has reported to adding energy stock, Dynegy Inc. (
) to its portfolio as of Nov. 2, according to
GuruFocus Real Time Picks
, about a month after the company emerged from Chapter 11
bankruptcy in October.
This transaction places Marks as 7.23 percent owner of Dynergy.
Dynegy Inc. is a company that generates wholesale power to energy
companies, operating in six U.S. states in the Midwest, the
Northeast and the West coast.
As the company recuperates from Chapter 11, Dynegy's has acquired
a revamped balance sheet that will accommodate post-emergence
operations, with about $800 million in liquidity in the form of
cash; part of this cash will be used to eliminate the $4 billion
debt as part of it Chapter 11 process, which gives Dynegy "one of
the strongest balance sheets in the independent power producers
sector," according to a news release.
Dynegy president and chief executive officer, Robert C. Flexon,
said the following statement in the release: "Dynegy is well
positioned for success and we are committed to creating value for
our investors. With the Chapter 11 process behind us, our focus
is exclusively on executing our forward strategy. With our
balanced asset portfolio, along with operational, commercial and
financial discipline and our dedicated workforce, we are
confident that we will deliver favorable results in the current
as well as future market environments."
Last week, Dynegy announced its third quarter fiscal report, its
first quarterly report since its emergence, as well as an update
on its debt repayment.
So far, Dynegy has announced to repay $325 million to its lenders
to repay outstanding loans for two of its operations, while it
awaits an update to an auction process for the sale of one of its
assets in the northeast.
Below is an excerpt from its third quarter fiscal report:
"Dynegy Inc.reported third quarter 2012 Adjusted EBITDA for
the Coal and Gas segments of $50 million compared to $102 million
for the same period in 2011. Lower realized prices for the Coal
segment, lower revenues from the termination of certain
California contracts, and the settlement of legacy financial
positions reduced Adjusted EBITDA for the Coal and Gas Segment by
$89 million. Partially offsetting these items were a $12 million
improvement in Coal and Gas segment general and administrative
and operating and maintenance expenses, a $14 million benefit
related to lower option premium expenses, and a $10 million
positive adjustment for non-cash amortization related to the Gas
segment's Independence contract. The operating loss for Dynegy's
Coal and Gas segments was $(1) million for the third quarter of
2012 compared to operating income of $40 million for the same
period in 2011. The net loss for Dynegy's consolidated operations
was $(41) million for the third quarter of 2012 compared to a net
loss of $(129) million for the same period in 2011."
Dynegy Inc. is currently trading at $18.10 per share.
As new owner, Marks currently holds 7.2 million shares of Dynegy.
The recent transaction impacted his portfolio by 2.5 percent.
Marks currently has 177 stocks in his portfolio as of the end of
the second quarter, with a total value of $5.28 billion. View
Howard Marks' current portfolio
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