Troubled Dynegy energy marketer ends trading business; executive resigns; layoffs coming

Wednesday, October 16th 2002, 12:00 am

By: News On 6

HOUSTON (AP) _ Dynegy Inc., damaged by the fallout from the Enron scandal and the California power crisis, announced Wednesday that it is getting out of the energy trading business.

In addition, the chief operating officer is resigning and significant layoffs are coming, the company said.

Dynegy is still in the business of power generation, natural gas liquids, regulated energy delivery and communications.

Dynegy said dumping the cash-hungry trading business will ease pressure to borrow money. The company faced the need to renew $1.3 billion in credit over the next several months, even as its credit rating fell to below investment grade.

Investor confidence in Dynegy and other energy trading companies withered after Enron collapsed last year. At one point, Dynegy emerged as Enron's rescuer, but abandoned an $8.4 billion buyout of its former rival.

California has also accused Dynegy and other large power generators of manipulating prices during the energy crisis that caused rolling blackouts.

Those woes and questions about possible bogus trades led company founder and chief executive Chuck Watson to resign in May.

Dynegy would not specify the timing of the layoffs or the number of employees affected, saying only that it would announce details in the near future. Dynegy has 5,500 employees worldwide, with 1,600 at its Houston headquarters.

Raymond James analyst Jon Kyle Cartwright said Dynegy's energy trading ``has all but evaporated.''

``It's a classic survival strategy _ try to sell what's not working,'' he said.