28 May 2002 – Troubled US energy company Dynegy today announced the resignation of Chairman and CEO Chuck Watson.
Last week Dynegy was issued with a subpoena from the U.S. Attorney’s Office in Houston to add to those from the SEC and FERC requesting documents relating to the company’s transactions, including its buy and sell trades with CMS Energy and its long-term natural gas supply transaction referred to as “Project Alpha.”
The move follows the abrupt resignation of CMS Energy Corp.’s Chairman William T. McCormick Jr. Friday in the wake of a controversy concerning $4.4bn in questionable electricity trades that inflated the utility’s trading volume.
The Dynegy board has appointed Glenn F. Tilton, Vice Chairman of ChevronTexaco and a Dynegy Director, as interim Chairman. Board member Daniel L. Dienstbier, who is President of Northern Natural Gas (NNG), has been appointed interim Chief Executive Officer. The new officers assume their responsibilities effective immediately. Steve Bergstrom is continuing with the Company as President and Chief Operating Officer. Otis Winters will continue to serve as lead director of the Board.
Mr. Tilton said, “Chuck Watson played a critical role in the creation of the merchant energy business and in the emergence of Dynegy as a major force in the global energy industry. Under his leadership, the Company evolved from a small enterprise into a top producer and marketer of energy.”
Mr. Watson said, “For 17 years, I have endeavoured to build value for all of our stakeholders. Dynegy combines strategic assets, solid management and proven strategies to navigate through the immediate challenges and meet the opportunities ahead. As a shareholder, I fully support the combination of new and existing leadership at this stage of the Company’s evolution.”
Mr. Tilton, continued, “Today, Dynegy is in an industry that is changing more rapidly and profoundly than ever before. That change creates opportunities, as well as a new set of challenges that must be addressed. In particular, events of the past year have hurt the credibility of this sector and eroded investor confidence. As a result, the changes in the merchant energy sector have been extensive. Fortunately, Dynegy has a solid base of assets and strong business fundamentals.”
Mr. Dienstbier said, “I believe that we can move quickly and successfully to address the issues Dynegy is now confronting. Glenn and I will work closely together with Steve Bergstrom and the other talented and dedicated people here toward resolving every issue facing the Company, realizing the value of Dynegy and building for the future. We are committed to taking the actions necessary to demonstrate to our investors, lenders and trading partners the underlying strengths of this Company and its full potential.”
Mr. Bergstrom said, “All of us at Dynegy are grateful for Chuck Watson’s vision and leadership in guiding the Company to tremendous success. The new structure announced today will allow our team to focus fully on the key business and operating issues before us. We appreciate the confidence of the Board and ChevronTexaco in our ability to move the Company forward in this changed environment.”
Mr. Winters said, “In this environment, Dynegy must convince shareholders and lenders that the company has the best strategy in place to resolve the issues it faces, while generating new momentum in its businesses. We must move ahead squarely focused on three objectives: restore the Company’s credibility; build on the strengths of our energy producing assets; and solidify our achievements in energy marketing.”
The Dynegy Board of Directors plans to conduct a comprehensive search to fill the Chairman and CEO positions with a leader who has the right combination of experience and skills to address all the opportunities and challenges facing the Company as it moves forward.
The company said it intends to cooperate fully with the U.S. Attorney’s Office, as it has with other similar requests, in its investigation of these matters and remains committed to resolving this and other issues as quickly as possible.
CMS Energy has appointed an interim chairman and CEO Kenneth Whipple who said his first priority will be to restore confidence in the company with Wall Street and shareholders. Whipple, 67, a former executive vice president with Ford Motor Co., said he plans to visit Wall Street banking firms soon to assure them that the energy company is on a solid road to recovery.