By Michael Erman and Thyagaraju Adinarayan NEW YORK/BANGALORE, Nov 12 (Reuters) - Billionaire investor Carl Icahn said he would vote against Blackstone Group's proposal to buy Dynegy Inc and would offer a $2 billion line of credit to the struggling power company. "The Icahn companies, which have billions of dollars of liquidity, will today contact management to make available a $2 billion line of credit if Dynegy management cannot obtain other financing," Icahn said in a regulatory filing. He also said he had acquired call options that would alow him to raise his stake in Dynegy to 12.9 percent. In October, he held 9.3 percent. The loan offer comes after Dynegy warned it would face severe financial hardship if shareholders voted down the $543 million takeover offer from private equity firm Blackstone. The deal, worth $4.7 billion including debt, must win shareholder approval at a meeting scheduled for Nov. 17. Icahn, Dynegy's largest shareholder, voiced opposition to the Blackstone deal in October but has been quiet since. Another top Dynegy shareholder, hedge fund Seneca Capital, has launched a campaign against the Blackstone deal and also plans to nominate two directors to Dynegy's board. Seneca owns a 9.29 percent stake in Dynegy. Icahn and Seneca believe Blackstone's offer for Dynegy is too low, threatening the deal's chances of succeeding. But Dynegy says market conditions have deteriorated since Blackstone's offer due to low and declining commodity prices, continued economic weakness and a challenging financial position. Proxy advisory firm ISS has recommended that shareholders vote in favor of the takeover by Blackstone. Dynegy and Blackstone could not be immediately reached for comment on Friday. Dynegy shares, which have been roughly flat since the Blackstone proposal was made public in August, were up 12 cents to $4.75 in premarket trade. (Additional reporting by Brenton Cordeiro in Bangalore; editing by John Wallace) ((Reuters Messaging: firstname.lastname@example.org +1 646 223 6134)) Keywords: DYNEGY ICAHN/ (Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.
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