ENERGY COMPANY CEO of Dynegy views assets as rebound key

The company abandoned the energy trading business in the wake of the Enron scandal.
HOUSTON (AP) -- Two weeks into his new job as Dynegy Inc.'s chief executive, Bruce Williamson is focusing on assets as the key to restoring the troubled energy merchant -- which to keep, which to sell and what combination offers the best route toward ensuring the company's future.
"What Dynegy can become is an asset-based business," Williamson, 43, said in an interview with The Associated Press.
The strategy
"We need to generate cash, which we continue to do. We need to sell off the noncore assets. Then we need to pay down debt. When we pay down debt, we get to a sustainable capital structure. And then this business just takes off and goes on forward," he said.
But Dynegy faces enormous hurdles, with many analysts questioning its prospects for survival.
The company's stock has hovered below $1 for weeks, and last week its largest shareholder, ChevronTexaco Corp., announced it would write off most of its Dynegy investment. Shares closed Friday down 3 cents to 79 cents on the New York Stock Exchange.
The company has about $1.3 billion in debt due next year, and it is looking for ways to renegotiate.
A year ago Houston-based Dynegy stepped up to buy Enron Corp., its larger, failing rival. But Dynegy walked away from the $8 billion deal and Enron went bankrupt amid a wave of accounting scandals that have tainted the entire industry. Since then, Dynegy and other energy merchants have faced fleeing investors, credit downgrades and increased regulatory scrutiny.
This year Dynegy forced out top managers, fired traders and announced plans to lay off hundreds of workers as it abandoned the energy trading business.
On Friday, El Paso Corp. became the third energy merchant this year, behind Dynegy and Kansas City-based Aquila Inc., to announce plans to abandon trading. Enron gave its trading business to UBS Warburg in January in exchange for a third of future profits.
Traditional business
Instead of trading, Dynegy will focus on its traditional energy businesses, which include coal and natural gas-fired power plants, and Illinois Power, which has about 650,000 gas and electricity customers across that state.
"It's an industrial business model, and that's our business model," Williamson said. "What ultimately matters is, did you produce and sell energy and deliver energy in a low-cost manner, and how did you manage your business? That's what this business is."
Williamson said the utilities, coupled with sound cash management and asset sales, will enable Dynegy to ride out the weak economy. Among the properties Dynegy has been shopping around is Rough, a provider of natural gas storage in the United Kingdom and used by about half of U.S. natural gas shippers. Dynegy paid $590 million for the storage business last year.
His background
Williamson, a Montana native, was assistant treasurer at Houston-based Shell Oil Co. from 1981-1995. He was vice president of finance at PanEnergy Corp. in 1997 when that company merged with Duke Energy. Williamson left his job as president and CEO of Duke's global markets division last month to take the helm of struggling Dynegy.
A week later, the company announced a $1.8 billion third-quarter loss fueled by low power prices and a flurry of one-time charges, including costs related to its departure from the marketing and trading business.
Jim Hackett, chairman and chief executive of Ocean Energy in Houston, worked with Williamson at PanEnergy and Duke. He called Williamson "very deliberate, very paced, very tough-minded and very fair."
"He has an ability to strategize very well, and an ability to look at how that strategy can be translated into action," Hackett said, "It's a great career move if he can make a success out of it."