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Dynegy CFO Steps Down Amid Job Cuts

June 19, 2002

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HOUSTON (AP) _ Less than a month after Dynegy Inc.’s chief executive stepped down as the company’s stock price plummeted amid questions surrounding energy trades, the company’s chief financial officer has followed his former boss out the door. The company also said it is cutting 340 jobs.

Less than a month after Dynegy Inc.’s chief executive stepped down as the company’s stock price plummeted amid questions surrounding energy trades, the company’s chief financial officer has followed his former boss out the door. The company also said it is cutting 340 jobs.

Rob Doty stepped down Wednesday as Houston-based Dynegy Inc. CFO and executive vice president. Hours later the company announced it would cut 340 employees from its work force.

The company said had appointed the president of its energy marketing division, Louis Dorey, to replace Doty.

``I think it is a natural transition in motion and a changing of the guard that comes when you have a new, different management style,″ Sanders Morris Harris analyst John Olson said. ``To my knowledge, there are no issues or agendas that were in conflict here.″

Dynegy said the move will allow it go improve its financial position, strengthen its balance sheet and improve its credit profile. The layoffs also are part of the company’s plan to restructure.

``Our business environment calls for a different set of skills as we address the changes in our industry,″ said Dynegy’s interim chief executive, Dan Dienstbier. ``Louis has a unique combination of commercial and financial knowledge and experience that will serve Dynegy and its stakeholders well.″

Besides being in charge of the company’s wholesale power and gas marketing and origination businesses, Dorey worked as an executive vice president of strategy and planning for Dynegy Marketing and Trade. He joined the company in 1997.

A majority of the Wednesday’s layoffs were in Houston, where 300 employees received pink slips. The job cuts, which included 50 employees from the company’s trading business, should result in $35 million in annual savings, the company said.

``Dynegy has always been an efficient organization, especially from a work force standpoint,″ Dienstbier said. ``Nevertheless, the new business environment in the merchant energy sector requires that we pare down certain businesses, such as power trading, and adjust accordingly in order to position the company for long-term, sustainable profitability.″

Olson said other companies have let go their entire energy trading work force, so he was pleased to hear Dynegy was only cutting 50 people.

``That’s a light reduction,″ he said.

The move sent shares of Dynegy tumbling, but a Dynegy executive said it would allow the Houston-based company to improve its financial position, strengthen its balance sheet and improve its credit profile.

``Our business environment calls for a different set of skills as we address the changes in our industry,″ said Dynegy’s interim chief executive, Dan Dienstbier. ``Louis has a unique combination of commercial and financial knowledge and experience that will serve Dynegy and its stakeholders well.″

Shares of Dynegy fell 99 cents, or 11 percent, to $7.71 on the New York Stock Exchange

Besides being in charge of the company’s wholesale power and gas marketing and origination businesses, Dorey worked as an executive vice president of strategy and planning for Dynegy Marketing and Trade. He joined the company in 1997.

Chuck Watson, Dynegy’s former CEO and co-founder, stepped down on May 28 as the company’s stock price spiraled downward amid questions of possible sham trades.

Turmoil has spread through the energy-trading industry since Enron Corp. collapsed into bankruptcy last year. Dynegy tried to buy Enron last fall for $9 billion but abandoned the deal as Enron’s tangle of partnerships began to unravel, although Dynegy claimed rights to Enron’s most valuable asset, the Northern Natural Gas pipeline, as compensation for $1.5 billion it pumped into the failing rival.

Dynegy disclosed last month that the Securities and Exchange Commission was looking into so-called round-trip trades made by the company last fall. Dynegy said it conducted the trades to test its system and that they didn’t yield any profits for Dynegy or its trading partner.

The SEC office is also investigating one of Dynegy’s natural gas contracts. That contract provided an $80 million tax benefit in 2001 and resulted in about $300 million in net cash flow during 2001.

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On the Net:

http://www.dynegy.com

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