Shareholders have approved the $2.2 billion merger between Houston-based power plant operator Dynegy and New York power plant developer LS Power Group. California-based Chevron, which owns about 87 percent of Dynegy's Class B common stocks, also voted in favor. The transaction, which will expand Dynegy's electricity-generating capacity by nearly 70 percent, is expected to be complete on Monday. Dynegy Chairman Bruce Williamson has said the deal will provide greater diversity--in both geography and the fuels used to generate electricity. The merger will expand Dynegy's footprint from 20 plants with a capacity of 12,800 megawatts to 31 plants with more than 20,000 megawatts. The companies also plan to become joint-venture partners in nine power plants--some 7,600 megawatts of capacity under development. Eight of those planned plants are coal-fired. Dynegy came close to bankruptcy in 2002 after a failed merger attempt with Enron. Since then, Dynegy has been cutting debt from $14 billion to $4 billion, selling assets and settling litigation as it streamlined its business.
The federal government awarded Qwest Communications, San Antonio-based AT&T and Verizon the government's largest telecommunications contract ever--a ten-year deal worth up to $48 billion. The contract winners beat out Sprint Nextel for the prize. Now, they have to compete with each other for the telecom needs of various federal agencies. The contract covers voice, video and data services and technologies domestically and internationally for at least six federal agencies. Industry analysts say they expect the federal government to spend at least $20 billion over the life of the Networx Universal contract--which is capped at $48 billion.
The deadline is tonight at midnight for Halliburton shareholders to swap their shares for those of KBR. The two companies are getting closer to their anticipated breakup. Houston-based Halliburton set the deadline for the exchange offer, but it noted the period could be extended. The split of the oil-field services giant and KBR—a military contractor and engineering/construction outfit--began in November. KBR held an initial public offering that netted about $500 million. Halliburton retained a roughly 80 percent stake in KBR, though it said at the time it planned to spin off the remainder of KBR to its shareholders by April. But Halliburton's board last month approved a plan that allows it to unload the nearly 136 million KBR shares it still owns through a split-off exchange offer.
Struggling home-accessories retailer Pier 1 Imports announced it will cut 175 positions. More than half of the job losses will be at Pier 1's Fort Worth headquarters. The company expects the cuts to cause about $5 million in severance costs in the first quarter of the year. The cutbacks appear to represent less than one percent of Pier 1's work force. About 75 of the jobs to be eliminated are field administration positions and 100 are at headquarters. Chief Executive Alex Smith says the retailer can return to profitability by becoming leaner and more efficient. He said savings from the layoffs would be reinvested in key areas of the business.
The House has narrowly passed a nearly $3 trillion Democratic budget blueprint that envisions a big surplus in five years. The vote sets up negotiations with the Senate, which has already passed a budget blueprint with similar spending increases for education, defense, homeland security and veterans programs. But Republicans say the surplus will only be realized if the president's tax cuts are allowed to expire, which they say will create the "largest tax increase in American history.'' Decisions on the fate of the Bush tax cuts are expected to wait until after next year's presidential election.
State House members plunged into lengthy debate today on a proposed $150 billion state budget. The proposal includes a spending increase over the previous two-year plan, with most of the extra money going to education. The proposal includes 72.5 billion in state general revenue. That's an increase of slightly more than ten percent over the previous two years. The overall budget includes state money and federal money allotted to Texas. Education, followed by health and human services spending, account for the largest portions of the proposed budget. Approving a state budget is the only thing the legislature must do in its regular session, which ends May 28th. Once the House votes on its proposed budget, the Senate will have its say on the spending plan. Any differences between the two chambers' versions would then be up for negotiation by conferees.