Dynegy May Consider Bankruptcy Protection

Dynegy Inc., which claimed a major Enron Corp. pipeline after their failed merger attempt last year, warns it might follow its rival into bankruptcy protection if a pending sale of that pipeline snags.

The firm expects the planned $928-million sale of Northern Natural Gas pipeline to MidAmerican Energy Holdings Co. to be completed this month.

At the same time, Dynegy has agreed to pay rival Enron $25 million for backing out of a merger between the Houston-based energy marketers.

Under the settlement, Enron has agreed to release Dynegy from all claims related to the terminated merger. Enron’s bankruptcy judge in New York must approve the terms.

Dynegy’s shares fell 19 cents, or 13%, to $1.30 on the New York Stock Exchange.