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Chevron Sells Dynegy Stake

Chevron U.S.A. will part with 96.9 million Class A Dynegy shares.
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A unit of oil giant

Chevron

(CVX) - Get Chevron Corporation Report

plans to sell what amounts to a roughly 12% stake in electricity company

Dynegy

(DYN)

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through a public offering of stock.

Chevron U.S.A. will part with 96.9 million Class A Dynegy shares in a sale that will be managed by Goldman Sachs. Dynegy said that because the shares are already outstanding, the transaction won't be dilutive to other stockholders.

At Dynegy's $10.17 last price, Chevron would collect around $985 million. Dynegy won't receive any of the proceeds from the offering, which is expected to close by May 25.

When Dynegy completed its combination with LS Power in April, Chevron's equity in the company was converted to Class A stock, and the company dropped its holdings to around 12% from 20%. Chevron U.S.A. had acquired a significant equity ownership interest in Dynegy in 1996 when it contributed most of its midstream natural gas assets to Dynegy in exchange for common and preferred stock.

In connection with the transaction, Dynegy began marketing Chevron U.S.A.'s natural gas. Dynegy has since exited that business to focus on power generation.

Shares of Dynegy were losing 2% to $9.97 in after-hours trading Monday. Chevron was up 0.2% at $82.99.