* Filing would not affect parent company - sources
* Bankruptcy petition could come within the next day (Adds background, closing stock price, bylines)
By Caroline Humer and Michael Erman
Nov 7 Independent power producer Dynegy Inc (DYN.N), which has been struggling to balance high debt costs with low natural gas prices, is close to placing some assets in bankruptcy, sources familiar with the situation said on Monday.
The filing for the unit, Dynegy Holdings, would not affect the parent company, whose shareholders include billionaire investor Carl Icahn and investment firm Seneca Capital, the sources said.
It could allow Dynegy Holdings to restructure expensive leases on power plants and lighten its debt load. Dynegy Inc warned back in March that it needed to restructure its $5 billion in debt or the entire company could end up bankrupt.
Dynegy Holdings, whose assets include two unprofitable leased power plants, accounts for more than half of the parent company's debt, having issued $3.5 billion in unsecured bonds. It faces more than $700 million in lease payments over the next five years.
Dynegy Inc last week ended up having to cancel a $1.25 billion debt exchange for Dynegy Holdings after investors skeptical of the terms failed to show up. Dynegy Holdings last week also skipped a $43.8 million interest payment to noteholders.
The bankruptcy filing could come within the next day, according to one of the sources, who was not authorized to speak publicly on the situation.
The unit has a lease payment due on Nov. 8. The sources said they do not expect the company to make that payment.
Dynegy Inc did not return a call requesting comment.
STRUGGLING WITH DEBT
The company has been struggling with its debt load as its power business has been squeezed by rock-bottom natural gas prices. It refinanced $1.7 billion in debt this summer.
Bondholders of Dynegy Holdings such as Avenue Capital Group have been angered by a recent shuffling of assets that has put most of the company's power plants beyond their reach. Several lawsuits have been filed over the move, including by the Roseton and Danskammer power plants at the center of the controversial strategy.
While the bankruptcy filing would allow Dynegy Holding to restructure the two power plant leases, it could also possibly give bondholders a way to dispute the new corporate structure.
A spokesman for Avenue Capital declined to comment on the possible bankruptcy filing.
Dynegy had been shopping a prearranged bankruptcy to bondholders in the past few weeks. It was not clear on Monday if the bankruptcy filing that sources now say is imminent will have the support of the bondholders or not. A prearranged bankruptcy filing can speed the court process and make it less costly.
The move, which is designed to keep Dynegy Inc out of bankruptcy while still enabling a financial restructuring, would also protect Icahn's investment. He tried to buy the company for $5.50 a share, or $665 million in February. Private equity firm Blackstone Group (BX.N) had also tried to buy the company, but failed to get shareholders to sign onto its $5 a share bid.
Dynegy shares fell 10.6 percent to close at $2.95 on the New York Stock Exchange on Monday.
(Reporting by Caroline Humer, Michael Erman and Tom Hals; Editing by Richard Chang)