 Dynegy’s contingent equity commitment associated with Plum Point Energy Associates, LLC (PPEA)
 In addition to cash and LC’s posted as collateral, we have granted additional permitted first priority liens on the assets currently
 subject to first priority liens under our Credit Facility. The fair value collateralized by first priority liens, netted by counterparty,
 includes liabilities of $35 million, $60 million and $60
million at 3/31/10, 6/30/10 and 8/2/10, respectively
 
 

 
34
From 3/31/10 to 6/30/10:
 Decrease in cash and short-term
 investments was primarily attributable
 to working capital requirements
 Decreased availability is mostly
 attributable to increased collateral
 requirements due to higher
 commodity prices
 Currently there is no availability under
 the $150MM contingent letter of
 credit facility
  Under terms of this facility, up to
 $150 million of capacity can become
 available based on increases in spark
 spreads and power prices for 2012
 positions
Liquidity
 
 

 
 EBITDA Measures.  We believe that EBITDA and Adjusted EBITDA provide a meaningful representation of our operating performance.  We
 consider EBITDA as a way to measure financial performance on an ongoing basis.  Adjusted EBITDA is meant to reflect the true operating
 performance of our power generation fleet; consequently, it excludes the impact of mark-to-market accounting and other items that
 could be considered “non-operating” or “non-core” in nature, and includes the contributions of those plants classified as discontinued
 operations.  Because EBITDA and Adjusted EBITDA are two of the financial measures that management uses to allocate resources,
 determine Dynegy’s ability to fund capital expenditures, assess performance against its peers and evaluate overall financial performance,
 we believe they provide useful information for our investors.  In addition, many analysts, fund managers and other stakeholders that
 communicate with us typically request our financial results in an EBITDA and Adjusted EBITDA format.
  “EBITDA” - We define “EBITDA” as earnings (loss) before interest, taxes, depreciation and amortization.
  “Adjusted EBITDA” - We define “Adjusted EBITDA” as EBITDA adjusted to exclude (1) gains or losses on the sale of assets, (2) the impacts of mark-to-market
 changes and (3) impairment charges.
  “Adjusted EBITDAR” - We define “Adjusted EBITDAR” as Adjusted EBITDA adjusted to exclude operating lease commitments.
 Debt Measures. We believe that our debt measures are useful because we consider these measures as a way to re-evaluate our progress
 toward our strategic corporate objective of reducing our overall indebtedness. In addition, many analysts and investors use these
 measures for valuation analysis purposes. The most directly comparable GAAP financial measure to the below measures is GAAP debt.
  “Net Debt” - We define “Net Debt” as total GAAP debt less cash and cash equivalents and restricted cash. Restricted cash in this case consists only of collateral
 posted for the credit facility at the end of each period, and the Sithe debt reserve, at the end of each period where applicable.
  “Net Debt and Other Obligations” or “Adjusted Net Debt”- We define “Net Debt and Other Obligations” or “Adjusted Net Debt” as total GAAP debt plus
 certain operating lease commitments less cash and cash equivalents and restricted cash. Restricted cash in this case consists only of collateral posted for the
 credit facility at the end of each period.
  “Adjusted Debt” - We define “Adjusted Debt” as total GAAP debt plus certain operating lease commitments.
 Enterprise Value - We believe enterprise value is a common value used when evaluating transactions and also in comparing current and
 future value to peer companies.
  “Enterprise Value” - We define “Enterprise Value” as Adjusted Net Debt plus an implied equity value, which is calculated based on the transaction offer price.
Definitions
35
 
 

 
Reg G Reconciliation
36
Note: The above is a summary of the financial forecasts prepared by management of Dynegy in connection with Board’s consideration of the Blackstone transaction. For additional information about
these summary financial forecasts, including the assumptions Dynegy management made in preparing them, see the “Summary Financial Forecasts” section of the definitive proxy statement. (1)
Forecasted values. (2) Commodity pricing assumptions through 2012 were based upon June 7, 2010 price curves and commodity pricing assumptions after 2012 were based upon June 7, 2010 price
curves and adjusted based upon management’s fundamental outlook, which included the assumption of asset retirements by which Dynegy would benefit. (3) Adjusted EBITDA means EBITDA plus
other adjustments related to mark-to-market changes.