TheStreet.com: CFO Shift Staggers Dynegy
thestreet.com
CFO Shift Staggers Dynegy
By Melissa Davis
Staff Reporter
06/19/2002 05:34 PM EDT
The man charged with overseeing the books at embattled energy trader Dynegy
(DYN:NYSE - news - commentary - research - analysis) stepped down Wednesday
afternoon.
The company said Chief Financial Officer Rob Doty was resigning and that another
Dynegy manager, Louis Dorey, would take over. Doty's reasons for departing and
his plans weren't revealed.
Dynegy, which didn't immediately return calls seeking comment, said in a
statement that Dorey's appointment "is consistent with Dynegy's continued focus
on enhancing its financial position, strengthening its balance sheet and improving
its credit profile." The company also fired 340 workers, cutting its worldwide staff by
6%, to save $35 million.
But investors clearly worried that the departure of the financial chief portends bad
news, what with the company subject to a Securities and Exchange
Commission investigation of its business and accounting practices. A onetime
highflier in the merchant energy business, Dynegy is now among the most
besieged players in an industrywide meltdown triggered by last year's collapse of
Enron. Dynegy shares, which fetched $50 last summer, fell 11.4% Wednesday to
close at $7.71.
Wild Swings
The CFO change comes less than three weeks after Dynegy Chief Executive
Chuck Watson abruptly ended his 17-year leadership of the Houston energy
company. Watson left his post after regulators including the SEC and the Federal
Energy Regulatory Commission began investigating business and financial
practices at Dynegy and throughout the energy-trading industry.
A string of resignations is only the latest event to shake up the topsy-turvy world of
energy trading. In recent months the big companies in the sector have raced to
shore up their balance sheets to reassure risk-averse investors. Meanwhile,
regulators continue to dig through trading records looking for evidence of
improprieties.
Dynegy has been hurt by disclosures that it engaged in round-trip trading that
boosted financial results and that it engaged in complex transactions aimed at
cutting taxes and boosting cash flow. The company has defended the practices
and said it would cooperate with government probes.
In a prepared statement Wednesday, Dynegy offered only vague reasons for the
departure of Doty, who has directed its finances through the wild swings of the past
two years.
"Our business environment calls for a different set of skills as we address the
changes in our industry," said Dan Dienstbier, a Dynegy director serving as interim
chief executive.
Dienstbier said new CFO Dorey possesses the "unique combination of commercial
and financial knowledge and experience" needed to help map the company's future.
Dorey most recently served as president of Energy Marketing and Origination at
Dynegy.
Tape Delay
Adding to the ferment were Dynegy's plans to elaborate on the changes in a
conference call -- on Monday. In the meantime, critics are questioning the
company's silence, wondering if serious financial setbacks are in the offing.
One Houston analyst, known for his early hard-line stance against Enron, did not
seem overly concerned, however.
"This is apparently just a good, old-fashioned changing of the guard," said John
Olson, an analyst at Sanders Morris Harris. "There are no external issues, no
hidden agendas, to my knowledge."
Doty and Watson are just the latest in a series of top energy executives to vacate
their offices. AES (AES:NYSE - news - commentary - research - analysis) Chief
Executive Dennis Bakke announced his resignation Tuesday. And CMS
(CMS:NYSE - news - commentary - research - analysis) Chairman William
McCormick stepped down less than a month ago. |
