BG plc has today accepted a proposal valued at US$640 million (400 million) for the sale of its 24 per cent holding in US energy trader Dynegy Inc. The offer follows acceptance by the Board of Dynegy of a proposal to merge with Illinova Corporation of Decatur, Illinois. On the basis of the offer made to all the Dynegy shareholders by Illinova, BG will receive a minimum of 64 per cent cash for its holding, with the balance in the form of convertible preferred stock in the merged company.

Dynegy owns and operates 47 gas processing plants in the USA and 4400 megawatts (gross) of electrical generating capacity, has daily gas sales of nine billion cubic feet, and daily power sales of 0.3 million megawatt hours. Illinova is one of the top ten power marketing companies in the US, with 4100 megawatts of generating capacity, and daily gas sales of 0.25 billion cubic feet.

Dynegy has been a very successful investment for BG, achieving an annual return of more than 30 per cent since BG's initial investment in 1992. The investment is no longer core to BG's strategy and this deal helps the company to realise its return. The merger of Dynegy and Illinova is subject to regulatory and Illinova shareholder approval.

Notes to Editors

BG's holding in Dynegy Inc is accounted for as part of BG International, which came into existence on May 1, 1999, following the merging of the exploration and production and downstream businesses of BG plc. BG International is involved in gas and oil exploration and production, gas transportation, distribution and power generation in some 19 countries. A consortium led by BG recently won control of Brazil's biggest gas distribution company, Comgas, through the privatisation of the shares held by the state of Sao Paulo-owned power generation utility, Companhia Energetica Sao Paulo.

BG is being advised by Goldman Sachs International.