Message-ID: <3089092.1075860856703.JavaMail.evans@thyme> Date: Mon, 12 Nov 2001 15:53:50 -0800 (PST) From: ei_editor@platts.com To: einsighttext@listserv.platts.com Subject: Dynegy-Enron deal potential 'staggering' Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: 7bit X-From: Energy Insight Editor X-To: EINSIGHTTEXT@LISTSERV.PLATTS.COM X-cc: X-bcc: X-Folder: \Kevin_Hyatt_Mar2002\Hyatt, Kevin\Corp Memos X-Origin: Hyatt-K X-FileName: khyatt (Non-Privileged).pst Energy Insight News for Tuesday, November 13, 2001 Dynegy-Enron deal potential 'staggering' If the deal between Enron and Dynegy is successfully executed, it "should yield the most widely recognized, respected and downright credible wholesale/retail energy merchant in the world," said James Yannello and Ronald Barone, analysts with UBS Warburg, in a research note Monday. Troubled energy giant Enron Corp. agreed late Friday to be taken over by smaller rival Dynegy Inc. in a $7.8 billion stock swap, with assumption of at least $12 billion of Enron debt. The deal includes an immediate infusion of $1.5 billion from Dynegy's 26.6% owner ChevronTexaco to shore up Enron's cash-strained trading operations, with another $1 billion of new equity from ChevronTexaco when the merger closes. "We view both the near and long-term upside potential of this deal as staggering," said the UBS Warburg analysts, citing the combination of "Enron's unsurpassed global wholesale network franchise with that of Dynegy's; fully leveraging the two's online capabilities; continuing the aggressive growth of what will likely become Dynegy Energy Services; disposing of all non-core assets; and managing this global powerhouse with Dynegy's above-board culture based on teamwork, strict values and honesty." Even though it remains positive about this merger, UBS Warburg hasn't underestimated the "enormous challenge at hand. In the near-term, Enron must remain highly liquid, investment grade and its employees must remain focused on keeping its core wholesale/retail franchises up and running. ... Also, early indications are that the ratings agencies have blessed the plan." Dynegy will offer 0.2685 of its shares for each Enron share, giving Dynegy holders 64% of the combined company. At Dynegy's closing price Friday of $38.76/share, that equates to $10.41/share for Enron, which has seen its stock plummet from more than $89 a year ago to a recent low of $7 before rebounding on Dynegy bailout rumors. Enron closed at $8.63/share Nov. 9. Read the entire story at http://www.energyinsight.com. Also, catch the latest news headlines on Energy Insight Executive, updated twice daily. /////////////////////////////////////////////// Market Brief Monday, November 12 Stocks Close Change % Change DJIA 9,554.37 (53.6) -0.56% DJ 15 Util. 298.55 (1.2) -0.40% NASDAQ 1,840.13 11.65 0.64% S&P 500 1,118.33 (2.0) -0.18% Market Vols Close Change % Change AMEX (000) 176,778 46,308.0 35.49% NASDAQ (000) 1,594,429 70,096.0 4.60% NYSE (000) 994,539 (105,450.0) -9.59% Commodities Close Change % Change Crude Oil (Dec) 21.15 (1.07) -4.82% Heating Oil (Dec) 0.5973 (0.038) -6.01% Nat. Gas (Henry) 2.72 (0.205) -7.01% Propane (Dec) 35.50 (1.00) -2.74% Palo Verde (Dec) 30.50 (0.50) -1.61% COB (Dec) 36.00 (0.50) -1.37% PJM (Dec) 27.75 (0.45) -1.60% Dollar US $ Close Change % Change Australia $ 1.927 (0.021) -1.08% Canada $ 1.60 0.000 0.00% Germany Dmark 2.18 (0.005) -0.23% Euro 0.8942 0.000 0.01% Japan ?en 120.1 (0.200) -0.17% Mexico NP 9.28 0.040 0.43% UK Pound 0.686 0.0000 0.00% Foreign Indices Close Change % Change Arg MerVal 226.62 (1.74) -0.76% Austr All Ord. 3,238.70 17.30 0.54% Braz Bovespa 12567.12 (163.59) -1.29% Can TSE 300 7223.88 14.19 0.20% Germany DAX 4820.37 (89.70) -1.83% HK HangSeng 10592.45 (16.80) -0.16% Japan Nikkei 225 10081.56 (134.15) -1.31% Mexico IPC 5524.57 (71.81) -1.28% UK FTSE 100 5,146.20 (98.00) -1.87% Source: Yahoo! & TradingDay.com ////////////////////////////////////////////// Executive News FERC's Brownell says Enron's failure is 'tragic' U.S. Federal Energy Regulatory Commission Member Nora Brownell Monday described Enron's financial woes as "tragic," but said Dynegy's acquisition of the company shouldn't harm wholesale energy markets. Brownell, who said FERC will need to approve the deal, said "the reality is that we need strong companies and that's what I'll look at. I'm always sad to see companies [fall], but it happens. This shouldn't distort people's view of the market. What it should do is put it into context. This happens on Wall Street all the time. Companies come, companies go and that doesn't change the outcome of the equation. I don't want people to say the world is coming to an end, but it is tragic." She made her comments to a reporter at a meeting of state regulators in Philadelphia. CMS Energy selling Indian assets CMS Energy Corp. is planning to sell all its energy assets in India as part of its strategy announced last month to sell overseas assets and focus on its home markets. No timeframe has yet been decided upon for CMS to exit from two operating joint venture power utilities and a third project being built in India. CMS has invested $49 million in a 49% stake in the 200-MW Basin Bridge plant in the southern Indian city of Madras, which it owns along with Australia's Energy Equity Corp. and India's GMR Vasavi. It has also invested $28 million in a 23% stake in India's first independent power project, the 235-MW plant promoted by India's local GVK Industries at Jegurupadu in southern Andhra Pradesh state. The Dearborn, Mich.-based CMS had also committed $49 million for 50% of the 250-MW ST-CMS facility it is building at Neyveli, south of Madras. To subscribe to our Executive News Service, which is updated twice daily, log on to http://www.energyinsight.com, or contact Platt's Direct Response Team at 1-800-424-2908 (if outside the United States call 1-720-548-5700). ///////////////////////////////////////////////