Fitch: Dynegy Remains On Rating Watch Negative.

Business Editors

NEW YORK--(BUSINESS WIRE)--Nov. 30, 2001

The long-term credit ratings of Dynegy Inc. (DYN) and Dynegy Holdings Inc. (DYNH) remain on Rating Watch Negative following DYN's announcement Nov. 28, 2001 that it had terminated its agreement to merge with Enron, pending

Fitch had placed DYN and DYNH on Rating Watch Negative on Nov. 9, 2001 following the announcement that DYN had reached definitive agreement to acquire Enron in a stock for stock transaction. The rating action reflected uncertainty over the combined company's risk profile. In terminating the agreement, DYN cited Enron breaches of representations, warranties, covenants and agreements in the merger agreement, including the material adverse change provision. DYN also exercised its option to acquire the common stock of Northern Natural Gas Co. (NNG), an Enron pipeline subsidiary. As part of the merger agreement, ChevronTexaco Corp. (CVX), a 27% stakeholder in DYN, provided a $1.5 billion cash infusion in return for preferred stock in DYN, who in turn made a $1.5 billion capital contribution structured as a preferred stock investment in NNG with the option to purchase a single purpose entity that owns 100% of NNG's common stock.

Fitch believes that DYN's exercise of its stock option on NNG will be subject to legal challenges. Of greater concern, additional litigation revolving around DYN's aborted merger appears likely, potentially creating unquantifiable financial liabilities.

DYN ratings on Negative Rating Watch are as follows:

Dynegy Inc.
-- `BBB' implied senior unsecured debt.

Dynegy Holdings Inc.
-- outstanding `BBB+' notes.

Dynegy Capital Trust I
-- outstanding `BBB' trust preferred securities.