Message-ID: <21180346.1075851668002.JavaMail.evans@thyme> Date: Mon, 29 Oct 2001 06:03:57 -0800 (PST) From: m..schmidt@enron.com Subject: Enron Mentions Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: Schmidt, Ann M. X-To: X-cc: X-bcc: X-Folder: \Dasovich, Jeff (Non-Privileged)\Dasovich, Jeff\Inbox X-Origin: DASOVICH-J X-FileName: Dasovich, Jeff (Non-Privileged).pst Enron Discusses Credit Line of $1 Billion to $2 Billion With Banks The Wall Street Journal, 10/29/01 Manager's Journal: How Enron Ran Out of Gas The Wall Street Journal, 10/29/01 Enron Seeks Additional Financing The New York Times, 10/29/01 GLOBAL INVESTING: Enron stock plunge deals a heavy blow to mutual funds=20 Financial Times; Oct 29, 2001 COMMENT & ANALYSIS - Enron flickers. Financial Times, 10/29/01 FRONT PAGE - COMPANIES & MARKETS - Enron asks banks for additional credit. Financial Times, 10/29/01 Enron Seeks Further Credit to Reassure Investors, WSJ Says Bloomberg, 10/29/01 USA: REPEAT-Electric cowboys get roped in at the energy corral. Reuters English News Service, 10/29/01 Enron seeks new credit line; reportedly for 1-2 bln usd AFX (AP), 10/29/01 Enron Said Seeking New Credit Lines American Banker, 10/29/01 USA: Enron in talks for $1-2 bln credit line - WSJ. Reuters English News Service, 10/29/01 JAPAN: Japan's Teijin, Enron study coal-fired power plant. Reuters English News Service, 10/29/01 Enron, Teijin to Build Power Plant in Japan, Report Says Bloomberg, 10/29/01 Once-Mighty Enron Strains Under Scrutiny The New York Times, 10/28/01 Plumbing Mystery Of Deals By Enron The New York Times, 10/28/01 Investors Seem to Ignore Discouraging News The New York Times, 10/28/01 Enron Asks Banks for More Credit After Stock Slide, FT Reports Bloomberg, 10/28/2001 Enron Asks Banks For Additional Credit -FT Dow Jones Energy Service, 10/28/01 Week in Review TOP STORIES OCT. 22-26 Lockheed Edges Out Boeing for Contrac= t Los Angeles Times, 10/28/01 Devon Energy makes building its own with major lease Houston Chronicle, 10/28/01 INDIA PRESS: Enron Plans To Exit LNG Shipping JV Dow Jones International News, 10/28/01 Enron Taps All Its Credit Lines To Buy Back $3.3 Billion of Debt The New York Times, 10/27/01 COMPANIES & FINANCE INTERNATIONAL - Enron's bond prices drop to warning lev= els. Financial Times, 10/27/01 SHORTS - Enron bond prices under pressure. Financial Times, 10/27/01 Enron taps credit line; stock slides Associated Press Newswires, 10/27/01 Enron Decline Continues Los Angeles Times, 10/27/01 Enron taps credit line; stock slides / Company says cash will boost confide= nce Houston Chronicle, 10/27/01 Enron says Microsoft breached contract Houston Chronicle, 10/27/01 How to Lose a War The New York Times, 10/27/01 City - Enron directors cash in shares. The Daily Telegraph, 10/27/01 INDIA: Lenders to meet over Enron's Dabhol on Nov 3. Reuters English News Service, 10/27/01 Enron sues Microsoft for breach of contract ; Move could block high-speed s= ervice The Seattle Times, 10/27/01 Enron Discusses Credit Line of $1 Billion to $2 Billion With Banks By Jathon Sapsford and John Emshwiller Staff Reporters of The Wall Street Journal 10/29/2001 The Wall Street Journal A10 (Copyright (c) 2001, Dow Jones & Company, Inc.) Enron Corp., scrambling to restore confidence in its finances, is negotiati= ng with banks for a new credit line of between $1 billion and $2 billion, a= nd is likely to close a deal within days, according to officials familiar w= ith the matter.=20 The new credit line is intended to bolster Enron's financial condition and = head off a potentially devastating loss of investor and business confidence= . The new credit would supplement existing lines, which are largely tapped = out after Enron last week drew down about $3 billion to increase cash reser= ves and calm fears in the stock, bond and energy markets. An Enron spokesman confirmed that the company is negotiating a new credit l= ine, but said he couldn't supply any further details.=20 Houston-based Enron is the nation's biggest energy trader and a principal i= n nearly one-quarter of all electricity and natural-gas trades. Once a favo= rite of Wall Street, the company now is in the unfamiliar position of convi= ncing a deeply concerned investment community that, despite difficulties, i= ts finances remain sound.=20 Confidence in Enron's financial situation was shaken after Enron earlier th= is month announced a $618 million third-quarter loss and disclosed a $1.2 b= illion erosion of shareholder equity related to controversial transactions = it had done with entities connected to its then-chief financial officer, An= drew Fastow.=20 Last week, Enron replaced Mr. Fastow and said that the Securities and Excha= nge Commission was looking into the transactions. The company has consisten= tly said that the transactions were proper and legal.=20 Enron's stock price fell again Friday. As of 4 p.m., in composite trading o= n the New York Stock Exchange, Enron shares were down 95 cents at $15.40. E= nron shares have fallen 50% in the past two weeks and are down 83% from a S= ept. 18, 2000, high of $89.63.=20 Late last week, Enron tapped its existing credit lines, with part of that m= oney being used to redeem nearly $2 billion of its outstanding commercial p= aper, or short-term corporate IOUs. Ron Barone of credit-rating agency Stan= dard & Poor's said he believes that Enron was "getting a bit more resistanc= e" recently in rolling over its commercial paper as it came due. Thus, Enro= n probably decided it would be easier simply to redeem the paper outstandin= g, he said.=20 The Enron spokesman yesterday said that paying off the commercial paper and= still leaving the company with an additional roughly $1 billion cash on ha= nd would give it more financial flexibility.=20 Also last week, credit-rating agencies warned investors they were reviewing= Enron's debt and commercial-paper ratings for a possible downgrade. A lowe= r rating could hamper Enron's core trading businesses.=20 Behind the worries among these agencies, in part, is the loss of investor c= onfidence, which one of the rating companies, Fitch, said in a report last = week could impair "Enron's financial flexibility and access to capital mark= ets, therefore impacting its ability to conduct its business."=20 The Enron spokesman said yesterday that the company's trading partners are = doing business with Enron on "essentially the same terms" as they have in t= he past. "There has been no significant change in the credit conditions," h= e said. Trading partners demanding significantly stricter terms from Enron = would be a sign of further deteriorating confidence in the energy giant's f= inances.=20 The banks involved in the current negotiations, including J.P. Morgan Chase= & Co. and Citigroup Inc., are asking Enron for stricter covenants on the n= ew credit line than they had asked for in the past, one official said.=20 Bankers involved with the company say the goal of the new credit line is to= show the investment community that Enron can meet its commitments. "Confid= ence in this company was lost," said one bank official involved in the nego= tiations for a new credit line. "But confidence will be restored."=20 Corporations of Enron's size commonly establish credit lines only to demons= trate to the investment community that in case of an emergency, they have a= ccess to cash. In practice, few companies actually make use of these lines.= Thus, drawing down credit lines, while providing immediate cash, also illu= strates the pressure Enron is feeling. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Manager's Journal: How Enron Ran Out of Gas By Paul Kedrosky 10/29/2001 The Wall Street Journal A22 (Copyright (c) 2001, Dow Jones & Company, Inc.) Is troubled Enron Corp. the Long Term Capital Management of the energy mark= ets, or merely yet another mismanaged company whose executives read too man= y of their own press releases? Or is poor Enron just misunderstood? Those a= re the questions after another week of Chinese water torture financial rele= ases from the beleaguered Houston-based energy concern.=20 A year ago Enron was the hottest of the hot. While tech stocks were tanking= , Enron's shares gained 89% during 2000. Even die-hard Enron skeptics -- of= which there are many -- had to concede that last year was a barnburner for= the company. Earnings were up 25%, and revenues more than doubled. Not bad, considering where the company came from. A decade ago 80% of Enron= 's revenues came from the staid (and regulated) gas-pipeline business. No l= onger. Enron has been selling those assets steadily, partly fuelling revenu= es, but also expanding into new areas. By 2000, around 95% of its revenues = and more than 80% of its profits came from trading energy, and buying and s= elling stakes in energy producers.=20 The stock market applauded the move: At its peak, Enron was trading at arou= nd 55 times earnings. That's more like Cisco's once tropospheric valuation = than the meager 2.5 times earnings the market affords Enron competitor Duke= Energy.=20 But Enron management wanted more. It was, after all, a "new economy" Web-ba= sed energy trader where aggressive performers were lucratively rewarded. Ac= cording to Enron Chairman and CEO Ken Lay, the company deserved to be value= d accordingly. At a conference early this year he told investors the compan= y's stock should be trading much higher -- say $126, more than double its p= rice then.=20 Then the new economy motor stalled. The company's president left under stra= nge circumstances. And rumors swirled about Enron's machinations in Califor= nia's energy markets. Investors pored over Enron's weakening financial stat= ements. But Enron analysts must have the energy and persistence of Talmudic= scholars to penetrate the company's cryptic financials. In effect, Enron's= troubles were hiding in plain sight.=20 It should have been a warning. Because of the poor financial disclosure the= re was no way to assess the damage the economy was doing to the company, or= how it was trying to make its numbers. Most analysts blithely concede that= they really didn't know how Enron made money -- in good markets or bad.=20 Not that Enron didn't make money, it did -- albeit with a worrisomely low r= eturn on equity given the capital required -- but sometimes revenues came f= rom asset sales and complex off-balance sheet transactions, sometimes from = energy-trading revenues. And it was very difficult to understand why or how= -- or how likely it was Enron could do it again next quarter.=20 Enron's financial inscrutability hid stranger stuff. Deep inside the compan= y filings was mention of LJM Cayman, L.P., a private investment partnership= . According to Enron's March 2000 10-K, a "senior officer of Enron is the m= anaging member" of LJM. Well, that was a puzzler. LJM was helping Enron "ma= nage price and value risk with regard to certain merchant and similar asset= s by entering into derivatives, including swaps, puts, and collars." It was= , in a phrase, Enron's house hedge fund.=20 There is nothing wrong with hedging positions in the volatile energy market= -- it is crucial for a market-maker. But having an Enron executive managin= g and benefiting from the hedging is something else altogether, especially = when the Enron executive was the company's CFO, Andrew Fastow. While he sev= ered his connection with LJM (and related partnerships) in July of this yea= r -- and left Enron in a whirl of confusion last week -- the damage had bee= n done.=20 As stories in this paper have since made clear, Mr. Fastow's LJM partnershi= p allegedly made millions from the conflict-ridden, board-approved LJM-Enro= n relationship. And recently Enron ended the merry affair, taking a billion= -dollar writedown against equity two weeks ago over some of LJM's wrong-foo= ted hedging. Analysts, investors, and the Securities & Exchange Commission = were left with many questions, and very few answers.=20 To be fair, I suppose, Enron did disclose the LJM arrangement more than a y= ear ago, saying it had erected a Chinese wall between Fastow/LJM and the co= mpany. And in a bull market, no one paid much attention to what a bad idea = that horribly conflicted relationship was -- or questioned the strength of = the wall. Now it matters, as do other Enron-hedged financings, a number of = which look to have insufficient assets to cover debt repayments due in 2003= .=20 We didn't do anything wrong is Mr. Lay's refrain in the company's current r= ound of entertainingly antagonistic conference calls. That remains to be se= en, but at the very least the company has shown terrible judgment, and hero= ic arrogance in its dismissal of shareholders interests and financial trans= parency.=20 Where has Enron's board of directors been through all of this? What kind of= oversight has this motley collection of academics, government sorts, and r= etired executives exercised for Enron shareholders? Very little, it seems. = It is time Enron's board did a proper investigation, and then cleaned house= -- perhaps neatly finishing with themselves.=20 ---=20 Mr. Kedrosky is a professor of business at the University of British Colomb= ia. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 National Desk; Section A Enron Seeks Additional Financing By RICHARD A. OPPEL Jr. 10/29/2001 The New York Times Page 9, Column 4 c. 2001 New York Times Company DALLAS, Oct. 28 -- The Enron Corporation, still struggling to reassure inve= stors it can weather a financial crisis over complicated transactions invol= ving its former chief financial officer, is seeking $1 billion to $2 billio= n in additional financing from banks, an industry official said today.=20 Last week, Enron, the nation's largest energy-trading concern, used about $= 3 billion in available credit lines and spent about $2 billion to pay off c= ommercial paper. Now, by obtaining even more financing, Enron is hoping to = convince investors and other energy-trading firms that it will not face a c= ash squeeze that could lead trading partners to refuse to extend credit or = do business with it. Enron's board, which has been holding meetings by telephone over the last t= wo weeks to monitor the company's financial situation, held another meeting= this afternoon. ''The board is meeting frequently and will announce any ac= tions when appropriate,'' an Enron spokesman said.=20 Two weeks ago, Enron disclosed that its shareholder equity had been reduced= by $1.2 billion because of deals with investment partnerships involving it= s former chief financial officer, Andrew S. Fastow, who was ousted last wee= k. The company also disclosed about $1 billion in separate write-offs, and = it said last week that the Securities and Exchange Commission had made an i= nquiry into its financial accounting.=20 Enron hopes to maintain its investment-grade credit rating, which is crucia= l to ensuring that other energy traders continue to do business with it. La= tely, Enron's bonds have been trading at prices more like junk bonds, and t= wo major credit-rating agencies are considering whether to downgrade the co= mpany's rating. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 GLOBAL INVESTING: Enron stock plunge deals a heavy blow to mutual funds=20 Financial Times; Oct 29, 2001 By AGENCIES: AGENCY MATERIAL and ELIZABETH WINE Enron shares plunged 40 per cent in the last week,doing severe damage to mu= tual funds, the company's largest institutional ownership bloc, and the hav= oc may continue.=20 More than 15 per cent of the 4,000 US equity funds held shares in the embat= tled company's shares as of the most recent reporting period, according to = fund tracker Morningstar.=20 Mutual funds held a fifth of Enron's shares, but that percentage is likely = to be much lower now, say fund analysts, who suggest much of the stock's ha= lving in October is due to large sales by institutional holders.=20 Janus, the growth fund specialist, was the largest institutional shareholde= r according to the most recent filings, dated June 30, with more than 42m s= hares representing a stake worth Dollars 2.1bn.=20 The stake - if still held in its entirety - would be worth Dollars 659m at = Friday's closing price of Dollars 15.40. Enron shares dropped 95 cents, or = 5.81 per cent on Friday, taking its total fall to nearly 41 per cent last w= eek on concerns over accounting questions and some limited partnerships cre= ated by Andrew Fastow, former chief financial officer. On Friday, several l= eading rating agencies put the company's debt on credit watches, and Enron = bond prices plunged. The company's stock is down 81 per cent since January.= =20 Most fund managers, including those at Janus, refuse to discuss a company i= n which they are actively trading. However, several mutual fund groups with= large Enron stakes have said their listed positions are "dated", implying = that the funds' positions in the company have changed.=20 Morningstar analyst Christine Benz, who follows the Janus funds, said manag= ers of the group's larger funds had been "lightening up" their Enron holdin= gs this year. She said Blaine Rollins, who manages the Dollars 23bn flagshi= p Janus fund, said that in September he had sold some of his stake - listed= as 2.15 per cent of outstanding shares as of April 30 - but did not say wh= en.=20 Ken Zschappel, manager of the Dollars 11bn Aim Constellation fund, also dec= lined to discuss his holdings, listed as 0.27 per cent of outstanding share= s as of March 31. But Aim said the position had since been "trimmed substan= tially".=20 Other top fund owners, as of the most recent filings, included the Alliance= Premier Growth fund, the Janus Twenty, Janus Mercury and Janus Growth & In= come funds, Fidelity Magellan, AXP New Dimensions Fund, Putnam Investors, P= utnam Voyager and Putnam New Opportunities funds and Morgan Stanley Dividen= d Growth fund.=20 Copyright: The Financial Times Limited COMMENT & ANALYSIS - Enron flickers. By SIMON LONDON and SHEILA MCNULTY. 10/29/2001 Financial Times (c) 2001 Financial Times Limited . All Rights Reserved COMMENT & ANALYSIS - Enron flickers - Once a paragon of the new economy, th= e US energy group is under scrutiny for its opaque accounting and free-whee= ling management, write Simon London and Sheila McNulty.=20 Enron has some explaining to do. For the past decade or more, the Texas-bas= ed company has basked in the admiration of investors and business school pr= ofessors eager to understand its transformation from staid utility to fast-= growing energy trader. Now it faces scrutiny of a more unwelcome kind. Its share price has been falling since the beginning of this year. The US S= ecurities and Exchange Commission is investigating multi-million dollar dea= ls with a private equity fund associated with its own chief financial offic= er, which resulted in a $1.2bn reduction in shareholders' equity. A hastily= -convened conference call last week with analysts raised as many questions = as it answered about these "related-party transactions". The departure of A= ndy Fastow, the aforementioned CFO, soon followed.=20 With its credit rating under review by two leading ratings agencies, Enron = has also been forced to draw down bank credit lines. Yesterday if confirmed= it was trying to establish additional lines of liquidity.=20 "This marks the end of Enron's walk on the wild side," observes Curt Launer= , an analyst with Credit Suisse First Boston, the investment bank.=20 On the surface, events at Enron can be explained by the combination of dete= riorating trading conditions, a complex capital structure and poor investor= relations. But the root causes go back further. The entrepreneurial cultur= e and dynamic management that fuelled Enron's growth in the 1990s appear to= have also sown some of the seeds of the present crisis. Therein may lie a = cautionary tale for all executives trying to sprinkle "new economy" magic o= n to old economy companies.=20 Enron's transformation began in earnest in 1990 with the arrival of Jeffrey= Skilling, who was hired from McKinsey, the management consulting firm, to = develop energy trading.=20 For the previous decade Enron had been emerging as a force in the deregulat= ing US energy markets under the guidance of Kenneth Lay, a former deputy un= der-secretary of energy. Mr Lay remains chairman. But it was Mr Skilling wh= o spearheaded the move into trading energy as well as generating and supply= ing it.=20 The two sides of the business - trading and generation/supply - have always= been strange bedfellows. The former demands an entrepreneurial spirit more= likely to be found on Wall Street than in a utility. Mr Skilling's answer = in the early 1990s was to bring in talent from outside the company. One of = his first recruits was Mr Fastow, an expert in securitisation, the repackag= ing of financial assets so they can be traded in financial markets.=20 The energy trading division tried from the start to differentiate itself. A= management structure was introduced with only four layers - vice-president= , director, manager and associate/ analyst - much like a consulting firm. E= mployees were free to take as much holiday as they liked, so long as they d= elivered results. As one of Mr Skilling's early recruits recalled: "It was = all about creating an atmosphere and deliberately breaking the rules."=20 The seemingly free-wheeling style was based on a "loose-tight" management m= odel expounded by Tom Peters and Bob Waterman, the management writers and M= cKinsey alumni. At Enron this meant that employees in the merchant energy b= usiness were encouraged by huge bonuses to pursue new ideas and innovate in= existing markets.=20 Up-and-coming employees moved freely between projects in pursuit of glory. = Louise Kitchen, the 32-year-old British executive who was the creative forc= e behind Enron Online, the group's internet-based trading platform, changed= jobs or was promoted seven times in five years.=20 Balancing these loose management practices were tight central control of ri= sk, legal commitments, finance and performance evaluation/remuneration. Mr = Skilling once described the approach in this way: "As long as you clear you= r deals or business ideas through those screens, you can do whatever you wa= nt around here."=20 This approach did deliver growth and innovation. As well as making markets = in its core energy products, Enron now trades everything from weather deriv= atives - which enable companies to insure themselves against unfavourable c= limatic conditions - to broadband telecommunications capacity and metals. T= he success of Enron Online allows the group to describe itself as the world= 's leading e-commerce company.=20 It has also started marketing electricity to US consumers through a joint v= enture with International Business Machines and America Online, the interne= t service provider.=20 In February this year Mr Skilling got his reward: he became chief executive= of a group ranked seventh in Fortune magazine's list of the 500 most power= ful US corporations - ahead of such corporate giants as IBM, AT&T, Bank of = America and Boeing.=20 In retrospect, however, this breakneck pace of growth and innovation was ac= hieved at a price. First was the personal cost to Mr Skilling. In August he= abruptly resigned after only six months in the top job. Personal, non-heal= th related reasons were cited and investors have received no further explan= ation.=20 A second cost was an enormous increase in financial complexity. In order to= avoid a ballooning of assets and liabilities as the group expanded, Enron = used a range of off-balance sheet vehicles to help finance expansion. LJM, = the private equity fund in which Mr Fastow played a role, is just one of a = cast of characters to be found in the footnotes to Enron's accounts. Other = financing vehicles include Osprey, Marlin, Whitewing, Atlantic Water Trust = and Azurix. "They went after too many things too quickly," says Stephen Moo= re of Moody's Investors Service, the credit ratings agency.=20 A third cost, associated with the last, was a loss of financial transparenc= y. The group's extensive use of swaps, options and other derivative financi= al instruments in its merchant energy business means that investors have li= ttle idea of how Enron actually makes its money - or the underlying risks t= o which it is exposed.=20 David Fleischer, an analyst at Goldman Sachs, summed up the views of many i= nvestors during last week's conference call. He told the group's management= : "The company's credibility is being severely questioned and there is a ne= ed for much more disclosure. There is an appearance that you are hiding som= ething or that there is something going on beneath the surface that may be = questionable."=20 The fourth cost was a loss of strategic focus. "The problems, in our view, = stem from Enron venturing too aggressively in areas outside of its core ski= lls," argues Raymond Niles, analyst at Salomon Smith Barney. "Power plants = in India, water companies, extension of their franchise to the mass retail = market, and using a fibre-optic network to deliver content over the interne= t are all unrelated, or only tangentially related, to their core merchant e= nergy business."=20 Enron executives also appeared to get carried away with the prospects for s= ome of these ventures. This time last year Mr Skilling was arguing that Enr= on Broadband was a business worth $35bn ( #24bn) in its own right. This hel= ped push the share price to all-time highs - and storing up trouble when tr= ading volumes failed to materialise.=20 "They over-promised on the new business they created," says Chris Bartlett,= a professor at Harvard Business School and long-time watcher of the compan= y. "Enron was trying to ride the dotcom bubble with Enron Online and the br= oadband business. To some extent they are now paying the price."=20 Will Enron weather the storm? Notwithstanding the risk of further out-of-th= e-blue financial shocks, most analysts believe that it will. The merchant e= nergy business remains powerful and profitable. Mr Niles at Salomon Smith B= arney points out that this side of the group drives more than 80 per cent o= f earnings and has shown consistent 30-40 per cent annual growth over the p= ast three years. Assets totalling more than $4bn were also earmarked for di= sposal before the current crisis erupted, underlining that there is plenty = of realisable value within the group's portfolio of physical energy assets.= =20 And yet the doubts remain. It is, ultimately, a question of confidence and = credibility. Investors suspect that the balance between loose and tight man= agement methods has tilted too far towards the former. Mr Lay and his team = will have to tighten up.=20 (c) Copyright Financial Times Ltd. All rights reserved.=20 http://www.ft.com. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 FRONT PAGE - COMPANIES & MARKETS - Enron asks banks for additional credit. By SHEILA MCNULTY and GARY SILVERMAN. 10/29/2001 Financial Times (c) 2001 Financial Times Limited . All Rights Reserved Enron, the troubled US energy group, was attempting yesterday to persuade b= anks to provide additional credit to bolster its position after a sharp fal= l in its share price.=20 The Houston-based company was also due last night to hold a special board m= eeting to consider confidence-building measures after surprise financial di= sclosures damaged its reputation among US investors. Last week the company raised $3.3bn (Euros 3.7bn) in cash to bolster its fi= nancial position but Enron admitted yesterday that it was still looking for= additional finance. The company insisted, however, that it was in good fin= ancial health and that its core energy trading business remained strong.=20 Mark Palmer, an Enron spokesman, said he hoped the company would have somet= hing to announce in coming days from its latest effort to "establish additi= onal lines of liquidity". "Once we are able to get the liquidity position s= hored up, that will put a lot of fears of the unknown to rest," Mr Palmer s= aid.=20 The company's problems have become public since an announcement on October = 16 that it would take a $1.01bn special charge and write down shareholders'= equity by another $1.2bn. The moves followed losses arising from a private= equity operation run by Andrew Fastow, its former chief financial officer,= who was forced to take a leave of absence last week.=20 Enron's share price has fallen more than 50 per cent since the October 16 a= nnouncement and its bonds have been trading at levels that are technically = "junk" status, though its official ratings are still investment grade.=20 "Our concern is that a reduction in the debt rating could impair their abil= ity to operate their trading and marketing operations," said Raymond Niles = of Salomon Smith Barney. "These activities require at least an investment g= rade credit rating, or Enron could be subject to an increase in margin requ= irements."=20 The controversy over Enron's balance sheet adjustment has resulted in a req= uest for information from the Securities and Exchange Commission. Enron fli= ckers, Page 22.=20 (c) Copyright Financial Times Ltd. All rights reserved.=20 http://www.ft.com. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Seeks Further Credit to Reassure Investors, WSJ Says 2001-10-29 04:30 (New York) Houston, Oct. 29 (Bloomberg) -- Enron Corp., the largest energy trader, asked banks to provide a further credit line of as much as $2 billion in a bid to restore investor confidence in the company, the Wall Street Journal reported, citing unidentified officials close to negotiations. The new credit line is additional to the $3.3 billion credit line it tapped last week, the paper said, and should be completed within days. Investors have shunned the company since Oct. 16 when Enron reported a third quarter loss of $618 million and wrote down shareholders' equity by another $1.2 billion, the Journal said. The stock has fallen by 54 percent since the announcement. The company's shares were further dented after an investor sued Enron last month, saying dealings with two partnerships run by former Chief Financial Officer Andrew Fastow, cost the company $35 million. The suit also called Fastow's leadership of the partnerships, set up to cut Enron's debt, a conflict of interest. USA: REPEAT-Electric cowboys get roped in at the energy corral. By Janet McGurty 10/29/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Oct 26 (Reuters) - Last year, Enron Corp. was a darling of invest= ors and analysts, but the freewheeling trader of electricity and natural ga= s now faces a credibility crisis due to a lack of transparency in its busin= ess dealings.=20 Enron, trying to shake investor jitters over a possible downgrade of its cr= edit worthiness and their unease over the company's complex financial trans= actions, has seen its shares shed more than half their market value in the = past week. But the largest natural gas and electricity marketer in the United States i= s not alone in getting its wings clipped as energy prices come down and the= market volatility that drove earnings last year eases.=20 While Enron's problems differ from more traditional utilities, many other p= ower producers are returning to their roots. They are scrapping plans for s= plitting operations and questioning whether more risky overseas operations = can be supported by lower prices brought on by a slowing economy.=20 Paul Patterson, an energy analyst with ABN Amro, said there are common them= es affecting the industry.=20 "One is lower power prices and the margins that are associated with them. A= nd two is lower stock prices and the ability to finance more asset driven g= rowth," Patterson said.=20 As earnings fall and forward earnings guidance is revised downward, some po= wer companies are seeking strategies to address the bleaker environment. An= d plans to spin off units have been postponed or called off.=20 Shares of Enron slid $1.05, or 6.4 percent, to $15.30 in afternoon trade on= the New York Stock Exchange on Friday.=20 THE WORLD HAS CHANGED=20 AES Corp. , a global power producer whose earnings fell for a second consec= utive quarter on a poor showing from operations in Brazil and Britain, said= Thursday it would revamp its organization and did not rule out selling off= assets.=20 "It's a different place," AES' chief executive officer Dennis Bakke said of= the business climate facing utilities today compared with last year's powe= rful growth. On Friday, Constellation Energy Group , parent company of Balt= imore Gas & Electric, scrapped plans to split its power generation and trad= ing operations into two company because of economic changes. Constellation = also hired a new chief executive and severed ties with Goldman Sachs, which= planned to make an equity investment in the company.=20 "The utility industry and energy markets, and indeed the entire U.S. econom= y, have changed considerably in the past year. As a combined company, we wi= ll be better positioned to seize opportunities to grow and deliver," said C= hristian Poindexter, Constellation's chairman.=20 RETURN TO TRADITIONAL VALUES=20 Bakke said one prong of AES's brave, new world scenario was a renewed empha= sis on the traditionally profitable, long-term contract generation business= .=20 It makes sense for power generating companies to sign about 75 percent to 8= 0 percent of their generating capacity into long-term contracts because it = provides stability and a level of profitability in a period of flat growth,= according to Gordon Howald, energy analyst with Credit Lyonnaise.=20 "Calpine does it already," he said, referring to the California-based indep= endent power producer that has the lion's share of the power it generates c= ontracted out. "What drove the valuations in all these companies last year = was that power markets were very inefficient. Physical reserve margins were= low. But with flat to down demand in 2001 - as it appears to be the case -= there is very little to lead us to believe that power prices will be anywh= ere near that level," he added.=20 Howald said with all the new generation coming on, natural gas prices shoul= d remain high but power prices should come down further, squeezing spark sp= reads, or profit margins, for solely gas fired companies.=20 SMALLER COMPANIES ALSO RETHINK STRATEGIES=20 As lower power prices impact earnings, many power companies are turning bac= k to U.S. markets to try to maximize their bottom line.=20 "Earnings for the quarter is not the big deal. The big deal is that for 200= 2 they are not going to earn as much as people expected. It's a downward re= vision of earnings guidance." said Patterson.=20 Michigan-based CMS Energy Corp. cut its earnings estimates for the second t= ime to $2 to $2.05 for 2002, down from $2.79 and said it would sell off cer= tain overseas assets and focus future growth primarily in North America.=20 CMS, whose earnings were down for the third quarter, said it took a charge = for planned divestitures, includingdiscontinued South American energy distr= ibution units as well as other international investments.=20 Allegheny Energy Inc. also changed its strategy after reporting a fall in t= hird quarter earnings.=20 The Maryland-based company said while it is continuing to work towards gett= ing necessary regulatory approvals for a initial public offering to hold it= s unregulated assets, it will not proceed with the offering at this time.= =20 "The company will integrated until market conditions are such that demonstr= ated value can and will be created for shareholders," Allegheny said. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron seeks new credit line; reportedly for 1-2 bln usd 10/29/2001 AFX (AP) Copyright 2001 AFX News; Source: World Reporter (TM) NEW YORK (AFX) - Enron Corp is negotiating with banks for a new credit line= , a spokesman told the Wall Street Journal.=20 The company is in talks to raise between 1-2 bln usd and is likely to close= a deal within days, it quoted officials familiar with the matter as saying= . The deal, which is intended to head off a potential loss of investor and bu= siness confidence, would supplement existing lines. These are largely tappe= d out after Enron last week drew down about 3 bln usd to increase cash rese= rves and calm market fears.=20 Enron earlier this month announced a heavy third quarter loss and erosion o= f shareholder equity related to controversial transactions it had done with= entities connected to its then chief financial officer, Andrew Fastow.=20 jms For more information and to contact AFX: www.afxnews.com and www.afxpre= ss.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Markets Enron Said Seeking New Credit Lines BY LAURA MANDARO and ALISSA SCHMELKIN 10/29/2001 American Banker 31 Copyright (c) 2001 Thomson Financial, Inc. All Rights Reserved. The Texas energy and telecommunications giant Enron Corp. was reportedly ne= gotiating with its lenders about new credit lines Friday, a day after it dr= ew down billions on its existing lines.=20 J.P. Morgan Chase & Co. and Citigroup Inc. are the two banking companies wi= th the largest lending exposure to the $67 billion-asset Houston company, w= ith an estimated $400 to $500 million in bank debt outstanding "in addition= to derivatives and other structured product exposures," according to Goldm= an Sachs Group Inc. analyst Lori Applebaum. Morgan Chase and Citi were the book runners on a 364-day, $2.25 billion loa= n facility to Enron that closed in May, according to Thomson Financial Secu= rities Data. Credit Suisse First Boston was the sole bookrunner on a $582 m= illion loan to the company that closed in March and matures in March 2004, = the data company said. Bank of America, Citigroup, and Deutsche Bank also p= articipated, Securities Data said.=20 On Thursday, Enron issued a statement that "in order to dispel uncertainty = in the financial community," it had drawn on its committed lines of credit = to provide over $1 billion of cash liquidity. The Wall Street Journal repor= ted on Friday that Enron drew down about $3 billion from a credit line and = was in talks about obtaining a new multibillion-dollar line.=20 "We continue to have conversations new our creditors about new liquidity --= that's nothing out of the ordinary," said Enron spokesman Eric Thode.=20 The developments followed a $638 million loss for the third quarter, the de= parture of Enron's chief financial officer, and a Securities and Exchange C= ommission inquiry.=20 Enron, a natural gas company that has broadened its focus to include energy= trading, transport, risk-management, and telecommunications products and s= ervices, has relationships with banks that extend beyond credit lines.=20 "Citi, J.P. Morgan, and possibly Wachovia and Bank of America also invested= along with Enron in some of its partnerships," said Ms. Applebaum. A spoke= sman for Morgan Chase confirmed that the bank was a lender but said he did = not know the amount of its exposure.=20 Many other regional banks have participated in credit facilities to Enron. = Bank of America Corp. is estimated to have about $200 million to $300 milli= on of exposure; Bank One Corp. about $100 million; and Wachovia Corp., SunT= rust Banks Inc., and FleetBoston Financial Corp. about $50 million each, ac= cording to Goldman Sachs estimates. Bank of New York has between $50 to $10= 0 million of exposure, and Northern Trust, U.S. Bancorp and KeyCorp also ha= ve some lending exposure, Ms. Applebaum said.=20 Representatives of these banks would not comment on their relationships wit= h Enron, or did not return phone calls by deadline. http://www.americanbanker.com=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Enron in talks for $1-2 bln credit line - WSJ. 10/29/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Oct 29 (Reuters) - Energy trading giant Enron Corp. is negotiatin= g with banks for a new credit line of between $1 billion and $2 billion and= could close a deal within days, the Wall Street Journal reported in its on= line edition on Monday.=20 According to officials close to the situation, the new credit would supplem= ent existing credit lines, largely tapped out after the company drew down a= bout $3 billion last week to increase cash reserves and calm jittery invest= ors' fears, the Journal reported. The paper said that an Enron spokesman had confirmed that the company is ne= gotiating a new credit line, but could not supply any further details.=20 Confidence in Enron has been shattered following disclosures about its invo= lvement in complex partnerships. Its stock has tumbled amid a U.S. Securiti= es and Exchange Commission inquiry into the company's ousted Chief Financia= l Officer's links to some of the partnerships. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 JAPAN: Japan's Teijin, Enron study coal-fired power plant. 10/29/2001 Reuters English News Service (C) Reuters Limited 2001. TOKYO, Oct 29 (Reuters) - Japan's major polyester manufacturer, Teijin Ltd = , said on Monday it would conduct a feasibility study with U.S. energy gian= t Enron Corp on building a coal-fired power plant.=20 Teijin said in a statement that it and E Power Corp, a Japanese affiliate o= f Enron Corp, would look into building the 70,000 kilowatt coal-burning the= rmal power plant in Matsuyama, Ehime prefecture, on the southwestern island= of Shikoku, where Teijin has a polyester plant. "We are beginning to consider selling surplus power to third parties other = than our own plants, with eyes on further deregulation in Japan's power mar= ket," a Teijin spokesman said.=20 Japan is in the process of deregulating its power market. Since March last = year, large-lot consumers have been free to choose their suppliers.=20 In its polyester business, Teijin has expanded overseas output while reduci= ng domestic production, a trend which would leave it with surplus power. It= is thus looking at how to make good use of any surplus.=20 The two firms were also considering expanding the capacity of Teijin's exis= ting power generator in Matsuyama, Teijin said. It hopes to reduce costs at= the inefficient small plant with the help of Enron.=20 Enron Corp said earlier this year it had presented plans to build a liquefi= ed natural gas (LNG) fired power plant in northern Japan, aiming to become = the first foreign company to build such a power plant in Japan.=20 The Teijin spokesman said the two firms hoped to conclude the feasibility s= tudy by June 2002.=20 Teijin's shares ended the day down 13 yen or 2.68 percent at 472 yen. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron, Teijin to Build Power Plant in Japan, Report Says 2001-10-28 23:39 (New York) Tokyo, Oct. 29 (Bloomberg) -- Enron Corp. and Teijin Ltd. will jointly build a coal-fired power plant in southwestern Japan as early as 2004, the Nihon Keizai newspaper said on its wire service, without citing sources. Enron, the world's biggest energy trader, and synthetic- fiber maker Teijin will together spend 1 billion yen ($8.16 million) to build the 70,000-kilowatt plant in Ehime, southwest of Tokyo, the report said. Enron wants to eventually build bigger plants and sell electricity directly to large commercial users without going through exiting utilities, the report said. Money and Business/Financial Desk; Section 3 Once-Mighty Enron Strains Under Scrutiny By ALEX BERENSON and RICHARD A. OPPEL Jr. 10/28/2001 The New York Times Page 1, Column 2 c. 2001 New York Times Company IS time running out for Enron?=20 At the beginning of this year, the Enron Corporation, the world's dominant = energy trader, appeared unstoppable. The company's decade-long effort to pe= rsuade lawmakers to deregulate electricity markets had succeeded from Calif= ornia to New York. Its ties to the Bush administration assured that its vie= ws would be heard in Washington. Its sales, profits and stock were soaring. And under the leadership of Jeffrey K. Skilling, its chief executive, Enron= 's arrogance had grown even more quickly.=20 The company, based in Houston, dripped contempt for the regulators and cons= umer groups that stood between it and fully deregulated markets -- for elec= tricity, water and everything else. Everyone would win under deregulation, = Enron said -- especially its shareholders, whose stock would soar as the co= mpany profited from creating new markets.=20 ''We are on the side of angels,'' Mr. Skilling said in March, dismissing th= ose who saw the company as a profiteer in California's energy crisis. ''Peo= ple want to have open, competitive markets. They want fair competition. It'= s the American way.''=20 But less than a year later, everybody seems to have lost, especially Enron'= s investors. Enron's stock is plunging, and questions about its finances ar= e mounting.=20 Some experts in the energy industry worry that if the crisis at the company= worsens, trading in natural gas and electricity could be seriously disrupt= ed and energy prices could grow more volatile. In a worst-case outlook, Enr= on could become the 2001 version of Long-Term Capital Management, the huge = hedge fund whose collapse roiled financial markets during the fall of 1998.= Enron's shares have fallen more than 80 percent this year, erasing $50 bil= lion in shareholder value.=20 Enron closed on Friday at $15.40, down 95 cents, after hitting a 52-week lo= w of $15.04 earlier in the day.=20 The future of electricity deregulation is in doubt, thanks to blackouts and= soaring power prices in California earlier this year -- a crisis that ende= d only when that state contradicted deregulation's basic tenets by interven= ing deeply in the power market. Enron's efforts to become a profit-making w= ater supplier and to create a new market in broadband communications capaci= ty have been expensive failures. In August, Mr. Skilling quit, forcing Kenn= eth L. Lay, his predecessor as chief executive and still Enron's chairman, = to resume day-to-day control of the company.=20 The company declined to make senior executives, including Mr. Lay, availabl= e for comment, and asked that questions be submitted in writing. Mr. Skilli= ng could not be reached.=20 Enron's problems boiled over earlier this month, when it disclosed that its= shareholders' equity, a measure of the company's value, dropped by $1.2 bi= llion in the last quarter because of a deal disclosed only very hazily in E= nron's regular financial statements. The Securities and Exchange Commission= is looking into the company's financial reporting, and some investors ques= tion whether Enron has overstated profits at its primary business of tradin= g electricity and natural gas.=20 THE slump in the company's shares accelerated after Enron revealed the fall= in its shareholders' equity. On Wednesday, the company forced out its chie= f financial officer, Andrew S. Fastow, who is at the center of the controve= rsy over Enron's confusing finances. The company, which six months ago seem= ed to be reaping billions of dollars from California's energy crisis, today= faces a potential cash crunch.=20 The surprise about shareholder equity inflamed investors' smoldering concer= n about Enron's opaque financial statements. Now, with Wall Street analysts= and bond-rating agencies demanding more information about the complex tran= sactions that have fueled the company's profits, Enron has been reduced to = issuing news releases assuring investors that it has adequate access to cas= h.=20 Enron does not appear to be in immediate danger of running out of cash. On = Thursday, the company drew down a $3.3 billion credit line it had previousl= y arranged with a group of banks led by Citigroup and J. P. Morgan Chase, w= hich have each extended at least $400 million. But because of Enron's impor= tance in the natural gas and electricity markets, industry experts say that= any problem at the company could disrupt energy trading nationwide.=20 The supply of natural gas and electricity would probably not be affected ev= en if the company failed, because Enron is mainly a trader, rather than a p= roducer, of energy. But a crisis at the company might increase the volatili= ty of energy prices, which have swung wildly in the last year.=20 Philip K. Verleger Jr., an energy-markets economist, emphasized that he tho= ught Enron would survive this crisis. But he said it was not clear what wou= ld happen if Enron ran out of cash or if traders that use the company's Enr= onOnline Internet trading marketplace defaulted on their obligations.=20 ''You suddenly have all these positions they have taken on there -- are the= y good? Are the firm's hedges good? What's the situation?'' Mr. Verleger sa= id. ''It's got everyone scared.''=20 In the short run, Enron's credit rating may be its biggest problem. If the = company's rating falls below investment grade, Enron could be forced to iss= ue tens of millions of shares of stock to cover loans that it has guarantee= d. But creating new shares would make the shares that already exist less va= luable, because those shares would no longer represent full ownership of th= e company.=20 A drop in the company's credit rating could also prompt other energy trader= s and producers to back away from doing business with Enron, hurting the co= mpany's sales and profits.=20 Enron's credit rating stands several notches above the critical point. But = its bonds, which are publicly traded, have fallen so low that they are now = offering interest rates of almost 10 percent, comparable with many junk bon= ds. Two of the three major credit-rating agencies, Moody's Investors Servic= e and Fitch Investors Service, have put Enron's bonds on review for possibl= e downgrades.=20 ''The issue that's in the front of everybody's mind right now is credit,'' = said Mark Gurley, senior vice president and general manager for trading at = Aquila Inc., one of the nation's largest energy traders. Aquila is based in= Kansas City, Mo.=20 For now, Aquila and other major energy traders and producers, including Rel= iant Energy, the El Paso Corporation and Dynegy, are continuing to do busin= ess with Enron. And Mr. Gurley said that Enron's own trading in the electri= city and natural gas markets did not suggest the sort of frenzied selling r= eminiscent of the collapse of Long-Term Capital Management in 1998.=20 ''They haven't done anything trading-wise that gives me any indication they= are closing their books down,'' he said.=20 Still, some executives at other companies said they were looking more caref= ully at transactions with Enron, especially long-term contracts. They also = said risk-management and credit officers were calling each other regularly = to discuss the situation.=20 Mark Palmer, an Enron spokesman, said on Friday that no energy-trading comp= any had stopped doing business with Enron. He declined to say whether any o= f the company's trading partners had suspended or altered credit terms. He = said the company was continuing to see normal volumes of business.=20 But the crisis that Enron will face if its credit rating is downgraded is j= ust a symptom of the bigger problem the company must confront. For years, t= he details of Enron's finances have been a mystery even to the Wall Street = analysts whose job it is to follow the company, and to the investors who ow= n its stock and bonds. When Enron's profits were soaring and it was creatin= g lucrative new markets, shareholders did not seem to care about the impene= trability of its financial statements.=20 Now they do. Yet the company seems incapable of offering straight answers t= o the questions investors ask.=20 To others in the industry, the opaqueness of the company's financial statem= ents parallels Enron's efforts to keep its energy-trading business lightly = regulated and free of disclosure requirements. Though they do not expect En= ron to crumble like Long-Term Capital Management, they say that, like the g= iant hedge fund, Enron uses a lot of debt, regulatory oversight is limited = and outsiders have a difficult time figuring out its finances.=20 The most pressing concerns are a series of partnerships and trusts Enron cr= eated to move some of its assets and debt off its balance sheet. With names= like Marlin and Osprey, the partnerships have at least $3.3 billion in bon= ds outstanding, backed by assets like a stake in Azurix, Enron's water comp= any subsidiary. Enron has promised that if the partnerships' debts exceed t= he value of their assets, Enron will issue enough new shares to make up the= difference.=20 DEALS with partnerships formed by Mr. Fastow, who was chief financial offic= er when they were organized, led to the $1.2 billion write-off in sharehold= ers' equity that Enron announced last week. The company has offered only sk= impy details of its transactions with those partnerships.=20 Enron ended its relationships with those partnerships in the last quarter, = after being criticized by shareholders. In the process, it wrote off a prom= issory note that it had carried on its books, reducing its shareholders' eq= uity by $1.2 billion. But, because of complex accounting rules, the transac= tion was not apparent in Enron's quarterly earnings report.=20 The transaction disturbs investors because it suggests that Enron may have = found a way to hide losses, throwing the accuracy of its financial statemen= ts into question. When Enron released third-quarter earnings on Oct. 16, it= reported a loss from $1 billion in write-offs on failed investments. The e= arnings statement did not mention the additional $1.2 billion equity write-= down. But the company said its core business had been solidly profitable, a= nd its shares rose.=20 In a conference call with analysts after the announcement, Mr. Lay, Enron's= chairman, also disclosed the reduction in shareholder equity. The referenc= e was a brief one, however, and some listeners did not catch it. Those anal= ysts were angered when they found out the next day what Enron had done, and= many were confused by the accounting procedure. Enron's stock began to sli= de, and investors clamored for more information about the write-off. But so= far, the company's efforts to clear up the situation have further unnerved= investors.=20 Mr. Lay has met with investors during the last two weeks to try to explain = the deals, but some on Wall Street say they have come away with doubts abou= t Mr. Lay's grasp of the situation. They say that the two people at Enron w= ho appear to have been most knowledgeable about the deals -- Mr. Skilling a= nd Mr. Fastow -- have both left the company.=20 In an interview in late August, Mr. Lay said he did not know some details a= bout the deals involving Mr. Fastow. In response to one question about them= , he said, ''You're getting way over my head.''=20 Mr. Palmer of Enron disputed any suggestion that Mr. Lay did not have a gra= sp of the investments at issue, saying Mr. Lay was handicapped in talking a= bout them because of the S.E.C. investigation. ''There is not a whole lot w= e can say, or should say, about them,'' Mr. Palmer said. He also said the c= ompany expected to generate about $3 billion in cash through asset sales by= the end of next year.=20 In a conference call on Tuesday, analysts pressed Mr. Lay and other top Enr= on executives to reveal more information about the LJM write-down and its o= ther partnerships. Instead, they offered only vague explanations of the dea= l, leaving Wall Street worried that more write-offs might be coming.=20 David Fleischer, a Goldman, Sachs analyst and a longtime supporter of the c= ompany, was among those who came away concerned. ''If Enron is unable to cl= arify its off-balance-sheet transactions and restore confidence in the very= near term by assuring investors that no more surprises are forthcoming tha= t would affect the balance sheet or liquidity position, then the company wi= ll likely lose access to the capital markets,'' he wrote in a research note= after the call.=20 To try to reassure investors, Enron said late Thursday that EnronOnline, it= s Internet-based trading exchange, executed more than 8,400 trades that day= , a higher-than-normal volume.=20 ''We know we have our work cut out for us if we are to rebuild our credibil= ity with the investment community -- and we're working on that,'' Mr. Lay s= aid in a statement. ''But in the meantime, the best evidence of our strengt= h is the willingness of customers to bring their business to Enron.''=20 But those reassurances apparently are no longer enough for Wall Street. Enr= on's stock tumbled almost 6 percent Friday, to its lowest levels in six yea= rs.=20 Now analysts are scrambling to figure out the extent of Enron's off-balance= -sheet debt and to assess the risk that the company will have to issue new = shares to make good on its partnership guarantees.=20 Carol Coale, an analyst at Prudential Securities in Houston, calculates tha= t Enron may have close to $9 billion in off-balance-sheet debt. She said th= at Enron had for two years been trying to sell about $6 billion in foreign = assets -- including properties in Latin America and a power plant in India = embroiled in a dispute with the state government -- and she worries about t= hose prospects for sale in light of Enron's problems and the souring econom= y.=20 ''As Enron is forced to sell assets to keep the ratings agencies off their = backs, they may have to write those assets down,'' Ms. Coale said. On Wedne= sday, she downgraded her rating on Enron to ''sell'' from ''neutral.''=20 ''The bottom line is, it's really difficult to recommend an investment when= management does not disclose the facts,'' Ms. Coale said.=20 Short-sellers, who attacked Enron's accounting even before the company disc= losed the write-off, say the company's problems may run even deeper than an= alysts fear. Enron may have used the partnerships not just to finance money= -losing investments but to hide losses in its core trading business, they s= ay.=20 ''The company still isn't disclosing enough to know whether the core busine= ss, the trading business, is profitable,'' said Mark Roberts, director of r= esearch at Off Wall Street, which recommended shorting Enron's stock on May= 7, when it stood at $59.43. ''The issue remains: why are they doing these = transactions? Our theory has been that the core operations aren't that prof= itable.''=20 James Chanos, a leading short-seller who has bet that Enron's stock will fa= ll, said, ''Is Enron booking gains when it has real profits, but hiding the= losses when deals go against it?'' Mr. Palmer of Enron said the company st= ood by its reported energy-trading profits.=20 Even traders at other energy companies say they do not have a clear picture= of Enron's positions. Enron maintains that it is in no danger of being wip= ed out by a sharp move in electricity or gas prices because it keeps its tr= ading book balanced -- meaning the energy it has agreed to sell is offset, = in roughly equivalent amounts, by energy it has agreed to buy.=20 ''With these guys, they tell us -- and all you've got is their word -- that= they're hedged,'' said Mr. Verleger, the economist.=20 IN fact, Enron has lobbied forcefully over the years to limit regulation an= d disclosure of its trading operations. Last year, the company successfully= lobbied Congress to effectively ensure that its Internet-trading platform = would be exempted from regulation by the Commodity Futures Trading Commissi= on.=20 Enron and other power traders do file limited information in reports to the= Federal Energy Regulatory Commission, the agency that oversees wholesale e= lectricity and natural gas markets. But the commission does not keep track = of specific transactions and prices.=20 Large-scale energy trading has existed for only about a half-dozen years. E= nron pioneered the business, and now dominates it, accounting for about one= -quarter of all trading in the United States.=20 Before Congress and federal regulators opened up the market for wholesale e= lectricity, a process that began in earnest a decade ago, the power busines= s was a simpler affair. Utilities were given areas of monopoly service, and= their rates -- and ability to deliver enough electricity -- were overseen = by state regulators. But with the move to deregulate the business, independ= ent and unregulated generators and traders have flourished, providing an ev= er-growing portion of the nation's power.=20 Beginning in the 1980's, the sale and transportation of natural gas was als= o deregulated, spurring Enron, which used to be primarily a gas-pipeline co= mpany, to move into the trading business.=20 The company's shift to trading gas and electricity accelerated in the mid-1= 990's, with the ascension of Mr. Skilling, who became chief executive in Fe= bruary, just six months before his unexpected resignation. Underscoring the= change in direction, in securities filings this year Enron described its p= rincipal business as ''security brokers, dealers and flotation.'' Before, i= t had said it was in the business of ''wholesale-petroleum and petroleum pr= oducts.''=20 For most of its ascent, Enron reported outstanding profit figures and Wall = Street accepted them with pleasure. A year ago, when it disclosed the first= transactions with partnerships led by Mr. Fastow, the company's former chi= ef financial officer, analysts who asked questions were told that the deals= were routine and were being disclosed only because of Mr. Fastow's involve= ment.=20 Enron does not appear to face an immediate cash crunch. But the bank credit= lines that it drew on last week to pay off its short-term debt will have t= o be renegotiated next spring. The controversial partnerships do not have t= o pay their debts until the following year -- unless Enron loses its invest= ment-grade credit rating before that.=20 ENRON will also need to maintain its large trading positions, which could s= uffer if participants in those markets grow more nervous about Enron's cred= it. When Long-Term Capital was stumbling in 1998, some Wall Street rivals s= old the securities they thought Long-Term owned, trying to force Long-Term = to sell its positions quickly and at a loss. Something similar in energy ma= rkets might be possible. If so, Enron might find, as Long-Term did, that po= sitions that should offset each other do not.=20 Enron's new chief financial officer may yet persuade investors that in fact= the company's profits are real, and that its condition is better than the = short-sellers believe. As questions are answered, confidence, and the share= price, could rebound.=20 But for now, investors are skittish, and some competitors are eager to take= advantage of Enron's plight. Photos: Enron, which is building a new headquarters in Houston, grew with d= eregulation. But with deregulation in doubt, Enron stock has dropped. (Phil= lippe Diederich for The New York Times); Enron owns 65 percent of the power= plant in Dabhol, India, but has had trouble collecting payments. (The New = York Times)(pg. 13); 'We know we have our work cut out for us,' says Kennet= h L. Lay, Enron's chief. (WGBH/''Frontline'')(pg. 1) Chart: ''Enron's Board= '' Directors have not addressed the company's current difficulties, a spoke= sman said. KENNETH L. LAY: 58 Chairman JOHN H. DUNCAN: 73 Former chairman o= f the executive committee, Gulf and Western Industries ROBERT A. BELFER: 65= Chairman, Belco Oil & Gas CHARLES A. LEMAISTRE: 77 President emeritus, M. = D. Anderson Cancer Center, University of Texas ROBERT K. JAEDICKE: 72 Profe= ssor emeritus, Graduate School of Business, Stanford RONNIE C. CHAN: 51 Cha= irman, Hang Lung Group WENDY L. GRAMM: 56 Director, Mercatus Center, George= Mason University JOHN MENDELSOHN: 64 President, M. D. Anderson Cancer Cent= er, University of Texas PAULO V. FERRAZ PEREIRA: 46 Executive vice presiden= t, Group Bozano JOHN WAKEHAM: 68 Former British Secretary of State for Ener= gy NORMAN P. BLAKE JR.: 59 Chief executive, Comdisco KEN L. HARRISON: 58 Fo= rmer chief executive, Portland General Electric (FORMER ENRON EMPLOYEE) JER= OME J. MEYER: 63 Chairman, Tektronix FRANK SAVAGE: 62 Chairman, Alliance Ca= pital Management International JOHN A. URQUHART: 72 Adviser to the chairman= , Enron HERBERT S. WINOKUR JR.: 57 President of Winokur Holdings (FORMER EN= RON EMPLOYEE) (pg. 13)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Money and Business/Financial Desk; Section 3 Plumbing Mystery Of Deals By Enron By FLOYD NORRIS 10/28/2001 The New York Times Page 13, Column 6 c. 2001 New York Times Company AT the heart of the sudden collapse in investor confidence in the Enron Cor= poration are unusual trades it entered into with partnerships led by its ch= ief financial officer, Andrew S. Fastow, beginning in the summer of 1999. B= ecause they were transactions among related parties, the company was requir= ed to disclose them, but the disclosures raised as many questions as they a= nswered. Following are some questions that investors are asking, and the cu= rrently available answers.=20 Q. Why did Enron enter into the deals? A. Enron's first disclosures, in 1999, gave no reason. In later reports, it= said it was seeking to ''hedge certain merchant investments and other asse= ts,'' by which it apparently meant investments in technology and telecommun= ications companies.=20 Q. How did those investments do?=20 A. It looks as if they plunged in value, although there is no clear disclos= ure on that.=20 Q. Why can't that be discerned?=20 A. The company never said just what the investments were. And the transacti= ons with the partnerships were complicated, involving a variety of derivati= ve securities, Enron stock and various promissory notes. Enron's financial = disclosures do not provide enough information to understand the arrangement= s completely.=20 Q. Why were they so complicated?=20 A. One reason may have been to use accounting rules to its advantage. One a= ccounting rule dictates that companies may not record profits or losses on = transactions in their own stock. If a company sells its shares at $10 each = and then buys them back -- whether for $1 or $50 -- there is no gain or los= s. But shareholder equity does go up or down on the balance sheet -- in tha= t case reflecting how much extra cash the company took in, or paid out, on = the transactions. Enron's transactions appear to have been structured to fa= ll under that rule.=20 Q. Who made money from these transactions?=20 A. Enron reported some profits along the way from the deals, although not a= ll of the profits were spelled out in its quarterly filings. And it appears= that the partnerships distributed money to investors.=20 Q. If the deals began in 1999, why all the uproar now?=20 A. Many investors and analysts were not curious about them when everything = seemed to be going well. As long as Enron was exceeding its forecasted prof= its each quarter, they were willing to assume that what was not being discl= osed was not really important.=20 Q. When were concerns raised with Enron?=20 A. The complaints grew as Enron's share price fell earlier this year. By th= is summer, Enron decided that Mr. Fastow would sell his stake in the partne= rships. Then, because the partnerships would no longer be considered relate= d to Enron, the company would no longer have to disclose anything about the= transactions. But investors were still worried, and Enron later closed out= its deals with the partnerships.=20 Q. How did Enron do?=20 A. Badly. It took a $35 million loss, which, given the size of the transact= ions involved and the previous profits taken, was not very much. But it als= o reduced shareholder equity by $1.2 billion.=20 Q. How did that happen?=20 A. That, like so much else, is not clear. But it looks as if the partnershi= p owed Enron that much money, could not pay and was let off the hook by Enr= on. In return, Enron terminated ''previously recorded contractual obligatio= ns to deliver Enron shares in future periods.'' Enron treated that like a s= hare buyback, even though the shares in question had not been issued, and d= etermined that there was no need to treat it as a loss that would reduce re= ported earnings.=20 Q. Is that legal under the accounting rules?=20 A. Presumably it is. But Enron's limited disclosures make it impossible to = say for sure. Enron may have discovered ways to use the accounting rules to= enable it to keep losses off income statements, while leaving profits on t= hem. That may become clearer when the Securities and Exchange Commission, w= hich has begun preliminary inquiries, completes its work. FLOYD NORRIS Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Money and Business/Financial Desk; Section 3 DataBank Investors Seem to Ignore Discouraging News By MICHAEL BRICK 10/28/2001 The New York Times Page 17, Column 3 c. 2001 New York Times Company Investors sent stocks markedly higher last week, despite reports on the eco= nomy and corporate profits that were resoundingly poor.=20 The Dow Jones industrial average, strengthened by triple-digit rallies on M= onday and Thursday, ended the week nearly back to its level of Sept. 10, on= e day before the attacks on the World Trade Center and the Pentagon. Broade= r indicators ended slightly higher than they were on Sept. 10. Investors overcame their initial discouragement about reports that orders f= or durable goods and sales of existing homes were deteriorating faster than= expected. They also seemed unfazed by reports of corporate profits declini= ng from a year ago, at some companies by more than 30 percent.=20 All the bad news, investors seemed to surmise, meant that the government wa= s more likely to act aggressively in stimulating the economy, with tax brea= ks, spending and lower interest rates.=20 The Dow average gained 341.06, or 3.7 percent, to close at 9,545.17. The Na= sdaq composite index rose 97.65 points, or 5.8 percent, to 1,768.96. The St= andard & Poor's 500-stock index rose 31.13, or 2.9 percent, to 1,104.61.=20 MICHAEL BRICK Charts: ''STOCKS IN THE NEWS'' Enron NYSE: ENE The energy trading company o= usted its chief financial officer, Andrew S. Fastow, whose involvement in c= omplicated transactions with Enron caught the attention of the S.E.C. Frida= y's Close: $15.40 Week's Change: -40.88% EST. '01 P/E: 8.52 SBC Communicati= ons NYSE: SBC The company posted a 30 percent decline in earnings and said = it would cut thousands of jobs because of the weak economy and strong compe= tition. Friday's Close: $39.20 Week's Change: -10.17% EST. '01 P/E: 16.82 W= alt Disney NYSE: DIS After trimming $100 million from the price, Disney com= pleted its purchase of the Fox Family Worldwide cable television operation.= The deal included $2.9 billion in cash and $2.3 billion in assumed debt. F= riday's Close: $18.71 Week's Change: +1.19% EST. '01 P/E: 25.28 Microsoft N= NM: MSFT Microsoft introduced its computer operating system, Windows XP, th= e latest version of its flagship product. Friday's Close: $62.20 Week's Cha= nge: +7.43% EST. '01 P/E: 33.88 Vysis NNM: VYSI The drug maker Abbott Labor= atories has agreed to acquire Vysis, a laboratory products maker, in a stoc= k deal worth about $355 million. Friday's Close: $30.25 Week's Change: +47.= 13% EST. '01 P/E: -- WorldCom NNM: WCOM The long-distance telephone company= posted a 44 percent drop in its third-quarter profit and warned that sales= growth in its core data and Internet business would slow in the final quar= ter and in 2002. Friday's Close: $13.38 Week's Change: +1.59% EST. '01 P/E:= 12.15 Affymetrix NNM: AFFX Affymetrix settled a patent lawsuit over DNA an= alysis technologies with a rival, Hyseq, and the companies plan to form a j= oint venture. Friday's Close: $31.70 Week's Change: +72.66% EST. '01 P/E: -= - Overture Services NNM: OVER The Internet search service, formerly called = GoTo.com, reported a profit in the third quarter and higher sales, as its p= ay-per-listing service remained popular with advertisers. Friday's Close: $= 25.50 Week's Change: +32.88% EST. '01 P/E: -- (Source: Bloomberg Financial = Markets)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Asks Banks for More Credit After Stock Slide, FT Reports 2001-10-28 20:20 (New York) Houston, Oct. 28 (Bloomberg) -- Enron Corp., the largest energy trader, asked banks to provide further credit after tapping a $3.3 billion credit line last week to bolster investor confidence, the Financial Times reported, citing company sources. Enron's stock has fallen more than 50 percent since Oct. 17 when an investor sued the company for conflict of interest over transactions with affiliates run by Enron's former Chief Financial Officer Andrew Fastow. The company has been shut out of the leading market for low- interest, short-term loans since announcing Oct. 16 it would take a $1.01 billion special charge and write down shareholders' equity by another $1.2 billion, the FT said. Enron spokesman Mark Palmer said he hoped the company would announce the new financing facility in coming days, the newspaper said. Enron Asks Banks For Additional Credit -FT 10/28/2001 Dow Jones Energy Service (Copyright (c) 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- Enron Corp. (ENE) is attempting to persuade banks to= provide additional credit, The Financial Times reported on its Web site Su= nday.=20 The company was also due to hold a special board meeting Sunday to consider= confidence-building measures after surprise financial disclosures damaged = its reputation among U.S. investors, The Financial Times reported. The Financial Times quoted Enron spokesman Mark Palmer as saying he hoped t= he company could have something to announce in coming days as a result of i= ts latest effort to "establish additional lines of liquidity."=20 "Once we are able to the liquidity position shored up, that will put a lot = of fears of the unknown to rest," The Financial Times quoted Palmer as sayi= ng. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business; Financial Desk Week in Review TOP STORIES OCT. 22-26 Lockheed Edges Out Boeing for Contrac= t Abigail Goldman; Joseph Menn; Jesus Sanchez; Jeff Leeds; Chuck Philips; Meg= James; Nancy Rivera Brooks; Evelyn Iritani; James F. Peltz; Myron Levin; P= eter Pae 10/28/2001 Los Angeles Times Home Edition C-2 Copyright 2001 / The Times Mirror Company The vote is in. Lockheed Martin Corp. won the coveted right to build the na= tion's next-generation fighter aircraft, beating out Boeing Co. for what co= uld be the biggest military contract ever.=20 Culminating a five-year battle between two of the world's largest defense c= ontractors, Pentagon officials picked Lockheed Martin to begin development = of the Joint Strike Fighter, with plans to purchase 3,000 of the planes at = a cost of more than $200 billion. With the potential for foreign sales topping another $200 billion, the cont= ract is considered the most lucrative in U.S. history. "This really is the = contract of the millennium," said Christopher Hellman, analyst with the Cen= ter for Defense Information. "Nothing has or will come close. "=20 Peter Pae=20 Ford Settles Lawsuit Over Faulty Part=20 In the largest automotive class-action settlement in history, Ford Motor Co= . will reimburse customers who paid hundreds of millions of dollars to repl= ace a faulty part that caused their vehicles to stall.=20 It was uncertain how many consumers would qualify for reimbursements in the= range of $160 apiece.=20 The settlement caps six years of litigation. Plaintiffs' lawyers said the c= ost to Ford would be as high as $2.7 billion.=20 Myron Levin=20 AMR Posts Record Loss in Quarter=20 Even though more Americans are flying again, the airline industry continues= to reel and its problems are expected to worsen this holiday season.=20 AMR Corp., the parent of American Airlines, the world's largest airline, po= sted a record loss for the third quarter, even after getting $508 million i= n federal financial aid.=20 Although the number of passengers has kept growing each week since the Sept= . 11 attacks, about 20% fewer people are flying.=20 Less than a month before the busy Thanksgiving weekend, American Airlines s= ays advance bookings for November are down 6% from a year earlier.=20 Meanwhile, the airlines are now reporting a little-noticed aspect of the go= vernment rescue package: They have to pay federal taxes on the cash grants.= =20 James F. Peltz=20 ITC Says Imports Hurt Steel Industry=20 The International Trade Commission ruled that foreign imports pose a seriou= s threat to the domestic steel industry, paving the way for punitive sancti= ons that are likely to raise steel prices and intensify trade tensions with= Europe and Asia.=20 The independent U.S. agency has until mid-December to provide the White Hou= se with a list of proposed remedies, which could include import quotas or h= efty tariffs on foreign steel.=20 Beleaguered U.S. steelmakers applauded the decision.=20 President Bush, who instigated the ITC investigation, is expected to approv= e the protective measures, though critics warn they could harm a weakened d= omestic economy and complicate efforts to launch a new round of global trad= e talks.=20 Evelyn Iritani=20 Shares of Enron Plummet Amid Losses=20 Enron Corp.'s stock was pummeled by investors following disclosures of loss= es and shrinking shareholders' equity related to failed investments and a c= omplicated hierarchy of limited partnerships used to shelter some Enron ass= ets.=20 The stock slide was compounded by disclosure of a Securities and Exchange C= ommission inquiry into two of the partnership arrangements and by Wall Stre= et worries about future cash flow and credit problems that might be caused = by the investment vehicles.=20 Two conference calls with analysts and investors failed to calm nerves, and= several analysts lowered their recommendations on Enron.=20 Enron has reiterated that its finances are strong. And although analysts no= te that Enron's core businesses remain sound, some analysts doubt that the = usually taciturn company has revealed all of its problems.=20 To mollify investors, Enron replaced its chief financial officer, who until= recently headed the two partnerships the SEC is eyeing.=20 Nancy Rivera Brooks=20 Pentagon OKs Northrop Bid for Newport News=20 Northrop Grumman Corp. was all but assured of winning the bid to acquire Ne= wport News Shipbuilding Inc. as the Pentagon endorsed the deal and the Just= ice Department, citing antitrust concerns, blocked a rival bid by General D= ynamics Corp.=20 It marked a stunning turn of events for Northrop, which got the nod to acqu= ire the Virginia builder of nuclear submarines and aircraft carriers despit= e having been the underdog.=20 The Los Angeles-based defense contractor made an unsolicited offer for Newp= ort News after the shipbuilder had inked a $2.1-billion deal with General D= ynamics.=20 Separately, Northrop said third-quarter earnings fell 22% because of a larg= e drop in pension fund investments.=20 Peter Pae=20 Hollywood Production Jobs Fall to 4-Year Low=20 Skittishness following the Sept. 11 terrorist attacks has exacerbated an al= ready slow season in Hollywood, pushing employment in the movie, television= and film industry to a four-year low in September, state statistics show.= =20 Cutbacks and delayed projects by the major studios has trickled down throug= h the industry, leading to a spate of layoffs at small companies that provi= de equipment and services for the industry.=20 Meg James=20 Grammy Officials Urge Greene Settlement=20 High-ranking officials at the Grammy organization recommended a settlement = of more than half a million dollars to resolve sexual assault and battery a= llegations against the nonprofit group's chief executive, C. Michael Greene= , Grammy sources said.=20 The proposed settlement, subject to approval by the group's board of direct= ors, has ignited an internal revolt, with at least a dozen of the 41 truste= es privately calling for Greene's firing, the sources said.=20 Greene declined to comment. Attorneys for the Grammy nonprofit group previo= usly denied that Greene assaulted or had any sexual contact with Jill Geime= r, the Grammy executive who has threatened to sue over Greene's alleged mis= conduct.=20 Chuck Philips=20 EMI Ousts Record Label Executive Nancy Berry=20 British music conglomerate EMI Group sacked Nancy Berry, the vice chairwoma= n of its worldwide Virgin Records division.=20 Berry's exit came a week after the London-based record company ousted its g= lobal record chief, Ken Berry, who is Nancy Berry's former husband.=20 The shake-up follows a dispiriting period for EMI, including a disastrous s= ales debut from pop icon Mariah Carey, who suffered a nervous breakdown mon= ths after signing an $80-million contract with the company this year. Nancy= Berry spearheaded the elaborate marketing campaign for Carey's album, "Gli= tter," which has sold fewer than 400,000 copies since its Sept. 11 debut.= =20 Jeff Leeds=20 Management Buyout of G&L Realty Approved=20 Stockholders of G&L Realty Corp. approved a management-led buyout of the re= al estate investment trust despite a higher offer by a rival group and conc= erns that the deal unfairly favors top executives.=20 The company's co-chairmen, Daniel Gottlieb and Steven Lebowitz, plan to tak= e the small Beverly Hills-based company private after a majority of shareho= lders backed their $12-a-share offer.=20 The management-led offer triggered a shareholder lawsuit this year that cla= imed G&L's board breached its fiduciary duty=20 Jesus Sanchez=20 Internet Archive Turns Back Web Pages of Time=20 The nonprofit Internet Archive launched its so-called Wayback Machine, allo= wing Web surfers to check out most Internet sites that have vanished and ol= der versions of sites that are still around.=20 The San Francisco effort is the brainchild of Brewster Kahle, a millionaire= technologist who wants to preserve the Internet's ephemera for generations= to come.=20 Like many Internet pioneers, however, Kahle faces unfamiliar risks along wi= th the opportunities: the archive might be the most massive violation of co= pyright law since ownership rights over words came into being.=20 More than 10 billion pages are available at http://web.archive.org.=20 Joseph Menn=20 Job Cuts, Make-Over in Store for Sears=20 Sears, Roebuck & Co. is getting a new look, borrowing from competitors that= have been biting into Sears bottom line.=20 In a bid the company says will increase operating income by $1 billion duri= ng the next three years, Sears will look more like a mass merchant, with mo= re self-serve areas and centralized checkouts.=20 As part of its financial realignment, Sears will cut 4,900 jobs in the next= 18 months.=20 The company's challenge, analysts say, is to offer something unique within = its niche of serving middle-income consumers--an ever difficult proposition= against innovative rivals such as Kohl's and Target.=20 Abigail Goldman PHOTO: Newport News builds nuclear submarines and aircraft carriers.; ; PHO= TOGRAPHER: Associated Press; PHOTO: Sears is cutting nearly 5,000 jobs and = launching a new strategy.; ; PHOTOGRAPHER: Associated Press; PHOTO: The ree= ling airline industry is expecting its problems to worsen.; ; PHOTOGRAPHER:= Agence France-Presse; GRAPHIC: Dimming Power, Los Angeles Times;=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 BUSINESS Ralph Bivins Devon Energy makes building its own with major lease RALPH BIVIN Staff 10/28/2001 Houston Chronicle 2 STAR 10 (Copyright 2001) HOUSTON is known as the "Energy Capital of the World." And a glance around = the downtown skyline proves the nickname is appropriate. Houston skyscraper= s bearing the names of Enron, Chevron, Exxon and Shell make significant con= tributions to the view.=20 Now another name is being added to the downtown mix, enhancing the energy c= apital image even further. The 36-story Two Allen Center has been renamed D= evon Energy Tower. Devon Energy has just signed a lease for 193,000 square feet of space, more= than doubling its presence in the building, and as part of the deal, Devon= gets to put its name on the structure.=20 The lease also gives Oklahoma City-based Devon the right to take more space= in the 1 million-square-foot building, at 1212 Smith St.=20 Devon recently announced its plans to acquire Mitchell Energy & Development= , but it will maintain Mitchell's offices in The Woodlands, said Klay Kimke= r, manager of office administration for Devon.=20 Kevin Snodgrass and Tim Relyea of Cushman & Wakefield represented Devon in = the transaction. Paul Frazier and Margaret Sigur negotiated the deal on beh= alf of TrizecHahn Office Properties, the owner of the building.=20 TrizecHahn owns both the Allen Center and Cullen Center office complexes, a= total of 6 million square feet of space in downtown. The TrizecHahn office= space is nearly full right now, but Enron will be vacating large amounts o= f space there next year when the nearby Enron building is complete.=20 Teamsters to build facilities=20 Teamsters Union officials are planning to build new headquarters facilities= after the union sells its building on the Katy Freeway.=20 To replace the Katy Freeway building, the union expects to build two smalle= r structures near Bush Intercontinental Airport to house different chapters= , said A.W. Parker, secretary treasurer of Local 968.=20 Parker's group is expecting to build a 13,000-square-foot building at Ella = Boulevard at Beltway 8.=20 Another Teamsters group has purchased 4.5 acres on Beltway 8 at Diplomatic = Plaza Drive, in the World Houston Business Center. The land was purchased f= rom the Licha Family Trust. Tony Patronella and Marc Drumwright, both of So= uthwest Realty Advisors, handled the sale.=20 Chicago firm buying property=20 A Chicago real estate investment firm is on a quest to acquire suburban off= ice buildings in Houston.=20 ML Capital Ventures has purchased two small office structures: the 71,736-s= quare-foot building at 5500 Northwest Central Drive and the 66,338-square-f= oot building at 5301 Hollister. The building on Northwest Central Drive is = the headquarters of BJ Services energy company.=20 Mike Luecht, president of ML Capital, said his firm will acquire two additi= onal Houston office buildings before the end of the year.=20 ML Capital, which has been in business for eight months, will exceed Luecht= 's initial plan to buy more than $22 million worth of suburban office space= in Houston in the company's start-up phase.=20 Luecht said his firm was bullish on two types of real estate: buying wareho= uses in Chicago and buying office buildings in suburban Houston. Houston's = economy has been adding jobs and it is a promising market that is overlooke= d by many investors, Luecht said. Many investors have been too slow to forg= et the devastating meltdown of Houston realty market in the 1980s, Luecht s= aid.=20 In its most recent deal, ML Ventures bought the 5500 Northwest Central buil= ding in partnership with Avgeris & Associates of Chicago. Tom Bousquet of C= B Richard Ellis brokered the deal.=20 Woodlands opens new section=20 Several $1 million home sites go up for sale this weekend as The Woodlands = opens a new section of its Carlton Woods gated community.=20 The premium lots will be facing the new Jack Nicklaus Signature golf course= .=20 Custom lots will range in price from $150,000 to $1 million and range in si= ze from one-fifth of an acre to two-and-three-fourths acres.=20 The Carlton Woods community is the first gated community in The Woodlands a= nd has been well received by upper-end home buyers, said Paul Lazzaro, vice= president of marketing for The Woodlands.=20 Thirty-two homes are under construction in Carlton Woods and all of them ar= e priced at more than $1 million.=20 A total of 208 lots have been sold in Carlton Woods, which opened about a y= ear ago. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 INDIA PRESS: Enron Plans To Exit LNG Shipping JV 10/28/2001 Dow Jones International News (Copyright (c) 2001, Dow Jones & Company, Inc.) NEW DELHI -(Dow Jones)- Enron Corp. (ENE) has decided to exit its Indian sh= ipping joint venture, Greenfield Holding Co., the Financial Express reports= , quoting the Press Trust of India news agency.=20 Enron's affiliate, Atlantic Commercial Inc., holds a 20% stake in Greenfiel= d. Mitsui OSK Lines Ltd. (J.OSM) holds 60%, while India's state-owned Shipp= ing Corp. of India (P.SPG) holds the remaining 20%, the report said. "Atlantic Commercial has expressed a desire to its partners to exit...," th= e PTI quoted a shipping industry source as saying.=20 Greenfield's liquefied natural gas carrier "Laxmi" would have brought gas f= or Enron's Indian unit, Dabhol Power Co., the Financial Express reports.=20 Enron has a controlling 65% stake in the 2,184 megawatt Dabhol power projec= t, located in the western Indian state of Maharashtra.=20 Newspaper Web site: http//www.financialexpress.com=20 -By Himendra Kumar; Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dow= jones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business/Financial Desk; Section C Enron Taps All Its Credit Lines To Buy Back $3.3 Billion of Debt By FLOYD NORRIS 10/27/2001 The New York Times Page 2, Column 5 c. 2001 New York Times Company The Enron Corporation, trying to reassure investors that it has ample liqui= dity, began to repurchase all its outstanding commercial paper yesterday, u= sing $3.3 billion it borrowed from banks by depleting its lines of credit.= =20 An Enron spokesman said that when the commercial paper repurchases are comp= leted the company will retain more than $1 billion in cash. The moves did not appear to reassure investors, as Enron's share price fell= to another six-year low. Shares traded as low as $15.04 yesterday, before = ending the day at $15.40, down 95 cents.=20 The move will raise the interest expense for the company, because banks nor= mally charge more than companies have to pay in the commercial paper market= , and because its outstanding debt will rise by the additional $1 billion.= =20 Enron's debt is rated investment grade. But its bonds now trade below inves= tment grade levels, although not so low that it appears investors fear an e= arly default. But with the bonds trading so low, it is unlikely Enron will = be able to sell more commercial paper.=20 Enron's stock has been plunging since Oct. 17, shortly after it disclosed t= hat its third-quarter balance sheet, which has yet to be released, will sho= w a $1.2 billion reduction in shareholder equity as a result of complicated= transactions involving partnerships formerly controlled by Andrew Fastow, = who was the company's chief financial officer until he was replaced on Wedn= esday.=20 The stock has lost more than half its value since the earnings announcement= , and the company has disclosed that the Securities and Exchange Commission= has asked questions about its accounting practices. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 COMPANIES & FINANCE INTERNATIONAL - Enron's bond prices drop to warning lev= els. By ROBERT CLOW, SHEILA MCNULTY and JENNY WIGGINS. 10/27/2001 Financial Times (c) 2001 Financial Times Limited . All Rights Reserved Enron, the Houston-based energy trading group, continued to pay a heavy pri= ce for its lack of financial transparency yesterday as its bond prices plum= meted.=20 Investor confidence in Enron has declined sharply since the company announc= ed a $1.2bn reduction of shareholder equity stemming from a complex off-bal= ance sheet structure. The Securities and Exchange Commission has also launc= hed an informal investigation into the company's finances. Enron's five-year bonds were trading yesterday at 77 cents in the dollar wi= th a yield of 11.13 per cent, down from 83 cents on Thursday. Bond prices a= t these levels normally suggest that investors expect a company to file for= bankruptcy.=20 Late on Thursday, Enron announced that it would draw on its bank lines to b= uy back its outstanding commercial paper after two ratings agencies put the= company on negative watch.=20 Commercial paper financing, which normally has to be rolled every 90 days, = is one of the first forms of financing to disappear in a crisis.=20 "What they want to do is assure their clients and other trading partners th= at they are creditworthy and continue with business," said Robin West, chai= rman of the Petroleum Finance Company, the industry consultants. "In a situ= ation like this, cash is king."=20 Enron's biggest immediate business risk is that its major trading counterpa= rties, such as Duke Energy and Reliant Resources, start asking it for more = collateral, increasing the cost of its everyday business.=20 If Enron were downgraded to junk, the counterparties could do just that.=20 So far, credit rating analysts say, Enron's core business is holding up wel= l. But their actions over the past few days acknowledge that the company co= uld still be severely damaged by the scandal.=20 Enron has long faced criticism of its opaque financial reporting, but its m= ost recent problems stem from the LJM private equity fund run by Andy Fasto= w, the company's former chief financial officer.=20 Enron compensated its partners in this complex off-balance sheet structure = by promising to give them Enron shares, if the value of private equity inve= stments in The New Power Company, technology and other things fell below a = certain level.=20 Those investments fell $1.2bn in value from the threshold level, which shou= ld have triggered the issue of 62m shares if the deal had not been reversed= .=20 The complex deal was designed to make sure Enron did not experience the sam= e balance sheet volatility that JP Morgan Chase and others have suffered fr= om marking their private equity investments to market.=20 (c) Copyright Financial Times Ltd. All rights reserved.=20 http://www.ft.com. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 SHORTS - Enron bond prices under pressure. 10/27/2001 Financial Times (c) 2001 Financial Times Limited . All Rights Reserved Enron, the Houston-based energy trading giant, continued to pay the price f= or financial opacity as its stock slumped to its lowest level since 1995 an= d its five-year bonds traded at 77 cents in the dollar with a yield of 11.1= 3 per cent, down from 83 cents on Thursday. Bond prices at these levels nor= mally suggest that investors expect a company to file for bankruptcy. Page = 10.=20 (c) Copyright Financial Times Ltd. All rights reserved. http://www.ft.com. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron taps credit line; stock slides 10/27/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. HOUSTON (AP) - After Enron Corp. tapped into more than $3 billion in credit= in an effort to boost confidence of investors and customers, stock prices = dropped.=20 Enron Corp.'s stock price hit its lowest point in more than five years Frid= ay. Shares fell 95 cents on Friday to $15.40, a level not seen since 1995, = as analysts continued to muddle through a complicated series of bookkeeping= issues revealed after the company's earnings announcement earlier this mon= th. The stock is down more than 50 percent in two weeks, and the company lost a= lmost $14 billion in market value.=20 Late this week the company decided to convert $3 billion in revolving credi= t it has through various banks into cash. The company put about $1.1 billio= n in the bank in an effort to reassure business partners and investors of i= ts liquidity and is using the $2.2 billion balance to begin an orderly repu= rchase of a certain kind of short-term corporate IOU known as commercial pa= per.=20 "Nothing spells confidence quite like cash, which is what we want investors= to understand," said Enron spokesman Mark Palmer of the $1.1 billion banke= d this week.=20 Palmer could neither confirm nor deny that the company is negotiating furth= er lines of credit with banks but described such actions as "good managemen= t decisions."=20 On Oct. 16 Enron's third-quarter earnings release drew renewed attention to= an issue investors and analysts had previously been unhappy about: Then-Ch= ief Financial Officer Andrew Fastow, with the Enron board's approval, had f= ormed and run two investment partnerships that could have created a conflic= t of interest.=20 The partnerships, LJM Cayman and LJM2 Co-Investment, did complex financing = and hedging deals with Enron.=20 Fastow had resigned from his roles in the partnerships months ago when Wall= Street began to question whether he could watch out for the interests of E= nron's shareholders and the investment partnership simultaneously. But last= week when the company reported a $35 million loss related to ending its LJ= M ties as well as a $1.2 billion reduction in shareholder equity, new quest= ions began to arise.=20 The Securities and Exchange Commission's Division of Enforcement launched a= n informal inquiry into the partnerships, and earlier this week Fastow was = put on a leave of absence.=20 Reducing the company's debt exposure through commercial paper and putting i= t back into more traditional financial tools, like a revolving line of cred= it, could give great peace of mind to Enron's investors, said Anatol Feygin= , an analyst with J.P. Morgan.=20 "It helps them shore up their support behind their energy trading business,= which is really the core of their operations," Feygin told the Houston Chr= onicle for Saturday's editions.=20 Carol Coale, an analyst with Prudential Securities, still sees the move as = somewhat confusing.=20 "Just last week they were touting their unused lines of credit as a plus, b= ut the fact that they tapped those now sends a strange, mixed message," she= said. "Do they need the cash to keep the rating agencies off their back? I= s it a gesture for customers? It first struck me as another one of these st= rangely timed actions on the part of management." Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business; Financial Desk Enron Decline Continues Bloomberg News 10/27/2001 Los Angeles Times Home Edition C-2 Copyright 2001 / The Times Mirror Company HOUSTON -- Enron Corp. bonds and shares fell after the largest energy trade= r tapped a $3-billion credit line because it has been shut out of the leadi= ng market for low-interest, short-term loans.=20 The company's stock has fallen 54% in the last 14 days after investors ques= tioned its transactions with affiliates run by Enron's former chief financi= al officer. The shares fell 95 cents, or 5.8%, to $15.40 on the New York St= ock Exchange. Investors said Chief Executive Kenneth Lay has failed to reassure them that= the company's credit rating won't be cut. Enron can no longer borrow in co= mmercial paper markets, where short-term loans carry lower rates than banks= offer.=20 "Do they have the financial flexibility they once had? No," said John Cassa= dy, who helps manage $3 billion in bonds at Fifth Third Bancorp. "People ar= e questioning the credibility of management."=20 The company will use its credit line to pay off $2.2 billion in commercial = paper it has outstanding, Enron spokesman Mark Palmer said.=20 The price of Enron's 6.75% bonds, which mature in 2009, declined 11/2 point= s to a bid of 84 cents on the dollar and an offer of 86 cents. At that pric= e, the bonds, which carry a rating of BBB+, yield 9.53%.=20 Investors have grown concerned that the firm's credit rating will be cut af= ter $1.01 billion in third-quarter losses from failed investments. Enron ne= eds good credit to raise cash daily to keep trading partners from demanding= collateral and to settle transactions.=20 Enron's decision to tap its credit line was "a smart financial move," said = Stephen Moore of Moody's Investors Service. "It took away the hassle and ti= me-consuming nature of rolling commercial paper and insured access to capit= al." Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 BUSINESS Enron taps credit line; stock slides / Company says cash will boost confide= nce TOM FOWLER Staff 10/27/2001 Houston Chronicle 3 STAR 1 (Copyright 2001) Enron Corp.'s stock price hit its lowest point in more than five years Frid= ay after it tapped into more than $3 billion in revolving credit in an effo= rt to re-assure investors and customers.=20 Shares fell 95 cents on Friday to $15.40, a level not seen since 1995, as a= nalysts continued to muddle through a complicated series of bookkeeping iss= ues revealed after the company's earnings announcement earlier this month. = The stock is down more than 50 percent in two weeks, and the company lost a= lmost $14 billion in market value. Late this week the company decided to convert $3 billion in revolving credi= t it has through various banks into cash. The company put about $1.1 billio= n in the bank in an effort to reassure business partners and investors of i= ts liquidity and is using the $2.2 billion balance to begin an orderly repu= rchase of a certain kind of short- term corporate IOU known as commercial p= aper.=20 "Nothing spells confidence quite like cash, which is what we want investors= to understand," said Enron spokesman Mark Palmer of the $1.1 billion banke= d this week.=20 Palmer could neither confirm nor deny that the company is negotiating furth= er lines of credit with banks but described such actions as "good managemen= t decisions."=20 Enron's most recent woes began Oct. 16 when its third-quarter earnings rele= ase drew renewed attention to an issue investors and analysts had previousl= y been unhappy about: Then-Chief Financial Officer Andrew Fastow, with the = Enron board's approval, had formed and run two investment partnerships that= could have created a conflict of interest.=20 The partnerships, LJM Cayman and LJM2 Co-Investment, did complex financing = and hedging deals with Enron and were formed originally as a way to offset = risks associated with some of the company's newer businesses such as broadb= and trading.=20 Fastow had resigned from his roles in the partnerships months ago when Wall= Street began to question whether he could watch out for the interests of E= nron's shareholders and the investment partnership simultaneously. But last= week when the company reported a $35 million loss related to ending its LJ= M ties as well as a $1.2 billion reduction in shareholder equity, new quest= ions began to arise.=20 The Securities and Exchange Commission's Division of Enforcement launched a= n informal inquiry into the partnerships, and earlier this week Fastow was = put on a leave of absence.=20 Now Enron will begin repurchasing its commercial paper. This is a way for c= ompanies to raise money over a short period at rates that are usually sligh= tly better than what banks offer, and often with more flexible terms.=20 "To some extent, redeeming the commercial paper is at the expense of the ca= pital markets, which look at it negatively," said Anatol Feygin, an analyst= with J.P. Morgan.=20 But reducing the company's debt exposure through commercial paper and putti= ng it back into more traditional financial tools, like a revolving line of = credit, could give great peace of mind to Enron's investors, he said.=20 "It helps them shore up their support behind their energy trading business,= which is really the core of their operations," Feygin said.=20 Carol Coale, an analyst with Prudential Securities, still sees the move as = somewhat confusing.=20 "Just last week they were touting their unused lines of credit as a plus, b= ut the fact that they tapped those now sends a strange, mixed message," she= said. "Do they need the cash to keep the rating agencies off their back? I= s it a gesture for customers? It first struck me as another one of these st= rangely timed actions on the part of management."=20 Jeff Dietert, an analyst at Simmons & Co., said Enron management needs to c= ontinue to make clear the issues that have investors confused and concerned= .=20 In a worst-case scenario, investor fears could create a vicious cycle that = continues to drive the stock down, which would force bond rating agencies t= o consider downgrades of Enron. That could lead to lower credit ratings, wh= ich would force Enron's energy trading partners to limit their exposure to = the company and cut back on business with it.=20 "Thus, we see a big incentive for Enron to clarify the issues," Dietert wro= te in a report Friday. "Our gut feel is that Enron can pull it off."=20 Feygin said he also believes the company will continue to do better in reve= aling its financial dealings but thinks there may be more surprises in stor= e.=20 For example, a Wall Street Journal article Friday discussed for the first t= ime another business entity with ties to Enron known as Chewco. It was form= ed in 1997 with about $400 million in financial backing to buy interests in= unnamed Enron assets.=20 Chewco was run by Michael Kopper, a managing director of Enron's Global Equ= ity Markets Group. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 BUSINESS Enron says Microsoft breached contract Staff 10/27/2001 Houston Chronicle 3 STAR 2 (Copyright 2001) Enron Corp. filed suit against Microsoft Corp. in state district court in H= ouston this week, claiming the software giant breached a contract over a ne= w high-speed Internet service.=20 The companies entered into an agreement last June in which Enron would prov= ide Internet bandwidth to Microsoft as it rolled out its MSN Broadband serv= ice. Enron's broadband network would link MSN customers in over two dozen s= tates, including Texas. Qwest Communications is providing the Internet infrastructure in 14 other s= tates for MSN.=20 On Oct. 23, Microsoft said that Enron would have breached the contract if i= t didn't provide an operational bandwidth system by Oct. 25, according to B= loomberg News. In the lawsuit, Enron claims Microsoft failed to deliver the= ordering and billing system it needed to deliver its end of the project's = first phase.=20 The lawsuit appears to be blocking the launch of the MSN service in all but= the 14 states served by Qwest.=20 Enron officials declined to comment. A Microsoft spokesman said the company= had not reviewed the filing but was "confident that we have upheld our agr= eement with Enron." Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Editorial Desk; Section A Journal How to Lose a War By Frank Rich 10/27/2001 The New York Times Page 19, Column 2 c. 2001 New York Times Company Welcome back to Sept. 10.=20 The ''America Strikes Back'' optimism that surged after Sept. 11 has now be= en stricken by the multitude of ways we're losing the war at home. The F.B.= I. has proved more effective in waging turf battles against Rudy Giuliani t= han waging war on terrorism. Of the more than 900 suspects arrested, exactl= y zero have been criminally charged in the World Trade Center attack (thoug= h one has died of natural causes, we're told, in a New Jersey jail cell). T= he Bush team didn't fully recognize that a second attack on America had beg= un until more than a week after the first casualty. The most highly trumpet= ed breakthrough in the hunt for anthrax terrorists -- Tom Ridge's announcem= ent that ''the site where the letters were mailed'' had been found in New J= ersey -- proved a dead end. And now the president is posing with elementary= -school children again. Given that this is the administration that was touted as being run with C.E= .O. clockwork, perhaps it should be added to the growing list of Things Tha= t Have Changed Forever since Sept. 11. But let's not be so hasty. Not every= thing changes that fast -- least of all Washington. The White House's home-= front failures are not sudden, unpredictable products of wartime confusion = but direct products of an ethos that has been in place since Jan. 20.=20 This is an administration that will let its special interests -- particular= ly its high-rolling campaign contributors and its noisiest theocrats of the= right -- have veto power over public safety, public health and economic pr= udence in war, it turns out, no less than in peacetime. When anthrax struck= , the administration's first impulse was not to secure as much Cipro as spe= edily as possible to protect Americans, but to protect the right of pharmac= eutical companies to profiteer. The White House's faith in tax cuts as a pa= nacea for all national ills has led to such absurdities as this week's Hous= e ''stimulus'' package showering $254 million on Enron, the reeling Houston= energy company (now under S.E.C. investigation) that has served as a Bush = campaign cash machine.=20 Airport security, which has been enhanced by at best cosmetic tweaks since = Sept. 11, is also held hostage by campaign cash: As Salon has reported, Ser= viceMaster, a supplier of the low-wage employees who ineptly man the gates,= is another G.O.P. donor. Not that Republicans stand alone in putting fat c= ats first. In a display of bipartisanship, Democrats -- lobbied by Linda Ha= ll Daschle, the Senate majority leader's wife -- joined the administration = in handing the airlines a $15 billion bailout that enforces no reduction in= the salaries of the industry's C.E.O.'s even as they lay off tens of thous= ands of their employees.=20 To see how the religious right has exerted its own distortions on homeland = security, you also have to consider an administration pattern that goes bac= k to its creation -- and one that explains the recent trials of poor Tom Ri= dge.=20 Mr. Ridge is by all accounts a capable leader -- a successful governor of a= large state (Pennsylvania) who won the Bronze Star for heroism in Vietnam.= A close friend of George W. Bush, he should have been in the administratio= n from the get-go, and was widely rumored to be a candidate for various job= s, including the vice presidency. But after being pilloried by the right be= cause he supports abortion rights, he got zilch. Instead of Mr. Ridge, the = administration signed on the pro-life John Ashcroft and Tommy Thompson -- w= ho have brought us where we are today.=20 The farcical failures of these two cabinet secretaries are not merely those= of public relations -- though Mr. Thompson often comes across as a Chamber= of Commerce glad-hander who doesn't know his pants are on fire, and Mr. As= hcroft often shakes as if he's not just seen great Caesar's ghost but perha= ps John Mitchell's as well. Both have a history of letting politics overrid= e public policy that dates to the start of the administration. They've seen= no reason to reverse their partisan priorities even at a time when the pat= riotic duty of effectively fighting terror should be their No. 1 concern.= =20 Pre-Sept. 11, Mr. Thompson, in defiance of science, heartily lent his credi= bility to the Bush administration's stem cell ''compromise'' by going along= with its overstatement of the viability and diversity of the stem cell lin= es it would deliver to researchers. Post-Sept. 11, he destroyed his credibi= lity by understating the severity of the anthrax threat, also in defiance o= f science. Now he maintains that the $1.5 billion the administration is req= uesting to plug the many holes in our public health system -- almost all of= it earmarked for stockpiling pharmaceuticals, not shoring up local hospita= ls -- is adequate for fighting bioterrorism. This, too, is in defiance of a= ll expert estimates, including that of the one physician in the Senate, the= Republican Bill Frist.=20 It should also be on Mr. Thompson's conscience that for the first two weeks= of the anthrax crisis he kept the federal government's house physician -- = David Satcher, the surgeon general and a much-needed honest broker of publi= c health -- locked away, presumably because Dr. Satcher, a Clinton appointe= e, became persona non grata in the Bush administration for issuing a June r= eport on teenage sexuality that angered the religious right. Only after Mr.= Ridge arrived on the scene was the surgeon general liberated from the gula= g.=20 As for Mr. Ashcroft, he has gone so far as to turn away firsthand informati= on about domestic terrorism for political reasons. Planned Parenthood, whic= h has been on the front lines of anthrax scares for years and has by grim n= ecessity marshaled the medical and security expertise to combat them, has s= ought a meeting with the attorney general since he took office but has neve= r been granted one. This was true not only before Sept. 11 but, says Ann Gl= azier, Planned Parenthood's director of security, remains true -- even thou= gh her organization, long targeted by such home-grown Talibans as the Army = of God, has a decade's worth of leads on ''the convergence of international= and domestic terrorism.''=20 Ms. Glazier found the sight of Mr. Ashcroft and other federal Keystone Kops= offering a $1 million reward for anthrax terrorists a laughable indication= of how little grasp they have of the enemy. ''Religious extremists don't r= espond to money,'' she points out. Such is the state of the F.B.I., she add= s, that one agent told a clinic to hold onto a suspect letter for a couple = of days ''because we have so many here we're afraid we're going to lose it'= ' (perhaps among the Timothy McVeigh documents).=20 If either the attorney general or the secretary of health and human service= s inspired anything like the confidence that, say, Mayor Giuliani does, the= re wouldn't have been a need to draft Mr. Ridge. Even so, he's mainly a P.R= . gimmick -- a man who should have been in the administration in the first = place reduced to serving as a fig leaf for lightweights. As director of hom= eland security, he's allegedly charged with supervising nearly 50 governmen= t agencies -- so far with roughly a dozen staff members. When asked to defi= ne Mr. Ridge's responsibilities, Ari Fleischer said on Wednesday that it wa= s ''a very busy coordination job,'' but so far Mr. Ridge is mainly sowing s= till more confusion.=20 The one specific duty that he has claimed -- in an interview with Tom Broka= w -- was that he'd be the one ''making the phone call'' to the president to= shoot down any commercial airliner turned into a flying bomb by hijackers.= That presumably comes as news to Donald Rumsfeld, who made no provision fo= r any homeland security czar in the Air Force chain of command he publicly = codified days after Mr. Ridge's appointment.=20 Since the administration tightly metes out the news from Afghanistan, we ca= n only hope that the war there is being executed more effectively than the = war here -- even as Mr. Rumsfeld and his generals now tell us that the Tali= ban, once expected to implode in days, are proving Viet-Cong-like in their = intractability. The Wall Street Journal also reported this week that ''inst= ead of a thankful Afghan population, popular support for the Taliban appear= s to be solidifying and anger with the U.S. growing.''=20 Maybe we're losing that battle for Afghan hearts and minds in part because = the Bush State Department appointee in charge of the propaganda effort is a= C.E.O. (from Madison Avenue) chosen not for her expertise in policy or pol= itics but for her salesmanship on behalf of domestic products like Head & S= houlders shampoo. If we can't effectively fight anthrax, I guess it's reass= uring to know we can always win the war on dandruff. Drawing=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 City - Enron directors cash in shares. By Simon English. 10/27/2001 The Daily Telegraph P31 (c) Telegraph Group Limited, London, 2001 LEADING executives at Enron, the troubled US energy giant, cashed in shares= worth more than $100m ( #70m) this year in the run-up to a financial crunc= h that has left the company's credibility in ruins.=20 Research by Thomson Financial shows that Kenneth Lay, chief executive, sold= about 400,000 shares this year, netting him more than $25m. He still held = 2.8m shares until July. Other executives made similar sales, a revelation likely to anger investors= who have seen the shares fall from $83 at the start of the year to $45 by = July. They halved again this week and fell to below $16 yesterday. Enron de= clined to comment on the share sales.=20 Mr Lay said in a statement that he is seeking to "dispel uncertainty in the= financial community" by drawing on lines of credit to restore faith in Enr= on's financial strength. Enron will pay off debts of $2.2 billion and keep = another $800,000 in cash. He said: "We know we have our work cut out for us= if we are to rebuild our credibility with the investment community."=20 The company is facing an inquiry by the Securities & Exchange Commission in= to partnerships managed by Andrew Fastow, former chief financial officer.= =20 Mr Fastow was ousted on Wednesday night as part of the company's moves to r= estore confidence, though Enron insists he has done nothing wrong.=20 Enron lost $1 billion in the third quarter on what it has called "failed in= vestments". Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 INDIA: Lenders to meet over Enron's Dabhol on Nov 3. 10/27/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, Oct 27 (Reuters) - Lenders to power plant in India majority owned b= y Enron Corp have called a meeting next week in London to discuss ways of r= eviving the beleaguered project, a banking source said on Saturday.=20 They will examine offers that two Indian companies have put forward for buy= ing the U.S. energy giant's 65 percent stake, and those of two other U.S. f= irms, in Dabhol Power Company (DPC), which is building the controversial pr= oject, the source told Reuters. The meeting of lenders, who include multinational banks such as Citibank an= d Bank of America , will be held on November 3, the source added.=20 At stake is not just the fate of the $2.9 billion, 2,184 MW project, which = is India's largest foreign direct investment, but also the over $600 millio= n investment of Enron, General Electric Co and Bechtel.=20 All three companies are founders of DPC, which in 1995 got permission from = India's Maharashtra state government to set up the plant on its coast.=20 The plant's first phase of 740 MW was completed in 1999, but work on the se= cond phase of 1,444 MW, which is 97 percent complete, was abruptly stopped = in June this year following a blazing row with cash-strapped state utility = MSEB.=20 MSEB, which agreed in 1995 to take the plant's entire output, said it can n= o longer do so because Dabhol's power is too costly.=20 Dabhol, in turn, accused MSEB of defaulting on its monthly payments and ser= ved a preliminary notice to terminate the power purchase contract.=20 Under this notice, both companies are given six months time to settle the m= atter through negotiations. If talks fail, Dabhol has the right to issue a = final termination notice and take the matter to arbitration in London. That= six month period expires on November 19.=20 Houston-based Enron, which owns 65 percent of Dabhol, further announced tha= t it intends to exit the project and offered to sell its equity to the Indi= an government.=20 TIME RUNNING OUT=20 The Business Standard newspaper reported that next week's meeting would als= o discuss a request by Dabhol to finally terminate the contract after Novem= ber 19.=20 "It is one of the items on the agenda," the paper quoted a senior banker as= saying.=20 The paper said once Dabhol serves the final notice, the matter proceeds to = arbitration, which would not help India.=20 "The widespread view among the government and lenders is that in such a sit= uation DPC will win hands down," the paper added.=20 A Dabhol spokesman could not be contacted immediately.=20 The source said the meeting would review the progress made in resolving the= dispute so far.=20 The Indian government has not responded to Enron's offer to buy its equity,= but two Indian companies, BSES Ltd and Tata Power Ltd , have shown interes= t.=20 They have agreed to take over the project if the cost is reduced, and if th= e founders agree to sell their stake at a discount.=20 Local business daily, the Economic Times reported on Friday that Tata Power= and BSES are willing to pay the founders $450-$600 million for the 85 perc= ent stake held by Enron, GE and Bechtel.=20 Enron has rejected the offer and is not ready to settle for anything less t= han $1 billion, the paper added.=20 Officials of Tata Power and BSES were not immediately available for comment= .=20 ($1=3D48.00 Indian rupees). Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business Enron sues Microsoft for breach of contract ; Move could block high-speed s= ervice The Associated Press,Bloomberg News 10/27/2001 The Seattle Times Fourth E4 (Copyright 2001) HOUSTON -- Enron has sued Microsoft, alleging it breached a contract for br= oadband services, in a move that could temporarily block the largest softwa= re company's MSN high-speed Internet service in some U.S. regions.=20 Microsoft said the dispute temporarily blocks the company from providing th= e high-speed service in areas where Enron provides broadband access, leavin= g MSN fully operational only in the 14 states -- including Washington -- wh= ere Qwest Communications International operates, said Bob Visse, director o= f marketing for MSN. Enron's lawsuit was filed Thursday, the same day Microsoft had planned to o= ffer fast Internet access in 45 cities to give it access to potential custo= mers in 29 million homes. Microsoft, the No. 2 U.S. Internet provider, is m= aking a push to win customers from AOL Time Warner.=20 "We are trying to resolve the issues with Enron, as quickly as possible and= at the same time we are evaluating other providers," Visse said.=20 Enron spokeswoman Karen Denne declined to comment on the lawsuit, citing co= mpany policy on pending litigation. Enron, based in Houston, is the largest= energy trader.=20 Enron in June signed an agreement with Microsoft to provide bandwidth for M= SN Internet service. Under the agreement, Enron isn't required to deliver o= perational broadband services if Microsoft hasn't first provided a billing = and ordering system, Dow Jones news wire reported.=20 Enron claims in its lawsuit that Microsoft failed to deliver the ordering a= nd billing system required in the initial phase of the deal, Dow reported.= =20 Alternative browser-users denied Microsoft entry=20 NEW YORK -- Microsoft's premier Web portal, MSN.com, denied entry to millio= ns of people who use alternative browser software such as Opera and told th= em to get Microsoft's products instead.=20 The decision led to complaints from the small but loyal Opera community tha= t Microsoft was abusing its status as the Internet's browser leader. Micros= oft later backed off and said yesterday that it would support the other bro= wsers after all.=20 Browser products affected by the shutout, which was triggered by a face-lif= t of the MSN.com Web site, included Opera, Mozilla and Amaya, said Kevin Re= ichard, editorial manager for Internet.com's BrowserWatch site.=20 Mike Pettit, president of ProComp, an anti-Microsoft group, urged state and= federal investigators to look into the matter as part of its lawsuit accus= ing Microsoft of anti-competitive practices.=20 -- The Associated Press=20 MicrosoftSF to shut down; Sony will run retail store=20 SAN FRANCISCO -- Sony will take over a retail store it manages with Microso= ft next month, when the biggest software maker's Xbox goes up against Sony'= s PlayStation 2 in a contest for control of the $20 billion video-game mark= et, a Sony spokeswoman said.=20 The two companies agreed to shut down MicrosoftSF, a retail outlet in Sony'= s San Francisco Metreon entertainment complex. It will be replaced with a D= igital Solutions electronics store run by Sony on Thursday, Metreon spokesw= oman Kirsten Maynard said.=20 In April 1998, the companies said they would open the store that displays a= nd sells Microsoft products alongside Sony electronics that run the softwar= e. In March 2000, Microsoft announced the Xbox, a game console with an adva= nced-graphics chip that goes on sale Nov. 15.=20 "A lot has changed with both companies," Maynard said. "It sort of became n= ot-a-fit anymore."=20 Sony Metreon won't carry the Xbox or Game Cube, a new video console from Ni= ntendo that goes on sale Nov. 19, she said. Officials at Microsoft couldn't= be reached for comment on the shutdown.=20 -- Bloomberg News=20 Copyright [copyright] Seattle Times Company, All Rights Reserved. You must = get permission before you reproduce any part of this material. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09