U.S. power producer Dynegy Inc will sell nine U.S. power plants to its one-time development partner LS Power Associates L.P, the Wall Street Journal said on Monday.

New York-based LS Power is likely to pay about $1 billion and return almost $500 million in shares to Dynegy, the paper said, citing people familiar with the matter.

Under the plan, LS, which develops, acquires and manages generation and transmission projects, will give up its three seats on the Dynegy board and submit to a standstill, prohibiting it from increasing its Dynegy ownership beyond the 15 percent it will hold once the deal is completed, the paper said.

Dynegy is likely to use cash from the deal to pay off approaching bond maturities, the paper said.

LS Power and Dynegy could not be immediately reached for comment by Reuters.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Valerie Lee)