Dynegy Holdings Inc. Announces Tender Offer and Consent Solicitation for All of Its 2008, 2010 and 2013 Second Priority Notes

Dynegy Inc. (NYSE:DYN) today announced that itswholly-owned subsidiary, Dynegy Holdings Inc. ("DHI"), has commenced acash tender offer and consent solicitation for all $225 million ofDHI's outstanding Second Priority Senior Secured Floating Rate Notesdue 2008 (the "2008 Notes" - CUSIP No. 26816LAH5), all $625 million ofDHI's outstanding 9.875% Second Priority Senior Secured Notes due 2010(the "2010 Notes" - CUSIP Nos. 26816LAL6 and U2676AAD5) and all $900million of DHI's outstanding 10.125% Second Priority Senior SecuredNotes due 2013 (the "2013 Notes" - CUSIP Nos. 26816LAP7 and U2676AAE3)(the "Notes").

The total consideration for each $1,000 principal amount of the2008 Notes tendered and accepted for purchase pursuant to the tenderoffer will be $1,045. The total consideration for each $1,000principal amount of the 2010 Notes and the 2013 Notes tendered andaccepted for purchase pursuant to the tender offer will be determinedas specified in the Offer to Purchase and Consent SolicitationStatement of DHI, dated March 15, 2006 (the "Statement"), on the basisof a yield to the applicable first redemption date equal to the sum of(i) the yield (based on the bid side price) of the U.S. Treasurysecurity specified in the Statement for each of the 2010 Notes and the2013 Notes, as calculated by Credit Suisse Securities (USA) LLC inaccordance with standard market practice on the Price DeterminationDate, plus (ii) a fixed spread of 62.5 basis points.

The Price Determination Date will be March 29, 2006 (unless DHIextends the tender offer for any period longer than ten business daysfrom the previously scheduled expiration date, in which case a newPrice Determination Date will be established).

In connection with the tender offer, DHI is soliciting consents to(i) certain proposed amendments to the indenture pursuant to which theNotes were issued, which would eliminate substantially all of therestrictive covenants, eliminate or modify certain events of defaultand eliminate or modify related provisions of the indenture and (ii)the release of certain liens securing the obligations of DHI and theguarantors of the Notes under the indenture.

DHI is offering to make a cash consent payment of $30 per $1,000principal amount of Notes (which is included in the totalconsideration for the Notes described above) to holders who validlytender (and do not withdraw) their Notes and deliver (and do notrevoke) their consents prior to 5:00 p.m., New York City time, onMarch 28, 2006 (the "Consent Date"). No consent payments will be madein respect of Notes tendered and consents delivered after the ConsentDate. Holders may not tender their Notes without delivering theirconsents, and may not deliver their consents without tendering theirNotes.

The tender offer is scheduled to expire at Midnight, New York Citytime, on April 11, 2006, unless extended (the "Expiration Date").Notes tendered prior to the Consent Date may not be withdrawn, andconsents delivered prior to the Consent Date may not be revoked, afterthe Consent Date, except in the limited circumstances described in theStatement. Notes tendered and consents delivered after the ConsentDate and prior to the Expiration Date may not be withdrawn or revoked,except in the limited circumstances described in the Statement.

DHI has reserved the right to accept for purchase on the PriceDetermination Date all Notes validly tendered prior to the ConsentDate. If DHI elects to exercise this option, it will pay the totalconsideration on a date (the "Early Payment Date") promptly followingthe Consent Date. On the Early Payment Date, DHI will also pay accruedand unpaid interest up to, but not including, the Early Payment Dateon the Notes accepted for purchase.

Subject to its right to exercise this early acceptance option, DHIcurrently expects to accept for purchase, and pay the totalconsideration (as to all Notes tendered prior to the Consent Date) andthe tender offer consideration (which is the total consideration lessthe cash consent payment, as to all Notes tendered after the ConsentDate) with respect to, all validly tendered Notes on a date (the"Final Payment Date") promptly following the Expiration Date. On theFinal Payment Date, DHI will also pay accrued and unpaid interest upto, but not including, the Final Payment Date on the Notes acceptedfor purchase.

The tender offer and consent solicitation are subject to thesatisfaction of certain conditions, including the receipt of consentsfrom the holders of at least two-thirds in principal amount of eachseries of the Notes and the consummation by DHI of one or more newdebt financings on terms satisfactory to DHI in an aggregate amountnot less than $750 million. No assurance can be given that such newfinancings will be completed in a timely manner or at all.

The complete terms and conditions of the tender offer and consentsolicitation are described in the Statement and the related Consentand Letter of Transmittal, copies of which may be obtained bycontacting Global Bondholder Services Corporation, the informationagent for the tender offer and consent solicitation, at (212) 430-3774or (800) 470-4200 (toll free). Questions regarding the tender offerand consent solicitation may be directed to the Dealer Managers andSolicitation Agents for the tender offer and consent solicitation:Credit Suisse Securities (USA) LLC, which may be contacted at (212)538-0652 or (800) 820-1653 (toll free), and Banc of America SecuritiesLLC, which may be contacted at (212) 847-5834 or (888) 292-0070.

This announcement is not an offer to purchase, a solicitation ofan offer to purchase or a solicitation of consents with respect to anysecurities. The tender offer and consent solicitation is being madesolely by the Offer to Purchase and Consent Solicitation Statement ofDHI, dated March 15, 2006, and the related Consent and Letter ofTransmittal.

Dynegy Inc. produces and sells electric energy, capacity andancillary services in key U.S. markets. The company's power generationportfolio consists of more than 12,600 megawatts of baseload,intermediate and peaking power plants fueled by a mix of coal, fueloil and natural gas. DYNC

Certain statements included in this news release are intended as"forward-looking statements." These statements include assumptions,expectations, predictions, intentions or beliefs about future events,particularly the consummation of the transaction described above.Dynegy cautions that actual future results may vary materially fromthose expressed or implied in any forward-looking statements.Specifically, Dynegy cannot assure you that the proposed transactiondescribed above will be consummated on the terms Dynegy currentlycontemplates, if at all, or that the notes tendered in the tenderoffer and consent solicitation described above will be accepted forpurchase. More information about the risks and uncertainties relatingto these forward-looking statements are found in Dynegy's SEC filings,including its Annual Report on Form 10-K for the year ended December31, 2005, which is available free of charge on the SEC's web site athttp://www.sec.gov.