LS Power is likely to pay approximately $1 billion and return almost $500m in shares to Dynegy, reported WSJ, quoting people familiar with the matter.

According to the plan, LS Power would give up its three Dynegy board seats and submit to a “standstill”, prohibiting it from increasing its Dynegy ownership beyond 15% it is expected to hold once the transaction is completed.

The company would sell five peaking plants in Kentucky, Illinois, and Michigan and three combined-cycle plants in Arizona and Connecticut, to LS Power. These peaking and combined-cycle plants will be used only during peak energy demand periods. The company would also transfer its interest in a plant in Texas, which is uncompleted.

Following the transaction, the company’s portfolio will be left with approximately 20 power plants, which use coal and gas as fuel. The company’s power plants are primarily located in the Northeast, Midwest and California.