Dynegy Sacrifices Bondholders

Utility's plan to avoid default involves new layer of debt senior to existing bonds.

Dynegy Inc. is refinancing debt and altering its corporate structure to avoid a default, putting bondholders at a disadvantage by reducing their claims on the assets of the third-largest independent U.S. power producer.

Dynegy is seeking $1.7 billion in new loans to replace an existing facility on which it expects to default later this year.

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