Skip to main content

Updated from 12:19 a.m. EDT

HOUSTON (

TheStreet

) --

Dynegy

(DYN)

confirmed Monday it was selling five peaking and three combined-cycle generation assets, as well as its interest in a project under construction in Texas to

LS Power Associates

, its one-time development partner.

Under the terms of the deal, Dynegy will receive $1.025 billion in cash and 245 million of its Class B shares from LS Power. LS Power also will receive $235 million principal amount of 7.5% senior unsecured notes due 2015. The transaction is expected to close in the second half of 2009.

News of the deal was first reported by the

Scroll to Continue

TheStreet Recommends

Wall Street Journal

on Monday. The deal unwinds a joint venture formed in 2006 that was supposed to create the country's largest new developer of coal-fired power plants, the

Journal

notes.

Dynegy also said it would begin next year a program to cut $400 million to $450 milion over four years, through reduced capital expenditures and other cost cuts.

Based on these moves, Dynegy said in a statement Monday it expects pro forma 2010 adjusted earnings before interest, taxes, depreciation and amortization of $425 million to $550 million, and operating income ranging from a loss of $55 million to a gain of $70 million.

The energy company separately reported a second-quarter loss of $345 million, or 41 cents a share, compared with a year-earlier loss of $272 million, or 32 cents a share.

The wider loss in the second quarter was "primarily driven by asset impairment charges and lower realized power prices period-over-period, partially offset by lower mark-to-market losses," Dynegy said.

Revenue in the quarter rose 53% to $493 million.

-- Reported by Joseph Woelfel in New York

.