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EXHIBIT 99.1
Aug. 2, 2000
Analyst: Margaret Nollen
Dynegy Inc.
(713) 767-8707
Media: John Sousa Gabriella Tobar Martin Ratia
Dynegy Inc. Extant, Inc. Telstra Corp.
(713) 507-3936 (312) 214-1000 +61 2 9298 5058
Ext. 117 [email protected]
DYNEGY TO PURCHASE WHOLESALE COMMUNICATIONS PROVIDER EXTANT
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. Launches Dynegy's Communications Platform
. Names Extant Chairman Larry McLernon CEO and President of Dynegy
Global Communications
. Establishes Virtual Vehicle for Future Bandwidth Marketing and Trading
Capabilities
. Leverages Dynegy's Core Capabilities in Commodity Marketing, Trading
and Risk Management
HOUSTON, TEXAS AND AURORA, COLO. (Aug. 2, 2000) - Dynegy Inc. (NYSE: DYN), one
of the country's leading energy merchants, today announced it has signed a
letter of intent to acquire Extant, Inc., a privately held, Colorado-based
communications solutions company providing centralized clearinghouse services,
OSS integration and network expansion capabilities to communications service
providers. The purchase is expected to close by the end of the third quarter
2000.
Extant's primary business is the development of connectivity software and a
state-of-the-art network. The company's advanced technology platform provides
communications businesses and information providers with connectivity solutions
and broadband capacity, enabling them to exchange information and provide voice,
data and video services to their customers. Extant is
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DYNEGY TO PURCHASE WHOLESALE COMMUNICATIONS PROVIDER EXTANT
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one of the first companies in the communications industry to deploy an optical
switched mesh network. This allows service providers to cross-connect high-speed
optical signals, creating more robust hubs, faster, more reliable service for
wholesale customers and more efficient use of fiber.
Under the terms of the purchase agreement, which were unanimously approved
by each company's board of directors, Extant is valued at $188 million and
Dynegy's net investment is $60 million in cash and 1.25 million shares of Dynegy
Inc. common stock. Following the transaction, Dynegy will establish Dynegy
Global Communications, a new division that, in addition to pursuing other
communications opportunities, will own 80 percent of a limited partnership to be
called Dynegy Connect. Telstra Corporation Ltd., Australia's premier
telecommunications and information services company and a leading player in the
Asia-Pacific region, currently owns a 17 percent interest in Extant and has
finalized a memorandum of understanding with Dynegy to own a 20 percent interest
in Dynegy Connect.
Dynegy Connect will incur approximately $400 million to complete
development and implementation of the network and connectivity solution. Dynegy
Connect will deploy a smart-build strategy utilizing leases, alliances,
ownership or control over existing fiber routes.
Extant Chairman Larry McLernon, an industry leader with 35 years of
experience in communications, will become executive vice president of Dynegy
Inc. and chief executive officer and president of the Dynegy Global
Communications division. Extant's 200 employees will report up to McLernon and
remain in their current locations.
"This transaction enables Dynegy to execute its long-term strategy to
become a leader in the broadband marketing and trading arena, while remaining
focused on the tremendous opportunities in energy convergence," said Chuck
Watson, chairman and chief executive officer of Dynegy Inc. "Our approach to
entering and developing a communications business will be to utilize the
marketing and trading skillset that has made us a leader in power and gas. We
will leverage physical asset ownership and control with our marketing, trading
and risk management capabilities to extract value from the market.
"This acquisition launches Dynegy into the communications marketplace
through the addition of management expertise, market intelligence, network
access and control, and sophisticated operating and connectivity software
systems," added Watson. "Extant, with its
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DYNEGY TO PURCHASE WHOLESALE COMMUNICATIONS PROVIDER EXTANT
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experienced leadership, solid back office support and proven track record of
delivering forward-thinking connectivity solutions and clearinghouse offerings
to customers, is the ideal platform from which to grow Dynegy's communications
presence."
Extant's previously announced plans to own and/or control a broadband data
communications network and establish an Internet-based independent clearinghouse
service between competitive and incumbent local exchange carriers in major U.S.
markets will continue as the major focus of Dynegy Connect. The Extant network
has been deployed in 28 U.S. cities. Forty cities are expected to be
operational by year-end 2000, with more than 100 cities to be fully deployed by
2003. Upon completion, the joint venture network will consist of approximately
80,000 fiber miles and 20,000 route miles.
"This strategic combination will enable our companies to draw upon the
experience, commercial acumen and resources each of us have established in our
respective businesses," said Larry McLernon, executive vice president of Dynegy
Inc. and chief executive officer and president of Dynegy Global Communications.
"Dynegy combines the agility of a start-up company and an entrepreneurial spirit
with financial strength and established market leadership."
The managing director of Telstra's global wholesale business, John Hibbard,
said Dynegy's acquisition of Extant validated its investment. "We saw the value
in Extant's unique data clearinghouse operation, which compelled us to invest in
the business," he said. "We are now delighted to be part of Dynegy Connect's
plans for expansion as they are closely aligned with our own ambitions for
regional and global connectivity."
Merrill Lynch acted as financial advisor and provided a fairness opinion to
Dynegy related to this transaction.
For more information about Dynegy or the Extant acquisition, please visit
www.dynegy.com and click on "Newsroom."
About Dynegy
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Dynegy Inc. is one of the country's leading marketers of energy products and
services. Through its leadership position in energy marketing, power generation,
transportation, gathering and processing, the company provides energy solutions
to its customers primarily in North America, the United Kingdom and Europe.
Dynegy's principal businesses - energy convergence, midstream natural gas
liquids and transmission and distribution - operate through the following core
segments:
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DYNEGY TO PURCHASE WHOLESALE COMMUNICATIONS PROVIDER EXTANT
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. Dynegy Marketing and Trade (DMT) focuses on energy convergence - the
marketing, trading and arbitrage opportunities that exist among power,
natural gas and coal that can be enhanced by the control and
optimization of related physical assets.
. Dynegy Energy Services (DES) is engaged in the marketing of energy
supply and management services through strategic alliances with
regional market leaders and direct marketing to industrial and
commercial customers.
. Dynegy's natural gas liquids subsidiary, Dynegy Midstream Services
(DMS), includes North American midstream liquids operations and
worldwide natural gas liquids transportation and marketing operations.
. Dynegy's transmission and distribution subsidiary, Illinois Power
(IP), is based in Decatur, Ill. IP serves more than 650,000 natural
gas and electric utility customers in a 15,000-square-mile area across
Illinois.
About Extant
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Extant is a national facility based clearinghouse provider for CLECS, ICPs, and
other related service providers in the wholesale marketplace. Extant
facilitates a global footprint for regional and super-regional players by
providing a single source for administrating end-to-end termination with every
other local service provider in the Extant Community. A unique clearinghouse
capability allows for on-line traffic arbitrage and settlement of charges
between the Community members through a single all encompassing statement.
Extant's value proposition starts with providing end-to-end, nationwide data
termination to an unlimited number of local service providers. Then, Extant
combines the power of their clearinghouse and settlement capabilities with a
unique eBusiness platform to support their latest "next generation" network to
drive new data revenues to each of the Community members, instead of competing
with them.
About Telstra
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Telstra is Australia's premier communications carrier and is a world-class fully
integrated, full service provider across wireline, ADSL, HFC, satellite and
digital wireless networks and platforms. It is Australia's leading ISP, has the
most highly accessed family of Internet portals and sites and provides
entertainment and multimedia content over its broadband network and through its
Pay-TV joint venture.
A top tier global carrier with fiscal 1998/99 revenue of A$18.2 billion (approx
US$11.6 billion), Telstra placed 62nd in Business Week's 1999 Global 1000
ranking of the world's most valuable companies by market value. The Wall Street
Journal ranked Telstra in the top 50 of "The World's 100 largest Public
Companies" in 1999.
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At the XXVII Olympiad, to be hosted by Sydney in the year 2000, Telstra will
provide The Millennium Network(TM), a comprehensive telecommunications
infrastructure that will allow the world's media to deliver the Games to an
estimated global viewing audience of up to 4 billion people. It will comprise
up to 30,000 phone and fax lines, as well as the capacity for 1,000,000 mobile
communications services, communications for 100,000 official personnel, Cable TV
infrastructure, CENTREX and Intelligent Network features, video/audio services,
data services and will utilise over 4,500 km of optic fibre cable. Linking into
Telstra's national network, the infrastructure used to convey the Games to the
world will use enough optic fibre cable to circle the planet a staggering 37
times!
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