Message-ID: <5322962.1075840916724.JavaMail.evans@thyme> Date: Wed, 28 Nov 2001 06:37:04 -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: \ExMerge - Kitchen, Louise\'Americas\SEC media X-Origin: KITCHEN-L X-FileName: louise kitchen 2-7-02.pst Don't Bet It All On Your Employer ; The plunge of Enron stock serves as a w= arning that workers should not invest too much in their company Time Magazine, 12/03/01 Pick One Stock; Our annual Love Only One stock-picking contest. Forbes Magazine, 12/10/01 The Informer Forbes Magazine, 12/10/01 Can shoppers save the economy?; Four-star defense; An anthrax enigma; Smoke= out; Gore, capitalist; Falling star; Forward Spin U.S. News & World Report, 12/03/01 Enron, Dynegy Work to Salvage Merger Deal The Wall Street Journal, 11/28/01 Deals & Deal Makers: Banks, Too, Have Stake in Enron Merger --- Stature, Mo= ney Are Both on the Line The Wall Street Journal, 11/28/01 Energy-Trading Market Survives Enron for Now The Wall Street Journal, 11/28/01 Business World: Enron Is History, Says History The Wall Street Journal, 11/28/01 Trying to Restore Confidence in Enron to Salvage a Merger The New York Times, 11/28/01 Enron, Dynegy pursue the right price Houston Chronicle, 11/28/01 Cooperation from Enron key in probe Houston Chronicle, 11/28/01 Dynegy Completes $600 Mln Purchase of U.K. Gas Storage Assets Bloomberg, 11/28/01 Natural Gas, Electricity Trading Appears Resilient, WSJ Reports Bloomberg, 11/28/01 J.P. Morgan, Citigroup Have Stakes in Enron Purchase, WSJ Says Bloomberg, 11/28/01 Enron's 401(k) Savings Plan Was Set Up for a Fall: David Wilson Bloomberg, 11/28/01 Enron Receives Proposal for $1 Billion Investment, FT Says Bloomberg, 11/28/01 GLOBAL INVESTING - Enron faces lawsuits over handling of pension plan ENERG= Y TRADER'S EMPLOYEES ALLEGE ... Financial Times, 11/28/01 COMPANIES & FINANCE THE AMERICAS - Enron works to save Dynegy bid. Financial Times, 11/28/01 WORLD STOCK MARKETS - Black clouds of pessimism hang over Wall Street AMERI= CAS. Financial Times, 11/28/01 Enron's Many Victims Los Angeles Times, 11/28/01 Dynegy Asks Enron for New Terms The Washington Post, 11/28/01 Dynegy Refigures Enron Offer Takeover: Buyer lowers price; energy trader's = stock stabilizes. Rating agencies show restraint. Los Angeles Times, 11/28/01 Ratings agencies agree to hold off on ratings move on Enron for now - WSJ AFX News, 11/28/01 Dynegy Completes BG Storage Ltd Buy Dow Jones News Service, 11/28/01 Dynegy Completes Acquisition of UK Natural Gas Storage Assets Business Wire, 11/28/01 INDIA: India's ONGC says rejects BG offer on fields. Reuters English News Service, 11/28/01 AUSTRALIA: Pacific Hydro to select wind turbine maker. Reuters English News Service, 11/28/01 Dynegy confirms it's renegotiating Enron deal The Daily Deal, 11/28/01 Dynegy confirms move to renegotiate Enron takeover Chicago Tribune, 11/28/01 USA: UPDATE 6-Enron, Dynegy hammer away at new merger deal. Reuters English News Service, 11/27/01 New negotiations for Dynegy purchase of Enron sends shares higher Associated Press Newswires, 11/27/01 USA: Enron woes bite into its energy trading. Reuters English News Service, 11/27/01 Enron/Dynergy Renogotiate MergerCNNfn CNNfn: Markets Impact, 11/27/01 Enron Board Agrees to Lower Dynegy Purchase Price, Paper Says Bloomberg, 11/27/01 Enron Finding It Harder to Trade, Competitors Say (Update2) Bloomberg, 11/27/01 Personal Time/Your Money Don't Bet It All On Your Employer ; The plunge of Enron stock serves as a w= arning that workers should not invest too much in their company Sharon Epperson 12/03/2001 Time Magazine Time Inc. 79 (Copyright 2001) Steve Lacey, 45, an emergency-repair dispatcher for a utility company in Sa= lem, Ore., has a personal life that reads like a holiday greeting card. He = recently married his longtime love, and after packing boxes over Thanksgivi= ng weekend, they are set to move into their dream house in the country, jus= t in time for Christmas. Lacey's retirement plans, however, are in ruins. H= e works for the embattled energy-trading firm Enron, and has all his 401(k)= savings in Enron stock, which plunged from $90 a share in late 2000 to $4.= 71 at the end of last week.=20 Much of that decline has come since October when Enron reported it had lost= $638 million in the third quarter and later admitted it had overstated ear= nings from 1997 to 2000. As their life savings shriveled, all Lacey and his= co-workers could do was watch. From Oct. 17 to mid-November, Enron blocked= its employees from shifting investments in their 401(k) accounts, while it= switched to a new plan administrator. Lacey has joined a federal lawsuit that accuses Enron of breaching its fidu= ciary duty to employees by encouraging them to invest in Enron stock even a= fter executives became aware of serious financial problems that would hurt = the stock price. "There was a lot of promotion inside the company to invest= in Enron and help us grow, so everybody got into it," Lacey told TIME's Ca= thy Booth Thomas. Enron says it doesn't comment on pending lawsuits.=20 Lacey and his colleagues could not have anticipated that they would be stuc= k with a plummeting stock. But their woes should be seen as a warning not t= o hold too much of your employer's stock in your 401(k) and to regularly mo= nitor the diversification of your investments.=20 Like Enron's, many firms' 401(k) plans can have blackout periods lasting fr= om a few days to a few weeks when they change plan administrators. "That's = not necessarily wrong or illegal," says Alden Bianchi, chairman of the empl= oyee-benefits group at the Mirick O'Connell law firm in Westborough, Mass. = Employees need to make sure their 401(k) investments are diversified at all= times--in case they can't shift them for a while.=20 Like Enron, many other big firms match employee contributions with company = stock. Your allocation to that one investment can grow very quickly. And yo= u might not be allowed to reallocate those matching funds into other invest= ments until age 50 to 55. At the end of last year, a whopping 39% of total = assets in profit sharing and 401(k) plans were invested in the stock of the= sponsoring company. Among employees who are allowed to hold their employer= 's stock in their 401(k) account, 18% invested half or more of their saving= s in that stock.=20 Financial planners will tell you it's a mistake to bet so much on a single = stock--especially that of the company you work for, whose fortunes already = affect your job security and career advancement. Planners often advise inve= stors to hold as little of their employer's stock as they can--say, only th= e amount the company gives them as a matching contribution. Then they shoul= d shift assets out of even that matching stock into a mix of diversified st= ock-and-bond mutual funds as soon as they are old enough to do so. Similarl= y, if your employer gives you options to buy company stock, don't buy and h= old the stock; cash it in and invest the proceeds in a diverse blend of sto= cks and bonds or mutual funds.=20 Remember that it's your responsibility to arrange your investments so that = they can survive any financial trouble your employer might suffer. As finan= cial planner Clare Wherley of New Providence, N.J., says, "It's not the com= pany's responsibility to make sure your investments go up."=20 Sharon Epperson is a correspondent for CNBC Business News. E-mail her at sh= aron.epperson@nbc.com=20 DIVERSIFY YOUR 401(K) ASSETS=20 Steve Lacey invested 100% of his savings plan in his employer's stock. Expe= rts say even the average worker, who holds 39% of his 401(k) assets in comp= any stock, is poorly diversified=20 Average allocation of assets in employee profit-sharing and 401(k) plans=20 Company's stock 39.2% Stock funds 35.4% Bond funds 5.9% Cash/Money market 3= .4% Other 16.1%=20 Source: Profit Sharing/401(k) Council of America COLOR PHOTO: SUSAN SEUBERT FOR TIME COLOR CHART=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Pick One Stock; Our annual Love Only One stock-picking contest. Andrew T. Gillies and Megan E. Mulligan 12/10/2001 Forbes Magazine 176 Copyright 2001 Forbes Inc. Bearish Wall Streeters again dominate our annual Love Only One stock-pickin= g contest. 2002 may not be so easy.=20 Our year-end Love Only One contest invites analysts and money managers to s= tick their necks out by choosing one stock to buy or to sell short. Those w= ho beat the market over the next 12 months get return invites. Our 12 bulls, with an 18% average decline, fared somewhat better than the S= &P500, which fell 20% from Nov. 13, 2000 to Nov. 1, 2001. Not much to write= home about. But it was a great year to finger rotten stocks. Our five bear= s' picks fell an average 56%. Four bears qualified to reenter, and three ch= ose to do so.=20 ProFund Advisors' William Seale hit the bull's-eye by selecting Transmeta a= s a stinker. In the past year the stock has fallen 95%. He's back this year= with a rap on Carnival Corp. Already, one big cruise line, American Classi= c Voyages, has declared bankruptcy. Now Carnival, despite being stronger th= an most cruise operators, will suffer as the heavy burden of overhead is sp= read among fewer vacationers, he says. At a recent $23 Carnival is trading = at 16 times estimated 2002 earnings per share and is eminently shortable.= =20 Stephen N. Worthington of Barbary Coast Capital Management foresaw trouble = with the burn rate and debt load at wireless service provider Metricom, tra= ding a year ago at $15.75. Nice call. In July 2001 the company filed for Ch= apter 11 protection.=20 This year Worthington sees trouble brewing on the balance sheet of PacifiCa= re Health Systems. He cites an impending writeoff of the HMO's intangibles = (mostly goodwill), now 42% of assets.=20 Martin Weiner of Comstock Partners correctly anticipated that a sagging mar= ket would dent enthusiasm for stock trading, as he picked broker Charles Sc= hwab, which fell 57%. For 2002, Weiner estimates a 20% drop in capital spen= ding for the semiconductor industry. So he says you should short Applied Ma= terials, the big supplier of chipmaking equipment.=20 Two new bears sign on for the year ahead: Timothy Ghriskey of Ghriskey Capi= tal Partners and Cengiz Searfoss, portfolio manager at West Broadway Partne= rs. Ghriskey sees a slide in Nestle, as investors lose their appetite for f= ood stocks in an eventual market rebound. Searfoss targets Eastman Kodak fo= r the stiff competition it confronts in a low-margin business.=20 Now for the bulls. Jean-Marie Eveillard, manager of the First Eagle SoGen G= lobal Fund, gained 21% with timber producer Rayonier. For next year Eveilla= rd still likes timber, as well as real estate and gold stocks. His choice f= or our contest is Security Capital, a holding company for a number of real = estate investment trusts and private real estate entities.=20 Morgan Stanley chief investment strategist Byron Wien rode retailer Target = to a 23% increase. Now he likes Oracle, arguing that it will outlast its co= mpetitors and that its share price already reflects the technology spending= downturn.=20 Thrya Zerhusen, manager of the ABN AMRO/Talon Mid Cap Fund, beat the market= last year with a 9% gain on American Power Conversion, the manufacturer of= backup power supplies. Now she opts for Unisys shares, at just 0.5 times s= ales and 9 times her 2002 earnings estimate.=20 Six new bulls join the contest. Subodh Kumar, chief investment strategist a= t CIBC World Markets, picks Intel on the theory that chip companies lead te= chnology rallies. Michael Mauboussin, chief U.S. investment strategist with= Credit Suisse First Boston, goes for Enron, suggesting that the acquisitio= n by Dynegy will take place on current terms. Enron shares are trading at a= 19% discount to their Dynegy value.=20 Anna Dopkin, manager of the T. Rowe Price Financial Services Fund, consider= s troubled insurer Safeco a promising turnaround. Wendy Trevisani, associat= e portfolio manager with Thornburg Investment Management, says E-Trade will= succeed with its diversification from pure trading into banking and lendin= g products.=20 Kurt Von Emster, portfolio manager of MPM BioEquities Fund, bets on Regener= on Pharmaceuticals: "This biotech has a prolific pipeline, a hoard of cash = and fantastic science." Sandi Gleason, a portfolio manager with Kayne Ander= son Rudnick, recommends Syncor International on the strong projected growth= of its radiopharmaceuticals business.=20 To track current quotes on these stocks, go to www.forbes.com/love.=20 The Long and Short of It=20 Eight newcomers, plus nine reigning winners from last year's contest, enter our annual Love Only One scrum.=20 Name/affiliation=20 Stock Price=20 Buzz Richard E. Cripps/Legg Mason=20 Computer Sciences $33.94=20 higher government tech spending Anna Dopkin/T. Rowe Price=20 Safeco 31.28=20 new management David Elias/Elias Asset Mgmt=20 J.P. Morgan Chase 36.34=20 cheap at 11 times 2002 estimated EPS Kurt Von Emster/MPM Capital=20 Regeneron 22.09=20 obesity drug in phase-3 trials Jean-Marie Eveillard/First Eagle SoGen Funds=20 Security Capital 18.67=20 market shift into real estate Grace Keeney Fey/Frontier Capital Mgmt=20 General Mills 47.00=20 predictable & sustainable profits Sandi Gleason/Kayne Anderson Rudnick=20 Syncor International 29.59=20 recession-proof growth Subodh Kumar/CIBC World Markets=20 Intel 25.94=20 new products & aggressive pricing Michael J. Mauboussin/Credit Suisse First Boston=20 Enron 11.99=20 market overreaction; Dynegy deal Wendy Trevisani/Thornburg Investment Mgmt=20 E-Trade 6.79=20 growing bank & mortgage business Byron R. Wien/Morgan Stanley Dean Witter=20 Oracle 14.17=20 long-term winner in tech Thyra Zerhusen/ABN AMRO Funds=20 Unisys 9.35=20 services account for 70% of sales SHORT-SELLERS=20 Timothy Ghriskey/Ghriskey Capital Partners=20 Nestle S.A. 53.02=20 P/E well above 9-year average William Seale/ProFund Advisors=20 Carnival 22.65=20 decline in travel & high overhead Cengiz Searfoss/West Broadway Partners=20 Eastman Kodak 26.80=20 heavy debt & digital competition Martin Weiner/Comstock Funds=20 Applied Materials 36.99=20 reduced spending in chip industry Stephen Worthington/Barbary Coast Capital Mgmt=20 PacifiCare Health System 18.26=20 razor-thin margins, dying business 2001 Roundup=20 Collectively, our bulls barely outperformed the market's 20% decline over the course of the contest. The bears had more fun-on average their picks tumbled 56%.=20 Name/affiliation=20 Ticker Stock change* Michelle R. Clayman/New Amsterdam Partners=20 BBOX Black Box -20% Richard E. Cripps/Legg Mason=20 T AT&T -5 Gail Dudack/independent strategist=20 CPHD Cepheid -25 David Elias/Elias Asset Mgmt=20 HD Home Depot 3 Jean-Marie Eveillard/First Eagle SoGen Funds=20 RYN Rayonier 21 John R. Hickman/Juricka & Voyles=20 DSWT Duraswitch -30 Mark C. Jordan/AG Edwards=20 CDO Comdisco -96 Grace Keeney Fey/Frontier Capital Mgmt=20 TMO Thermo Electron -18 Ron H. Muhlenkamp/Muhlenkamp Funds=20 SFP Salton -51 Byron R. Wien/Morgan Stanley Dean Witter=20 TGT Target 23 Martin Whitman/Third Avenue Value Funds=20 AVX AVX -29 Thyra Zerhusen/ABN AMRO Funds=20 APCC Amer Power Conv 9 SHORT-SELLERS=20 Lou A. Cardinali/Fiero Brothers=20 KKD Krispy Kreme 57 Mark Coffelt/First Austin=20 JNPR Juniper Networks -87 William Seale/ProFund Advisors=20 TMTA Transmeta -95 Martin Weiner/Comstock Funds=20 SCH Charles Schwab -57 Stephen Worthington/Barbary Coast=20 MCOM Metricom -99 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Departments The Informer Janet Novack, Justin Doebele, William P. Barrett, Lynn Cook, Benjamin Fulfo= rd, Daniel Fisher 12/10/2001 Forbes Magazine 54 Copyright 2001 Forbes Inc. Almost Makes Boesky a Saint=20 The U.S. Tax Court says Chicago-based FMC Corp. can't take a $218 million t= ax deduction for theft losses blamed on the big mid-1980s insider trading s= candal involving infamous arbitrager Ivan F. Boesky. The court held that FM= C's complaint--Boesky's dealings caused it to pay that much more to buy bac= k its own stock--was erased when it lost a nontax case making the same clai= m against an investment firm whose employee had leaked then-Forbes 400 memb= er Boesky the information. FMC, the court said, was asserting the "remarkab= le proposition" that its own shareholders had received too much. --Janet No= vack Watch What We Do, Not What We Say=20 Goldman Sachs Group is preparing to sell shares of a real estate investment= trust it created consisting of commercial property in Japan. A big pitch: = Rental yields are juicy compared with other investments available to domest= ic investors. Yet sources say Goldman itself is holding back on signing a l= ease for new digs in Tokyo, expecting rents to drop in coming months, which= could happen. An ongoing building boom is expected to add a glut-inducing = 25% to downtown Tokyo prime office space by 2004. No comment from the vener= able Goldman. --Justin Doebele=20 Regulators Get Hang of Law=20 After criticism on this page and elsewhere, NASD Regulation, the brokerage-= owned regulatory agency, is finally moving to make it harder for errant sto= ckbrokers to hide their sins from investors. Under proposed rules, brokers = who settle (i.e., pay money to end) a client's arbitration claim before a h= earing would generally no longer be able to keep the matter out of an NASDR= database accessible to the public. Also, NASDR would drop its legally absu= rd position that it had to honor expungement orders won by brokers in state= courts even if it wasn't a party. --William P. Barrett=20 A Buying Opportunity, Y'all?=20 Energy-company mergers--Enron-Dynegy and Chevron-Texaco--likely will help s= well the office vacancy rate under Houston's glittering skyline from a tigh= t 2% to a not-so-tight 15%. Also heading south: prime space rent, already c= heap by major-city standards at $27 per square foot per year. Big landlord = losers: Canadian real estate investment trust TrizecHahn and Fort Worth's C= rescent Real Estate Equities. --Lynn Cook=20 Soap Opera=20 In Japan, Sanyo, the big appliance maker, has just rolled out a washing mac= hine the company claims needs no detergent at all. Soapmakers are foaming a= t the mouth as they try to disprove the new contraption's effectiveness. Am= id the claims and counterclaims, machine sales appear brisk. --Benjamin Ful= ford=20 If Your Company Wants to Put Its Name on a Stadium, Think About Selling=20 With the sudden collapse of its stock, Enron becomes the latest public company to join the growing list of big firms whose share price underperformed the market after buying the naming rights to a professional sports arena. --Daniel Fisher=20 VENUE/CITY=20 YEARNAMED PERFORMANCEVS. S&P 500* 3Com Park/San Francisco=20 1995 -186% Pro Player Field**/Miami=20 1996 -171 PSINet Stadium/Baltimore=20 1999 -111 Compaq Center/Houston=20 1998 -95 CMGI Field/Foxborough, Mass.=20 2000 -69 Bank One Ballpark/Phoenix=20 1996 -65 Cinergy Field/Cincinnati=20 1996 -63 Coors Field/Denver=20 1991 -52 Enron Field/Houston=20 1999 -52 Network Associates Coliseum/Oakland=20 1998 -48 Adelphia Coliseum/Nashville=20 1999 -47 Safeco Field/Seattle=20 1998 -35 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Top of the Week Can shoppers save the economy?; Four-star defense; An anthrax enigma; Smoke= out; Gore, capitalist; Falling star; Forward Spin Lisa Stein 12/03/2001 U.S. News & World Report 10 c Copyright 2001 U.S. News & World Report. All rights reserved. Can shoppers save the economy?=20 Seems that when consumers get the blues they go shopping. And that's good n= ews for the nation's wobbly economy. After a second consecutive week of sunnier reports, economists wonder wheth= er their gloom--as well as their growth--forecasts may be in need of tinker= ing. After all, the slowdown was supposed to feel like a recession by now.= =20 But don't tell that to shoppers: Michigan's consumer sentiment index actual= ly rose in November to 83.9. The Conference Board's index of leading econom= ic indicators went up 0.3 percent in October while retail sales jumped 7.1 = percent.=20 What's more, for the fourth consecutive week, initial jobless rates dipped,= this time to 427,000. The economy, in fact, is suddenly beginning to look = a lot like it did on September 10--not robust maybe, but not hopeless eithe= r. Some optimistic analysts were ready to break out the champagne.=20 "These data scream that the biggest job losses are now over," says Ian Shep= herdson of High Frequency Economics. Adds economic adviser Joel Naroff: Suc= h "positive news could lead to a much happier holiday than anyone could hav= e dreamed of two months ago."=20 Four-star defense=20 Pentagon commanders are assigned to keep tabs on almost every country in th= e world--except the United States. Now there may be a commander in chief--o= r CINC, in Pentagon-speak--for the homeland too. If the brass get its wish,= CINC USA will oversee fighter jets, National Guard troops, chemical-weapon= s experts, and other forces that defend America's skies, borders, and citie= s. It's not a new idea. But until September 11, critics concerned about vio= lating restrictions on the domestic use of military troops had rebuffed it.= The bigger issue now is identifying a single authority--one who reports to= the president--who would oversee the military defense within U.S. borders.= The Pentagon wants to give the responsibility either to the North American= Aerospace Defense Command, or NORAD--which monitors the nation's skies--or= to Joint Forces Command, which develops new fighting concepts.=20 A point of friction: the role of the National Guard, which is clinging to i= ts tanks and artillery even though the Pentagon sees it as better-suited fo= r domestic guard duty.=20 An Anthrax Enigma=20 Clueless In Connecticut=20 Investigators are scouring the home of Ottilie Lundgren, the 94-year-old Co= nnecticut woman who died of inhalation anthrax. The suspected culprit: her = mail. Nearby postal workers were prescribed a regimen of antibiotics while = officials questioned relatives and tested the home for traces of the lethal= spores. "This is a very unusual case that we hope will give us more clues,= " says Jeff Koplan, director of the Centers for Disease Control and Prevent= ion.=20 But officials say Lundgren's death--like that of Bronx hospital worker Kath= y Nguyen--could yield more questions than answers.=20 Smokeout=20 Tobacco Wars=20 Beware lighting up in your home in Montgomery County, Md. If the smell offe= nds your neighbor, you could face a hefty fine. The suburban Washington, D.= C., county last week passed one of the nation's stiffest antismoking packag= es, treating tobacco smoke the same as other pollutants like asbestos and r= adon. Violators could be fined as much as $750. "This does not say that you= cannot smoke in your house," says council member Isiah Leggett. "What it s= ays is that your smoke cannot cross property lines."=20 Tobacco companies threaten legal action; ditto, the American Civil Libertie= s Union.=20 Gore, Capitalist=20 Taking Care Of Business=20 Just days after a consortium of newspapers decided Al Gore might have won t= he Florida recount and become president if only he had insisted that the ov= ervotes be counted as well as the undervotes--you remember overvotes and un= dervotes, don't you?--Gore announced he was forsaking politics for money, a= t least for now. Gore will become vice chairman of Metropolitan West Financ= ial Inc., a financial services company in Los Angeles. Avoiding the big que= stion--will he keep the beard?--the former veep said: "For more than 25 yea= rs, I have worked on business and economic issues from the perspective of a= public servant engaged in public policy. I am eager to learn more about bu= siness as an active executive of this dynamic and community-oriented compan= y."=20 While some of Gore's former aides had hoped their ex-boss would join a thin= k tank pending another run for the presidency in 2004, they now insist that= a private-sector job doesn't take him out of the race.=20 Falling Star=20 The Art Of The Deal=20 Early this year, Enron executives groused that Wall Street didn't appreciat= e their innovative business model, arguing that the company was severely un= dervalued at $80 per share. If only investors showed that kind of disrespec= t for Enron today. The beleaguered Houston energy trader's stock price tumb= led to as low as $4 last week, threatening a merger deal with Dynegy that i= s seen as Enron's best survival hope. The latest free fall came after Enron= disclosed the severity of its credit crunch to regulators.=20 Both Dynegy and Enron insist the deal's still on, and Enron's shares recove= red slightly after its lead lender gave it more time to pay off a $690 mill= ion loan. Still, it could take six to nine months to finalize the deal.=20 Forward Spin=20 HELPING HANDS Congress returns from Thanksgiving recess to work that will i= nvolve a lot of giving and no small measure of thanks. The defense appropri= ations bill will get early and generous attention, followed by an economic = stimulus bill that will be greeted with hands extended, asking that time-ho= nored question: Where's mine?=20 NEXT STOP? The last day in November is the deadline for ending sanctions ag= ainst Iraq. That seems highly unlikely given the uncertainty over any role = Baghdad might have played in propping up Osama bin Laden or even in support= ing terrorist attacks.=20 FAIL-SAFE After dismal academic performance and a projected $1.2 billion de= ficit, Philadelphia's school district will now be under the watchful eye of= not only Pennsylvania Gov. Mark Schweiker but also Edison Schools Inc. Sch= weiker backed off a proposal to allow Edison to take over school management= . Instead, the private company will serve as consultants and help in recrui= ting new managers for the troubled school district. Picture: Can shoppers save the economy? (WILL LESTER--INLAND VALLEY DAILY B= ULLETIN / AP); Picture: REFLECTED GLORY. President Bush lauded Robert F. Ke= nnedy last week as the Justice Department renamed its main building to hono= r the former attorney general and liberal icon. (JIM LO SCALZO FOR USN&WR);= Picture: Ottilie Lundgren (IMMANUEL LUTHERAN CHURCH / AP); Picture: Gov. M= ark Schweiker (DAN LOH--AP)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron, Dynegy Work to Salvage Merger Deal By Rebecca Smith and Gregory Zuckerman Staff Reporters of The Wall Street Journal 11/28/2001 The Wall Street Journal A3 (Copyright (c) 2001, Dow Jones & Company, Inc.) Top executives of Enron Corp. and Dynegy Inc. raced to salvage a deal to co= mbine the two energy-trading companies amid growing signs that Enron is fac= ing cash-flow problems as a result of a sharp downturn in its core trading = business.=20 The executives' task gained urgency amid worries that Enron's debt may soon= be downgraded to junk status by leading credit-rating agencies. After hold= ing talks with executives of Enron and Dynegy, representatives of Moody's I= nvestors Service Inc., Standard & Poor's Ratings Group and Fitch Inc. agree= d to hold off on making any ratings move yesterday, people familiar with th= e discussions said. J.P. Morgan Chase & Co. and Citigroup Inc.'s Citibank, = which are shepherding the merger and have already loaned $1 billion and agr= eed to invest an additional $500 million in the merged company, may arrange= still more funding for Enron, these people said. "I hope they err on the conservative side and stockpile cash," said Ralph P= ellecchia, analyst for Fitch, the credit-rating agency.=20 With few viable options remaining, Enron's board late yesterday informally = agreed to a new share-exchange ratio of 0.12 shares of Dynegy for each Enro= n share tendered, down more than 50% from the original offer of 0.2685 Dyne= gy share for each Enron share, according to one person familiar with the si= tuation. But the talks were still fluid as of late yesterday.=20 The latest proposed share-exchange ratio values Enron at $4.91 a share, or = a total of $4.17 billion. This would compare with the original value of $10= .98 a share, or $9.33 billion. In exchange for reducing the purchase price,= some members of the Enron team were insisting on more control over the mer= ged company. Dynegy also was considering an additional $250 million cash in= vestment in Enron. Dynegy, together with ChevronTexaco Inc., has already in= jected $1.5 billion into Enron in an effort to stabilize the company.=20 Talks between Enron and Dynegy were said to be tense and occasionally acrim= onious.=20 At 4 p.m., Enron shares were up 10 cents to $4.11, while Dynegy shares were= up $1.64 to $40.89, in New York Stock Exchange composite trading.=20 Talks between Enron and Dynegy began in earnest over the weekend to cut the= price of the all-stock transaction after Enron's share price had plummeted= in the wake of disclosures that its future earnings wouldn't be as high as= originally anticipated. On Nov. 9, Dynegy originally agreed to buy Enron a= fter the emergence of damaging revelations concerning a series of deals tha= t allowed Enron executives to profit personally at the expense of the compa= ny and its shareholders. Those deals are now the subject of a Securities an= d Exchange Commission investigation.=20 While struggling to keep the planned merger alive, Enron also has been seek= ing to extend the maturity dates of some of its borrowings. Enron has a tot= al of about $13 billion of debt, of which about $9 billion comes due by the= end of next year. The company may find itself on the hook for an additiona= l $7 billion in off-balance-sheet debt and another $3.9 billion in potentia= l liabilities, related to troubled investment partnerships, if its credit r= ating drops to below investment grade, says Mr. Pellecchia, the Fitch analy= st. A cut to a junk-status credit rating could deal a fatal blow to Enron, = which needs huge sums of cheap money to keep its trading operations alive.= =20 Enron, nowadays, seems to be generating less cash from that business, which= accounted for more than 90% of its profit in the most recent quarter. In t= he five weeks since Enron's problems became widely known, its trading partn= ers have sought to protect themselves by shifting deals elsewhere from the = dominant EnronOnline trading exchange and to limit their exposure to the Ho= uston-based company. About a week ago, Enron said it had about $1.6 billion= in cash, which surprised analysts who expected a number at least $1 billio= n higher given the most recent infusions from Dynegy and the banks.=20 Enron spokeswoman Karen Denne said the company "is continuing to meet all o= ur obligations." She added that trading activity at the EnronOnline unit ha= d been "below average" in recent days, but that the company believes "it ha= s stabilized."=20 Analysts say cash on hand doesn't appear to be enough to keep Enron alive f= or long, given the reluctance of its trading partners and creditors. Rebecc= a Followill, an analyst at Howard Weil in Houston, says that Enron needs a = bigger cash hoard than ever to rebuild confidence. She reckons Enron needs = $4 billion to $5 billion on hand while the merger deal winds its way throug= h shareholder and regulatory approvals.=20 ---=20 Robin Sidel and Jathon Sapsford contributed to this article. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Deals & Deal Makers: Banks, Too, Have Stake in Enron Merger --- Stature, Mo= ney Are Both on the Line By Jathon Sapsford and Kara Scannell Staff Reporters of The Wall Street Journal 11/28/2001 The Wall Street Journal C1 (Copyright (c) 2001, Dow Jones & Company, Inc.) As important as completing the Enron Corp.-Dynegy Inc. merger is for the tw= o companies, it is almost as critical for the banks that have backed it.=20 J.P. Morgan Chase & Co. and Citigroup Inc. have emerged as prominent financ= iers and cheerleaders behind the problem-plagued transaction, putting hundr= eds of millions of dollars of their own money into Enron in hopes of keepin= g the deal alive. Late yesterday, that effort continued, with the banks scr= ambling for new terms to avoid a credit downgrade that could scuttle the de= al. But in addition to putting their money behind the proposed merger, the two = lending giants have also staked their reputations -- and perhaps even some = of their prowess in the mergers-and-acquisitions business itself -- on comp= leting this transaction.=20 Both J.P. Morgan and Citigroup officials have said privately that the pendi= ng deal is a bellwether. That is because it could illustrate how big bankin= g institutions can use their lending muscle to offer customers one-stop sho= pping, thus usurping business from the other, more-traditional investment-b= anking institutions.=20 Because the banks offered financing to Enron on short-notice to grab the ad= visory business, the deal has the "potential for either giving a boost to a= bank's stature on the street or to sling some mud in its face," said Samue= l Hayes, professor of finance at Harvard Business School. "This is a high-s= takes assignment."=20 And an expensive one, if the deal doesn't happen. Each bank has commitments= outstanding to Enron, in the form of various loans, of roughly $700 millio= n to $800 million, according to officials familiar with the matter, and rou= ghly half of that is in unsecured debt. The two companies, these officials = say, have also committed an additional equity investment of $250 million ea= ch so far, though there is a possibility Enron could get more.=20 As mergers go, the deal is relatively small, and it has gotten smaller in r= ecent days as investors have hammered lower Enron's stock, which at 4 p.m. = yesterday stood at $4.11, up 10 cents in composite trading on the New York = Stock Exchange.=20 But on Wall Street, the importance of the deal goes well beyond its size, w= here the transaction is seen as a high-profile example of the new era of fi= nance in which large financials exploit the crumbling walls between once-se= parate businesses like lending, underwriting and mergers advisory.=20 Goldman Sachs Group, an investment bank that doesn't traditionally extend l= arge loans to clients, was denied a piece of the merger business because it= declined to extend the sort of loans that J.P. Morgan and Citigroup provid= ed last week.=20 Should this deal fall through, it will make Goldman look smart. "There is a= lot more to this deal for the banks than just [mergers and advisory] fees,= " says Andy Collins, an analyst at U.S. Bancorp Piper Jaffray.=20 It is also seen as well as a major test of the decision in 1999 to repeal D= epression-era laws under the Gramm-Leach Bliley Act.=20 For decades, the U.S. financial system effectively banned commercial banks = from lending to the same clients they served as an investment bank. The thi= nking was that commercial banks, the federally insured guardians of deposit= s, shouldn't be betting in the securities markets with depositor money.=20 Now with those laws repealed, some worry about risks creeping back into the= system. Roy Smith, a business professor at New York University, says the b= anks' lending to the same clients from which they seek to win securities bu= siness could encourage banks to over-lend for the purpose of closing deals.= =20 "You can't believe the chairman of the bank is up at night thinking about t= his," says Mr. Smith.=20 The banks, while conceding some exposure to Enron, decline to confirm speci= fic amounts, citing client confidentiality. But in private conversations, b= anks say they regularly sell loans to companies in which they may be too ex= posed in an active secondary market. Moreover, they use other credit deriva= tives to effectively transfer the risk of loans to other investors.=20 Some of the recent documentation of Enron debt suggests that much of the de= bt has been diversified across many investors. In May 2001, for example, Ci= tigroup and J.P. Morgan arranged a large $2.25 billion credit facility for = Enron, part of the total of approximately $13 billion in debt on Enron's ba= lance sheet (not including commitments to other financial institutions).=20 Those two banks, as lead arrangers of that financing, helped divide that lo= an up among 50 different banks, according to Loan Pricing Corp., a research= institute the follows the lending business. Many of those banks divided th= eir shares into even smaller pieces and sold them off to other investors. O= ne banker familiar with the matter said that, all told, more than 100 finan= cial institutions have exposure to Enron.=20 Yet J.P. Morgan and Citigroup, who have served as the top underwriters of t= his debt, would rather avoid being blamed for letting Enron's debts go bad.= Even more importantly, they also hold their own portion of that debt. Thus= , both banks recently provided an additional credit line to Enron totaling = $1 billion.=20 That additional lending, while enhancing the value of existing loans to Enr= on, is also relatively safe because it is secured with hard assets. Should = Enron default, the banks would take an interest in that collateral. "That a= dditional credit line is bullet proof," says one banker.=20 The banks, ultimately, have had a string of successes with similar strategi= es with other firms, though few are as high-profile as Enron. These two ban= ks, for example, are credited with saving companies like Lucent Technologie= s from a financial crisis earlier this year with a similar combination of f= inancing and investment banking advise. But speaking privately, bankers con= cede that a failure of the Enron deal would smart beyond what the damage mi= ght be to the banks' loan portfolio.=20 "If it falls apart," says Mr. Hayes, the Harvard professor, "it will be a s= ource of embarrassment."=20 ---=20 Robin Sidel contributed to this article. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Energy-Trading Market Survives Enron for Now By Wall Street Journal staff reporters Peter A. McKay in New York, Chip Cum= mins in Washington, and Alexei Barrionuevo and Thaddeus Herrick in Houston 11/28/2001 The Wall Street Journal C1 (Copyright (c) 2001, Dow Jones & Company, Inc.) Enron Corp.'s precarious financial condition has unnerved investors and tra= ding partners, but the largely invisible natural-gas and electricity tradin= g industry that it helped build appears relatively resilient -- at least so= far.=20 Veteran traders say many firms began to take precautionary steps a month ag= o against an energy-market meltdown related to Enron, when the first tidbit= s of the Houston-based company's woes were reported. Trading volume has mov= ed from the popular EnronOnline electronic platform to other venues, some t= raders have unwound complex financial bets, and others have simply worked a= round their onetime trading partner. As a result, insiders say natural-gas prices, in particular, haven't really= been affected so far by Enron's problems, and any impact is expected to be= moderate.=20 Unlike a traditional commodities exchange, open to all, natural gas and ele= ctricity are traded privately, with many transactions reflecting deals betw= een two players. EnronOnline, for instance, acts as both the buyer and sell= er, setting the price for which it will buy or sell commodities such as nat= ural gas or electricity. Players such as Enron, which had transformed itsel= f from a natural-gas pipeline company, make money by buying and selling ene= rgy many times over, capturing the difference between bids from buyers and = offers from sellers. But actual trading strategies are tightly kept secrets= , which has made the business difficult to track and assess.=20 While the energy market has held up amid Enron's woes, it remains edgy, esp= ecially given the uncertainty about what might happen if Dynegy Inc.'s agre= ement to acquire Enron is aborted. "Companies have stopped doing business w= ith Enron to the best of their ability," says Art Gelber, principal of Gelb= er & Associates, a Houston energy-consulting and asset-management firm. But= , he adds, Enron has such an enormous presence in the energy-trading market= place that it is impossible to stop doing business with the company altoget= her. "We have customers with long-term commitments to Enron, and they're sc= ared to death," Mr. Gelber notes. "If they had to start anew, it wouldn't b= e with Enron."=20 For the most part, major natural-gas producers, such as Devon Energy Corp. = of Oklahoma City, say they have made adjustments in their contracts with En= ron. Devon currently has a few contracts for physical gas sales to Enron to= taling less than 1% of Devon's total gas sales, said Darryl Smette, Devon's= senior vice president of marketing. So far, Enron has met all its obligati= ons.=20 At the same time, other trading players have stepped in to fill the void. T= hose benefiting most include American Electric Power Co., Duke Energy Corp.= , Koch Energy Trading, Morgan Stanley, El Paso Corp. and Dynegy itself, acc= ording to traders who deal with Enron.=20 "We certainly see a lot of customers calling us, more trying to revive rela= tionships that have been dormant for a while," says one trading executive.= =20 The relative calm is surprising to those both inside and outside the market= s, because so many of the natural-gas and electricity trades are intertwine= d.=20 Last year, the value of energy-based contracts outstanding among the 12 big= traders tracked by Swaps Monitor, a trade publication, more than tripled o= ver 1999 to $2.19 trillion. Electricity trading accounted for $365 billion = of that amount, up from just $39 billion the year before. Yet just 10 compa= nies accounted for about 60% of the electricity traded in North America, ma= king the companies highly dependent on each other.=20 Even Enron employees have tried to head off a crisis, notes the head of pow= er trading for one big energy-trading company, who asked not to be identifi= ed. He says Enron traders have worked for several weeks with traders at oth= er firms to make arrangements in the event that Enron contracts need to be = liquidated or the partners decide Enron isn't creditworthy enough.=20 To do this, Enron traders have been pairing Enron customers up with each ot= her. For instance, a customer who bought electricity from Enron at a certai= n price is being matched up with another customer who sold electricity to E= nron. The three-party transaction allows two Enron customers to meet their = power needs while at the same time reducing their exposure to Enron.=20 "Enron has been cooperating in packaging large deals to enable people to do= that," this trader explains. The traders may have a motive, he says, addin= g that "the people who are helping you are likely to be looking for a job i= n two months."=20 Companies have been unwinding exposure to Enron for several weeks, adds thi= s trader, who estimates that many companies are likely to have reduced expo= sure by about half by now.=20 If more bad news rocks Enron, the power and natural-gas markets may move up= ward -- though excess supply and low prices are likely to make any sort of = spike relatively insignificant, compared with the volatility of a year ago.= =20 Still, the perception that Enron might not be able to deliver against its p= ositions has nudged natural-gas prices a little, says Guy Gleichmann, senio= r energy trader at Barkley Financial. He estimates that natural-gas prices = have an "Enron premium" of about 25 cents built in; gas closed at $2.62 a m= illion British thermal units in New York Mercantile Exchange trading yester= day.=20 Even in a worst-case scenario, however, most traders assume that whoever ta= kes control of the company's assets will probably handle delivery of commod= ities against its contracts, he says.=20 "Enron has caused some short-term price moves, but it's not a big part of w= hat the market is going to do in the long run," says Bill O'Neill, director= of commodity research at Merrill Lynch & Co. "You have to remember that th= e fundamentals for energy, particularly demand, are not too good right now,= because of the economy."=20 Indeed, natural-gas storage is nearly full, and so far, warm fall weather h= asn't helped demand any. "A growing inventory of natural gas should have a = moderating effect on any transitional difficulties that might arise because= of a continued downward path for Enron," says Jon Rasmussen, an economist = at the Department of Energy's Energy Information Administration.=20 One clear impact has been on EnronOnline, Enron's electronic trading arm th= at had become the dominant energy e-trading platform in recent years, accou= nting for as much as 25% of the country's natural-gas and electricity deliv= eries. The rival IntercontinentalExchange Inc. has reported a 34% jump in i= ts weekly electricity volume since October, 13% in natural gas, and a 45% i= ncrease in crude oil. The Atlanta-based concern is owned by about 100 energ= y and metals traders, brokers and banks.=20 Other traders have returned to doing trades over the phone, a less transpar= ent method than pulling prices off a screen. "This is doing a lot to re-est= ablish human contact," says one trading executive. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business World: Enron Is History, Says History By Holman W. Jenkins Jr. 11/28/2001 The Wall Street Journal A19 (Copyright (c) 2001, Dow Jones & Company, Inc.) Back in the mid-1980s, a pipeline executive called Ken Lay was fishing arou= nd for a name for his company, produced by a merger of Houston Natural Gas = and Omaha-based InterNorth. He consulted with consultants, politicked with = politicians, and came up with a moniker. The company would be called "Enter= on."=20 Three weeks later, fed up with the wisecracks from a press that had looked = up the dictionary definition of "enteron" (n. the intestine), he changed th= e company's name again. Henceforth it would be known as Enron. A columnist less devoted to high standards of decorum might be tempted to e= xtend the metaphor of the company's misbegotten name. In recent weeks, afte= r all, we've seen Enron's stock collapse over indigestible accounting and t= he emergence of dealings between the company and its senior officers that e= xude an odor of genuine malfeasance. The evidence is far from clear, but fo= r the sake of Mr. Lay's reputation one hopes these missteps will prove one = more case of a company fooling itself rather than setting out deliberately = to defraud the markets.=20 Enron grew to be much more than a pipeline hauler of natural gas, becoming = the pre-eminent trader and marketer of all kinds of energy contracts and a = vocal proponent of deregulation. Now, all but overnight, it's kaput, just w= aiting to find out if its fate will be bankruptcy or absorption by an erstw= hile rival.=20 We cannot help be put in mind of another commodity wunderkind in the 1970s,= Phibro (short for Philipp Brothers). Hard to believe, but Phibro was once = a name that made grown men quiver on Wall Street. Fattened by trading profi= ts from the great commodity inflation of the 1970s, which some mistook for = a permanent new age of scarcity, it scooped up the Street's oldest partners= hip, Salomon Brothers, tucking it into its back pocket and renaming the com= bined firm Phibro-Salomon. Here was a powerhouse of unlimited potential, in= vestors told themselves.=20 Flash ahead to California's electricity meltdown earlier this year. Enron s= aw its revenues quadruple partly as a result of the inflated prices being q= uoted in the California market. Many foresaw a new scarcity megatrend, but = there was no true energy shortage. Posted prices on the California power ex= change may have skyrocketed, but the effective price was zero dollars and z= ero cents, because the utilities had no cash to pay and politicians were th= umbing their noses at piles of IOUs.=20 When prices are zero, suppliers take a hike -- that's what economics teache= s. But once the state government started pumping its own cash into the mark= et, the phony posted prices plummeted and supplies became plentiful again. = Now California is swimming in power and nobody talks about an "energy crisi= s" anymore.=20 You can date the loss of investor confidence in Enron almost exactly to the= moment when the California fiasco began to repair itself. Fortune Magazine= put the inaugural nail in Enron's coffin in March, noting that the company= 's growing dependence on trading had turned it into an oil-patch version of= Goldman Sachs. Goldman's stock sells at a price-earnings multiple of 17, r= eflecting investors' well-founded distrust of trading earnings to be reprod= uced reliably year after year. So why, the magazine asked, was Enron awarde= d a multiple of 60-plus? Mmm . . .=20 Enron did yeoman service as a champion of deregulation. Boss Ken Lay, a bel= iever in technology and the power of markets, was a true visionary, to the = point of annoying people who didn't care for his air of being a man on the = right side of history. The moldering pipeline he took over would certainly = have been an also-ran if he had not thrown Enron headlong into trading and = marketing.=20 But deregulation doesn't confer permanent advantage on anybody. A deregulat= ed environment favors constant innovation and a continual upsetting of plan= s and strategies.=20 Add the fact that, despite the California bubble, there is no reason to bel= ieve energy prices won't continue their long-term relative decline as techn= ology advances more quickly than the depletion of conventional resources. A= dd also the likelihood that information technology will continue to lower t= he barriers to entry to Enron's trading business, which means more competit= ion and shrinking margins. Enron begins to look a lot like Phibro.=20 The great commodity-trading machine was already running down by 1981, when = it bought Salomon and Wall Street was swooning. Inflation was being quelled= by Paul Volcker. The products that Phibro traders bought and sold were inc= reasingly being traded transparently on electronic exchanges. "Four or five= years ago, they used to be able to take other companies to the cleaners, b= ecause they knew where the market was and others didn't," a trader explaine= d. "With everyone knowing, within a few cents, where the price of any produ= ct was, Phibro's ability to make a profit off its superior knowledge disapp= eared."=20 Not only is this true of Enron, but of its would-be bottom fisher, Dynegy, = run by Mr. Lay's Houston homeboy, Chuck Watson. Dynegy's proposed takeover = of its former nemesis was hanging by a negotiation yesterday.=20 While Enron in recent years was selling hard assets and concentrating on el= ectronic market-making, Mr. Watson was doing the opposite. His big play in = the Enron deal is to get his hands on the original HNG-InterNorth pipeline,= now known as Northern Natural Gas. By having both feet planted in the real= business, he claims his firm will be able to make a profitable sideline ou= t of trading despite growing competition and transparency.=20 We'll see. Dynegy and Enron were born at the same time, and of the same mot= ive. Dynegy was originally created by six pipeline companies, a Washington = law firm and Morgan Stanley to take advantage of new opportunities in dereg= ulated natural gas. But the gnats are already circling.=20 Gas producers who have claimed for years that the duo control too much of t= heir fate now insist they shouldn't be allowed to merge. Don't listen to th= e fussbudgets. If this was a business in need of trustbusting, Enron wouldn= 't have been resorting to funny accounting to make its earnings. As Merrill= Lynch's Donato Eassey has pointed out, wholesale margins have been steadil= y thinning as trading becomes more transparent and competitive.=20 Wishful accounting has time and again proved the last refuge of companies w= hose dearly held "visions" were not panning out. Enron prided itself on bei= ng realistic and adaptive, but it failed to see that its own beliefs about = the world needed overhauling. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business/Financial Desk; Section C THE MARKETS: Market Place Trying to Restore Confidence in Enron to Salvage a Merger By RICHARD A. OPPEL Jr. and ANDREW ROSS SORKIN 11/28/2001 The New York Times Page 1, Column 2 c. 2001 New York Times Company The Enron Corporation and Dynegy Inc. worked yesterday to find ways to bols= ter confidence in Enron's weakened energy-trading business as the companies= ' negotiators continued talks on revising the terms of their merger, execut= ives close to the talks said.=20 The renegotiated deal would cut the value of the acquisition by half, they = said, to roughly $4 billion. Dynegy, they said, was also prepared to invest= at least an additional $250 million in Enron, on top of the $1.5 billion c= ash infusion from Dynegy's biggest investor, ChevronTexaco, included in the= initial deal announced Nov. 9. But Dynegy wants the new cash backed by har= d assets, and the companies were trying to identify and value enough Enron = holdings not already mortgaged to other creditors, the executives said. Before a series of financial disclosures sent Enron's stock into collapse a= nd the company into the arms of Dynegy, its Houston rival, Enron's natural = gas and electricity trading floors did more business than the two largest c= ompetitors combined. They also accounted for the majority of Enron's profit= s by far.=20 But traders and Wall Street analysts said the business had steadily deterio= rated amid questions about the depths of Enron's financial straits. Many tr= aders have curtailed dealings with Enron, and the executives close to the t= alks said Dynegy officials scouring Enron's books were having difficulty th= is week figuring out how much cash the trading operation was generating.=20 The executives close to the talks said that the renegotiated terms for Dyne= gy's acquisition of Enron would lower the price to about 0.13 Dynegy share = for each share of Enron, cutting by half the value of the deal announced No= v. 9, when Dynegy offered 0.2685 share. If a deal is struck at 0.13 Dynegy = share, at yesterday's closing prices, Dynegy would be paying about $5.32 an= Enron share, a 29.4 percent premium over Enron's diminished stock price. T= he premium was 20.6 percent over Enron's closing price on the day that the = deal was announced.=20 Both companies are seeking promises from Enron's bank lenders to extend deb= t repayment dates until after the merger closes. And they are also discussi= ng adding provisions that could limit Dynegy's ability to back out of the c= ombination.=20 The two companies are also working to arrange a cash infusion of $500 milli= on from J. P. Morgan Chase and Citigroup that would provide Enron with desp= erately needed new cash.=20 But there is growing concern that the cash infusion from the banks will not= calm investors' fears or reassure energy traders, leading Dynegy to seek a= n additional $500 million in cash for Enron. Late yesterday, the two compan= ies were hung up over whether Enron, which has already used many of its mos= t prized assets as collateral for loans, has enough assets left to serve as= collateral for the additional money, according to executives close to the = talks.=20 A number of Enron assets were being examined, including some that have alre= ady been used to obtain other loans, the executives said. The assets includ= e: Transwestern Pipeline, a major natural gas pipeline that links the gas-p= roducing basins of Texas and the Southwest with California; Enron's stake i= n other gas-pipeline assets; its 9.8 percent stake, worth about $400 millio= n, in EOG Resources, a former subsidiary that is now an independent publicl= y traded oil and gas company; and its indirect stake in Hanover Compressor,= which manufactures equipment used to increase the pressure of natural gas = and facilitate its flow on interstate pipelines.=20 Yesterday, investors anxiously awaited a report by Moody's Investors Servic= e, which like other major credit-rating firms, currently ranks Enron's debt= at the lowest investment-grade level. If Enron were to lose its investment= -grade status, it could be forced to repay or refinance up to $3.9 billion = in debt, while other traders would probably further curtail business. But b= y late yesterday, Moody's decided not to issue a statement after receiving = assurances from Enron and Dynegy officials that a renegotiated deal would b= e announced soon, the executives said. A Moody's spokesman declined comment= .=20 Executives close to the talks said that they hoped that new cash from Dyneg= y would reassure both Wall Street and the energy-trading markets that Enron= 's trading floor would survive and remain a valuable asset.=20 But analysts and investors are having difficulty figuring how much value th= e trading operation has already lost, and how much the business has been re= duced because of credit concerns.=20 ''I believe Dynegy is probably seeing that deterioration in the core busine= ss and wants to renegotiate the purchase price as a result,'' said Andre Me= ade, head of United States utilities research for Commerzbank Securities in= New York. ''I don't think anyone can estimate the earning power of Enron o= ver the next three to four quarters, and I'm not sure Enron has a good esti= mate.''=20 Mr. Meade said he did not believe that Dynegy's earlier estimate that the a= cquisition would add 90 cents a share to its earnings was ''reliable today,= given how sharply the business seems to have deteriorated.'' By Mr. Meade'= s calculations, if Enron's trading volumes were to fall 50 percent next yea= r -- even if normal volume growth levels returned in 2003 -- that would wip= e out nearly all the value in the stock.=20 Karen Denne, an Enron spokeswoman, said the company had experienced a decli= ne in energy trading volume and in the number of traders doing business wit= h it, but both stabilized yesterday. She declined to elaborate or quantify = the decline.=20 She also said that Enron's trading operation remained profitable, though sh= e could not quantify it, and she also said she did not know whether the com= pany was working on a possible bankruptcy filing or other contingency plans= should its business and liquidity worsen. ''We're moving forward with the = merger,'' she said.=20 Dynegy officials did not return telephone calls yesterday.=20 Shares of Enron rose yesterday on news of a possible revised acquisition ag= reement. They closed at $4.11, up 2.5 percent, or 10 cents. Shares of Dyneg= y closed at $40.89, up 4.2 percent, or $1.64.=20 Though yesterday's gains halted a four-day slide in Enron shares, the stock= is down 95 percent this year after disclosures of major losses as well as = significant accounting errors that led Enron to admit it overstated profits= during the last five years by nearly $600 million.=20 Now, difficulties within Enron's trading operation are exacerbating the com= pany's overall liquidity problems in three ways, according to some analysts= and rival energy-trading executives.=20 First, other traders are requiring Enron to put up greater margin on its tr= ades. On top of that, in some cases Enron's traders are being forced to pay= more to buy natural gas than traders at other companies. This credit premi= um in some transactions has ranged from 3 cents to 6 cents for every millio= n British thermal units of gas Enron buys, these people say.=20 Additionally, many traders, like the Mirant Corporation, have either scaled= back or stopped doing business with Enron, hurting its trading revenue.=20 Mr. Meade of Commerzbank said ''end-use customers and trading counterpartie= s appear to be shifting their business to competitors as a result of Enron'= s credit concerns and are reluctant to increase their exposures to Enron.'' Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Nov. 28, 2001 Houston Chronicle Enron, Dynegy pursue the right price=20 By LAURA GOLDBERG=20 Copyright 2001 Houston Chronicle=20 Dynegy and Enron Corp. continued discussions Tuesday on several issues, inc= luding new terms for Dynegy's deal to buy Enron and an equity infusion for = Enron, according to people familiar with the talks.=20 There was no sense talks were breaking down, but instead there were a lot o= f pieces that needed to be put in place, the people said.=20 Sources told the Chronicle on Monday that the two Houston-based energy trad= ers were negotiating a lower exchange rate for Dynegy's stock deal to buy E= nron.=20 The sources also said Enron and Dynegy were working with a group of banks t= o reach a so-called "override" agreement to extend, until after the merger = closes, maturity dates for certain Enron debt, and that the two energy comp= anies were working to finalize terms for equity infusion into Enron of arou= nd $500 million, expected to come from J.P. Morgan Chase & Co. and Citigrou= p.=20 Dynegy, one source said Tuesday, could also be a contributor to that $500 m= illion.=20 Under the Nov. 9 deal, Enron shareholders would receive 0.2685 share of Dyn= egy stock per Enron share owned. Since then, there have been increasing wor= ries about Enron's core trading business and new troubling financial disclo= sures from Enron.=20 The sources said Tuesday the new ratio being discussed is around 0.15.=20 Dynegy spokesman John Sousa said Tuesday he could confirm only that Dynegy = was in discussions with parties involved in transactions related to the dea= l.=20 Investors appeared optimistic Tuesday that Dynegy and Enron would work out = an arrangement to save the merger. Shares in Dynegy closed up $1.64 at $40.= 89, while shares in Enron closed up 10 cents at $4.11.=20 Wall Street expects Dynegy to either cut its purchase price or walk away. T= hat Dynegy is negotiating a lower exchange ratio shows it is very intent on= keeping the deal together, said Jeff Dietert, an analyst with Simmons & Co= . International in Houston.=20 If the deal falls apart, Enron would likely see its credit rating cut to so= -called junk status, which would trigger a series of negative consequences.= Among them: Enron's ability to run its trading business would be severely = hampered. In turn, Enron could quickly be forced into bankruptcy.=20 Enron's trading operation, which is highly dependent upon access to cash an= d credit, is already suffering. Enron hopes another equity infusion will sp= ur other traders to return the business they've taken elsewhere.=20 "It appears that trading counterparties have moved significant volumes away= from Enron over the past few weeks as a result of credit concerns," Andre = Meade, an analyst at Commerzbank Securities in New York, wrote in a report = Tuesday morning.=20 That new deal terms are being discussed "confirms our fears that Enron's co= re trading and marketing business has been rapidly deteriorating and is wor= th much less today than several weeks ago," Meade said.=20 Tuesday afternoon, word spread among analysts and investors that Moody's In= vestors Service would issue a rating report on Enron before day's end. They= were waiting to see if Moody's would have soothing words on Enron or drop = its credit rating to junk, but no report was released.=20 Enron is expected to lay off employees this week.=20 Nov. 28, 2001 Houston Chronicle Cooperation from Enron key in probe=20 By TOM FOWLER=20 Copyright 2001 Houston Chronicle=20 Federal officials say they are willing to be more lenient with companies th= at cooperate in securities fraud cases, an attitude that could help get Enr= on Corp. off the hook in its current SEC investigation.=20 But it could also put individual executives -- including its former chief f= inancial officer and other former employees -- in the hot seat.=20 In the months since he took over as head of the Securities and Exchange Com= mission, Chairman Harvey Pitt has laid out policies that will give companie= s credit for coming forward to report misconduct such as improper accountin= g. The message has been that cooperation could spare companies harsher pena= lties.=20 The SEC is so serious about its new attitude that late last month it took t= he highly unusual step of outlining the reasons it decided not to bring an = enforcement action against Seaboard Corp. of Shawnee Mission, Kan.=20 The pork processing and cargo shipping company issued misstatements in its = annual and quarterly reports from December 1995 to March 2000 based on impr= oper entries booked by a controller at a Florida division.=20 In a statement, the SEC said the company's conduct was key to it avoiding t= he enforcement action because within a week of finding the alleged miscondu= ct, internal auditors did a preliminary review and advised management and i= ts board of directors, who then hired an outside law firm to do an independ= ent review.=20 Four days later the controller who covered up the problems was fired, along= with two supervisors, and the public was notified of the problem. The SEC = reached a settlement directly with the former controller, where she agreed = not to violate securities laws in the future.=20 While the Seaboard case is the only enforcement action to occur since the n= ew policies were put in place, observers say it's likely they could be appl= ied to Enron in the SEC investigation.=20 "You won't see the SEC be easy on anyone," said Frank Velie, a former U.S. = attorney and partner with New York-based Salans Hertzfeld Heilbronn Christy= & Viener. "But if you have an individual, or a small group of individuals = who acted illegally, and the company acts swiftly to fire them, turn over i= nformation to the SEC and cooperate, in many cases the company can escape p= rosecution."=20 Since SEC officials began looking into a number of off-balance-sheet partne= rships formed by Enron's former CFO, Andrew Fastow, the company has gone to= great lengths to appear cooperative and to distance itself from anyone ass= ociated with the partnerships.=20 The day after an earnings report last month revealed Enron would lose $35 m= illion and take a $1 billion hit on shareholder equity because of the compl= ex financing partnerships, Enron Chairman and Chief Executive Officer Ken L= ay and the company's board of directors said they stood by Fastow. The boar= d had approved all the partnerships and dealings, it was noted.=20 A week later, however, on Oct. 24, the company replaced Fastow.=20 On Oct. 31, the day Enron said the SEC had upgraded its review of the finan= ces from a simple inquiry to a formal investigation, the company announced = it's board of directors had created an investigation committee of its own w= ith the power to take disciplinary action against any Enron employee, offic= er or director who it determined " ... improperly participated in the trans= actions."=20 The committee took action shortly after, as several employees were fired fo= r their involvement in the deals, a spokesman said, including Ben Glisan, a= managing director and treasurer of Enron Corp., and Kristina Mordaunt, a m= anaging director and general counsel of an Enron division. Other employees = who were determined to have invested in the partnerships, including Fastow = and executives Michael Kopper, Kathy Lynn and Anne Yeager, no longer work f= or Enron.=20 In its SEC filing that outlined more details of the partnerships earlier th= is month, Enron again tried to distance itself from the deals by saying tha= t it was aware of the partnerships but required that certain safeguards be = put in place and that the transactions be approved and reviewed regularly.= =20 Painting the company as a relative innocent that fell victim to the dealing= s of renegade employees may make sense in the face of the SEC inquiry, but = it won't ensure safe passage for Enron, says Henry Hu, a law professor at t= he University of Texas in Austin.=20 Dynegy Completes $600 Mln Purchase of U.K. Gas Storage Assets 2001-11-28 07:37 (New York) Dynegy Completes $600 Mln Purchase of U.K. Gas Storage Assets Houston, Nov. 28 (Bloomberg) -- Dynegy Inc., which is buying rival U.S. energy trader Enron Corp., completed its acquisition of BG Group Plc's U.K. natural gas-storage subsidiary for about $600 million, its first purchase of energy assets in Europe. Dynegy used cash and short-term borrowings to pay for the acquisition, which was announced in July. BG Storage is expected to boost 2002 earnings, Houston-based Dynegy said in a statement. The purchase includes two storage terminals, Rough and Hornsea, which are used by about half of the U.K.'s gas shippers and can store 111 billion cubic feet, Dynegy said. The business also has 19 miles of pipeline and an onshore gas-processing plant in Easington, England. BG Storage's 260 workers will become employees of Dynegy. Dynegy, which trades gas in Germany, the Netherlands, Switzerland and Scandinavia, has said it needs physical energy assets in Europe to support its trading business. Dynegy is in talks to lower the price of its acquisition of Enron, the biggest energy trader, from its current $23 billion in stock and assumed debt. Shares of Dynegy rose $1.64 to $40.89 yesterday. They have fallen 27 percent this year. Enron, also based in Houston, rose 10 cents to $4.11. The stock has plunged 95 percent this year. --Mark Johnson in the Princeton newsroom (609) 750-4662 Natural Gas, Electricity Trading Appears Resilient, WSJ Reports 2001-11-28 06:32 (New York) Houston, Nov. 28 (Bloomberg) -- Despite Enron Corp.'s precarious financial condition, the natural gas and electricity trading industry appears relatively resilient and prices haven't yet been affected, the Wall Street Journal said. Trading companies, which began to take precautionary steps a month ago when news about Enron's woes were first reported, have moved trading from EnronOnline to other venues, the paper said. Some traders have unwound complex financial bets, while others have simply worked around Enron. Unlike a traditional commodities exchange, open to all, natural gas and electricity are traded privately, often with contracts between two parties, the Journal said. EnronOnline acts as a buyer and seller, setting the price for which it will buy or sell commodities. However, the energy market remains concerned given the uncertainty of what might happen if Dynegy Inc.'s purchase of Enron falls through. Companies that would benefit from a potential trading void include American Electric Power Co., Duke Energy Corp., El Paso Corp. and Morgan Stanley Dean Witter & Co. J.P. Morgan, Citigroup Have Stakes in Enron Purchase, WSJ Says 2001-11-28 05:53 (New York) New York, Nov. 28 (Bloomberg) -- J.P. Morgan Chase & Co. and Citigroup Inc., as of late yesterday, were looking for new terms in Dynegy Inc.'s planed purchase of Enron Corp. in order to maintain their banking stature, the Wall Street Journal said. The banks, which have put hundreds of millions of dollars into completing the purchase, have also placed their reputations in the mergers and acquisitions business on this transaction, the paper said. The banks are also trying to avoid a credit downgrade that could scrap the transaction. Officials at both banks, whom the Journal didn't name, said the pending transaction is a bellwether because it shows how banks like J.P. Morgan and Citigroup can use their lending ``muscle'' to offer one-stop shopping. Each bank has committed $700 million to $800 million in the form of various loans, the paper reported, citing officials familiar with the matter. Half of that amount is unsecured debt. The banks also have committed $250 million each. Enron's 401(k) Savings Plan Was Set Up for a Fall: David Wilson 2001-11-28 06:02 (New York) Enron's 401(k) Savings Plan Was Set Up for a Fall: David Wilson (Commentary. David Wilson is a columnist for Bloomberg News. The opinions expressed are his own.) Princeton, New Jersey, Nov. 28 (Bloomberg) -- Enron Corp. employees participating in a company-sponsored savings plan were more vulnerable than usual to this year's 95 percent plunge in its share price. Common and convertible preferred shares of Enron, the largest energy trader, increased as a percentage of the plan's assets last year for the first time since 1994, according to filings submitted to the U.S. Securities and Exchange Commission. The stock amounted to 62 percent of assets in the so-called 401(k) plan, designed to help people save for retirement, at the end of 2000. That figure was the highest in six years; in both 1998 and 1999, it had been less than a majority. Participants in the plan, which had $2.14 billion in assets available for benefits, could only do so much to diversify their investments. Enron, like many other companies, uses stock rather than cash to match employee contributions and restricts sales of the shares. And they could only guess at the year-end makeup of the plan's assets until the end of June, reflecting SEC disclosure standards for savings plans. By that time, the stock's drop was already well under way. Trio of Lawsuits Enron has since reported $1.01 billion in third-quarter charges; ousted Chief Financial Officer Andrew Fastow, who ran partnerships that accounted for some of the charges; restated its results since 1997; become the target of an SEC investigation into its accounting; and accepted a takeover bid from Dynegy Inc., its biggest rival. The company's shares, which ended last year at $83.13, fell as low as $3.83 yesterday amid concern that Dynegy might abandon its offer for the Houston-based company. They closed at $4.11. In response to the plunge, employees in the 401(k) plan -- which allows workers to defer part of their pay and build tax-free savings, and takes its name from a section of the Internal Revenue Service code -- have filed three lawsuits against Enron. The suits allege, among other things, that Enron prevented employees from shifting investments within the plan between Oct. 17, the day after its disclosure of the charges, and Nov. 19 as the company made administrative changes. All three seek class-action status on behalf of the plan's participants. The most recent filing came from the Gottesdiener Law Firm, based in Washington, on Monday. It covers the longest time period: November 1995 to now. Falling Percentages Enron shares accounted for 64 percent of the savings plan's assets at the end of 1994, the year before the period associated with the Gottesdiener suit began. The figure reflected a one-time contribution of preferred stock, and rose from 62 percent in 1993. Each preferred share has a face value of $100 and is convertible into 27.304 common shares. This translates into a conversion price of $3.66 a share, about 12 percent lower than yesterday's closing price. The plan also owned a stake in Enron's former oil and gas unit, which became EOG Resources Inc. after gaining independence in 1999. Add in those shares, and company stock represented about two-thirds of the 1994 assets. Enron's common and preferred shares fell to 60 percent of 401(k) assets available for benefits in 1995, 58 percent in 1996 and 53 percent in 1997 as the U.S. stock market rallied, lifting the value of participants' investments in equity mutual funds. The shares represented 49 percent of the plan's assets in 1998. The proportion hit bottom at 46 percent in 1999, when the assets more than doubled -- exceeding the 56 percent increase in Enron's share price that year -- to $1.62 billion. How Much Choice? Then came last year, when the common stock recorded its best performance in more than two decades even as U.S. stocks stumbled. Enron rallied 87 percent amid soaring electricity and natural gas prices, while the Standard & Poor's 500 Index, a market benchmark that includes the company, fell 10 percent. Company shares in the plan rose in value by $652.7 million, according to an SEC filing. The total includes shares bought and sold throughout the year. By contrast, mutual-fund holdings fell by $47 million and ``other investments'' rose by just $134,000, the filing said. At year-end, the 401(k) plan owned 13.9 million Enron common shares and 70,000 preferred shares, valued at $1.32 billion. This total encompasses not only Enron's matching contributions to the plan, but also employees' investments with their own money. The company generally provides a 50 percent match, in stock, for the first 6 percent of pay that goes into the plan. Employees can't sell the shares and move the proceeds into other investment choices until they reach the age of 50. About 11 percent of the plan's stock holdings came from the contributions, said Karen Denne, an Enron spokeswoman. The figure suggests participants invested more heavily in their company than usual for 401(k) participants. Waiting for Data For the average U.S. plan account, company stock amounted to 19 percent of assets at the end of last year, according to a study done by the Employee Benefit Research Institute and the Investment Company Institute and published last week. In any case, Enron's approach to matching ensures that as much as one-third of the contribution to an employee's account takes the form of shares that they can't sell right away. Anyone who wanted to gauge how this approach, and Enron's stock performance, affected the plan's financial position last year had to wait until June 27. That's when the filing cited earlier arrived at the SEC. Employee savings and stock-purchase plans, such as 401(k) plans, don't have to submit annual reports until 180 days after their fiscal year ends. They can even get a 15-day extension of the deadline if they need one. By the time Enron's plan made its annual report, it was already a bit too late to act on the information. The company's shares dropped 44 percent between the end of 2000 and the date of the submission. As the filing demonstrated, employees looking to save for retirement had been set up for a fall. --David Wilson in the Princeton newsroom (609) 750-4546=20 Enron Receives Proposal for $1 Billion Investment, FT Says 2001-11-28 00:01 (New York) New York, Nov. 28 (Bloomberg) -- Enron Corp. has received a proposal from a group of investors willing to provide the energy trader with more than $1 billion, the Financial Times reported, citing an unidentified person close to the talks. The funding would be provided through an equity investment in the Houston-based company, the Financial Times reported. The investment could assure Dynegy Inc. that Enron can survive for the nine months it may take for Dynegy to acquire the company, the paper reported. The new proposal is believed to be different from Enron's efforts to secure $500 million in financing from J.P. Morgan and Citigroup Inc., the paper reported. It is not clear who is involved in the new consortium, whether Enron will accept the proposal or on what terms it was made, the Financial Times reported. Karen Denne, a spokeswoman for Enron, told the paper that the company was trying to secure $500 million to $1 billion worth of equity financing and to restructure its debt, the paper said. GLOBAL INVESTING - Enron faces lawsuits over handling of pension plan ENERG= Y TRADER'S EMPLOYEES ALLEGE ... By ELIZABETH WINE. 11/28/2001 Financial Times (c) 2001 Financial Times Limited . All Rights Reserved GLOBAL INVESTING - Enron faces lawsuits over handling of pension plan ENERG= Y TRADER'S EMPLOYEES ALLEGE ASSETS WERE FROZEN.=20 Enron, the troubled energy trading company, is facing four lawsuits for its= handling of its employee retirement plan, one of which claims $850m in los= ses. Enron employees allege that the company froze the plan's assets, stopp= ing them from selling company shares they held in the plan as the stock pri= ce plunged. The third suit, filed on Monday night by the Washington, DC-based Gottesdie= ner Law Firm, also claims Enron breached its fiduciary duty over the retire= ment plan when it sold employees company stock knowing the share price was = artificially high. Enron shares have fallen from a high of $90 in August 20= 00 to a 52-week low of $4.01 as of Monday's close. Its shares began a rapid= fall from about $30 in mid-October on news of improper accounting practice= s.=20 Between October 17 and November 19, Enron "locked down" the retirement plan= , barring employees from selling their shares. From the market's close on O= ctober 16 to November 19, Enron shares lost 73 per cent of their value. Eli= Gottesdiener, Gottesdiener's principal, said that his claim of $850m was b= ased on the drop in the value of the company stock in the pension fund from= $1.3bn at the start of the year to about $100m today.=20 Enron shares accounted for about 60 per cent of the $2.1bn plan's assets at= the end of 2000, according to another of the lawsuits, filed by the law fi= rm Campbell Harrison last week.=20 That amount was far too high for prudent diversification of investment, Mr = Gottesdiener said. This was in addition to his objection to Enron's "lockdo= wn", which forced employees to watch as their retirement savings plunged wh= ile the fund underwent administrative changes. "We allege a breach of fiduc= iary duty under the circumstances," he said. "Knowing that people would wan= t to sell their stock, and realising that Enron was not the company they th= ought it was, under those circumstances, to lock people in, was grossly neg= ligent and a violation of Enron's duty."=20 The lawsuits raise several issues, such as a company's fiduciary duty in of= fering its own shares to employees in a retirement plan, and its right to b= an employees from selling shares.=20 Defined contribution plans such as Enron's, in which employees allocate the= ir retirement money from a menu of choices including mutual funds and compa= ny stock, are regulated by the Labor Department. They are not overseen by t= he Securities and Exchange Commission, which oversees traditional mutual fu= nds.=20 No regulation limits companies' ability to start such "lockdowns", beyond b= asic fiduciary duty. As a result, there is little day-to-day oversight of t= he management of the investments, said Geoff Bobroff, a former SEC attorney= and financial services industry consultant.=20 An older type of employee retirement plan - a defined benefit plan - has a = 10 per cent limit on the amount of company stock that can be held in the pe= nsion fund because these plans are administered entirely by the company. Bu= t the legislation does not extend to defined contribution plans. Mr Gottesd= iener said part of the reason he was bringing the lawsuit was to push for l= egislation to place the same 10 per cent cap on company stock in defined co= ntribution plans that exists for defined benefit plans.=20 He added that when a company matched the employee contribution with its own= stock alone, it pushed employees to buy more company stock, forsaking prud= ent diversification. "As long as companies match their employees' contribut= ions in their own stock, people take that as implicit investment advice."= =20 Enron's only matching contributions were in company stock.=20 (c) Copyright Financial Times Ltd. All rights reserved.=20 http://www.ft.com. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 COMPANIES & FINANCE THE AMERICAS - Enron works to save Dynegy bid. By ANDREW HILL and SHEILA MCNULTY. 11/28/2001 Financial Times (c) 2001 Financial Times Limited . All Rights Reserved Enron was yesterday locked in negotiations with Dynegy, its energy trading = rival, about reworking the details of Dynegy's rescue bid.=20 Dynegy is understood to be considering halving the value of the all-stock b= id in the light of Enron's deepening financial crisis. John Sousa, spokesman for Dynegy, said: "I can confirm that we are in discu= ssions with the parties involved in the transaction related to the structur= e of the deal."=20 Dynegy's bid, launched on November 9, is worth $11 a share - or $9.4bn - bu= t the Enron shares were trading yesterday morning at $4.12.=20 Enron's fate still depends on Dynegy's commitment to the deal, lenders' wil= lingness to restructure their loans, and credit ratings agencies' decision = not to downgrade Enron debt to junk status.=20 A downgrade by the large rating agencies would trigger a series of collater= al calls by trading counterparties. It would also oblige Enron to repay abo= ut $3.3bn of bonds. Karen Denne, Enron spokeswoman, said: "We're still work= ing on an equity infusion of $500m to $1bn. And we're still working on rest= ructuring our debt."=20 The most likely investors are JP Morgan Chase and Citigroup, which have alr= eady extended a $1bn secured credit line to Enron and are the energy group'= s principal advisers on the Dynegy deal.=20 "You have five moving parts: Dynegy, Chevron-Texaco (which owns 26 per cent= of Dynegy), Enron, Citigroup and Chase. All these people are horse trading= ," said John Olson, of Sanders Morris Harris, a Houston-based investment ba= nking and securities firm.=20 People close to the negotiations said Enron was seeking further guarantees = from Dynegy that it would not pull out of the deal. Enron is also seeking f= urther cash on top of the $1.5bn Dynegy has already committed with the back= ing of ChevronTexaco.=20 Andre Meade, an analyst with Commerzbank Securities, said that even if the = deal were completed "the underlying earnings associated with Enron's tradin= g and marketing business may be significantly lower than Dynegy anticipates= ". Creditsights, a credit research group, said the mounting shareholder and= employee litigation against Enron risked triggering a clause that allows D= ynegy to walk away if potential liabilities exceed $3.5bn.=20 (c) Copyright Financial Times Ltd. All rights reserved.=20 http://www.ft.com. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 WORLD STOCK MARKETS - Black clouds of pessimism hang over Wall Street AMERI= CAS. By MARY CHUNG. 11/28/2001 Financial Times (c) 2001 Financial Times Limited . All Rights Reserved US stocks posted sharp losses in morning trading as unexpectedly weak consu= mer confidence data sparked a broad sell-off on Wall Street.=20 By midsession, the Dow Jones Industrial Average was off 111.26 at 9,871.49 = while the S&P 500 index had given up 11.33 at 1,146. The Nasdaq Composite l= ost 27.91 at 1,913.32. After overcoming the previous session's gloomy news that the economy is off= icially in recession, investors turned decisively pessimistic after the con= sumer confidence index dropped for the fifth consecutive month.=20 Technology stocks were hit the hardest. Intel fell 2 per cent to $31.28, Mi= crosoft 3.4 per cent at $62.94 and=20 Cisco Systems shed 1.3 per cent at $19.67.=20 Online retailers, that saw sharp gains following the Thanksgiving weekend a= s optimism grew for a surge in online holiday sales, lost momentum. Amazon = dropped 6.4 per cent at $11.43 and Ebay shed 3 per cent at $63.13.=20 "We had weaker-than-expected confidence data, which spurred some profit tak= ing," said Bryan Piskorowski, a market commentator for Prudential Financial= . "But all said and done, we had a nice run and it's not surprising to see = the market give back some ground."=20 Telecommunications stocks slid after Nokia, the world's largest mobile phon= e maker, downgraded estimates for worldwide handset sales for 2001 and pain= ted a cautious picture for 2002. Motorola retreated 2.2 per cent at $17.56.= =20 A US court issued an injunction preventing Rambus from asserting some of it= s patents against Infineon, the German memory chip maker. Rambus shed 7 per= cent at $9.40.=20 Retail stocks were lower as Kmart dropped 5.4 per cent at $6.48 after the d= iscount retailer reported a heavier quarterly loss than a year ago. Wal-Mar= t slipped 0.6 per cent at $55.40 and Home Depot gave up 5 per cent at $43.3= 5 and was the biggest loser on the Dow.=20 Dow components were all trading lower with American Express off 1.7 per cen= t at $34.51 and Exxon Mobil down 0.3 per cent at $37.57.=20 Enron, the embattled energy trading company, dipped 0.2 per cent to $4, wei= ghed down by talk of renegotiations with Dynegy.=20 Toronto edged lower in early trading as the weak opening for US equities sp= arked technology stock selling and countered the day's good news story - a = 50 basis points cut for interest rates by the Bank of Canada.=20 By midsession the S&P 300 composite index was off 0.1 per cent at 7,457.70.= Nortel Networks shed 16 cents at C$12.57 and Celestica came off 75 cents a= t C$66. Talisman Energy overcame concerns about crude oil prices, adding 22= cents at C$55.60.=20 (c) Copyright Financial Times Ltd. All rights reserved.=20 http://www.ft.com. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 California; Metro Desk Enron's Many Victims 11/28/2001 Los Angeles Times Home Edition B-12 Copyright 2001 / The Times Mirror Company Enron, the Houston energy company that helped throw California into crisis = last year, spirals downward. Its stock has fallen from a high of near $85 t= o $4 Tuesday. A planned rescue-merger is being renegotiated, and Enron's ex= ecutives are disgraced.=20 The only shame in this is that 15,000 Enron employees have seen their retir= ement accounts tank right along with the company stock. We can only wish th= em luck in their lawsuit filed this week against the company, which urged t= hem right up until the stock crashed to keep buying Enron, then froze the r= etirement fund so employees couldn't sell their stock while the price skidd= ed. The freeze was billed as an administrative necessity while plan manager= s were being changed. Considering that Enron Chairman Kenneth L. Lay made about $145 million on h= is stock options in 2000 and the first few months of 2001 alone, maybe he'l= l volunteer to cover some of the $890 million in retirement plan losses. Fa= t chance. Ditto the nearly $60 million that former Enron President Jeffrey = K. Skilling cleared on his options in 2000. It was Skilling's August resign= ation that helped trigger Enron's decline--that and disclosures that its ex= ecutives had formed off-the-books partnerships that essentially concealed c= ompany debt.=20 Enron's employees aren't the only ones holding the bag. Enron and its chair= man, Lay, essentially invented market trading in electric power. Lay was al= so a chief energy advisor to President Bush, as he had been to Bush's fathe= r. Along with a handful of other companies, Enron profited so handsomely fr= om deregulation that California consumers, except those in areas with munic= ipal power like Los Angeles, will pay the price in higher electric bills fo= r years. Pacific Gas & Electric declared bankruptcy, and Southern Californi= a Edison nearly did. The state itself is deeply in debt for the power it wa= s forced to buy. Major shareholders in Enron, including the state employee = pension fund, got burned. There is a lot of blame to pass around--after all= , Edison itself was a main cheerleader for deregulation--but Enron remains = a fat target.=20 Lay's tendency to fulminate at the state and its officials at the height of= the electricity crisis for not getting onto the free-market bandwagon deep= ened the wounds. When the price bubble fell victim to this year's cool summ= er, a declining economy and the state's purchase of long-term power contrac= ts, the damage was done.=20 Californians can hope that the Securities and Exchange Commission will requ= ire companies to disclose the sorts of shenanigans that concealed Enron's d= ebt. Voters can ask themselves whether state legislators' inexperience, a p= roduct of term limits, helped produce such a shoddily constructed deal on d= eregulation.=20 Nothing will bring back the ordinary shareholders' lost money. At least the= Enron employee lawsuit stands a chance of recovering some percentage of th= e retirement fund loss, even if not a penny comes from Kenneth Lay's $145 m= illion. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Financial Dynegy Asks Enron for New Terms Peter Behr Washington Post Staff Writer 11/28/2001 The Washington Post FINAL E01 Copyright 2001, The Washington Post Co. All Rights Reserved Dynegy Inc. is insisting on steeply cutting the price of the $23 billion re= scue offer it made to energy trading competitor Enron Corp., as the compani= es' executives yesterday continued to hash out financial and legal issues s= tanding in the way of a new agreement.=20 Dynegy confirmed that it was pressing Enron for new terms, following the la= test collapse of Enron's stock price after the companies' original Nov. 9 a= cquisition agreement. Neither company would discuss the parameters of a new deal. Dynegy is belie= ved to be seeking a reduction of about 45 percent in its original offer, wh= ich involved a stock swap and assumption of about $15 billion in Enron debt= .=20 More critical than the stock exchange ratio, however, is how Enron will rai= se more cash and capital to stay solvent over the six to nine months that r= egulators are expected to take to review a Dynegy-Enron deal, analysts said= . Enron has $7 billion in debts that come due over the next 12 months.=20 Under the original deal, Enron shareholders would receive about $10.50 a sh= are -- more than twice the stock's current market value. Enron shares close= d yesterday at $4.11, up 10 cents, while Dynegy closed at $40.89, up $1.64.= =20 The New York Times and Wall Street Journal reported details of the negotiat= ions on Monday.=20 Enron has little if any leverage, analysts said, predicting that a breakdow= n in the negotiations could trigger a series of events that would force the= nation's largest energy trading firm and champion of deregulation into ban= kruptcy reorganization.=20 "I don't think they have a choice," said Ralph Pellecchia, a credit analyst= with the Fitch Inc. bond-rating service.=20 Enron's stock -- which traded as high as $84 earlier this year -- plummeted= after a chain reaction of shocks over the past month tied to Enron's discl= osures that some executives were involved in investment partnerships whose = debts were kept off Enron's balance sheet. The Securities and Exchange Comm= ission launched an investigation of Enron's finances and Enron had to make = a $1.2 billion reduction in shareholders' equity and acknowledge a $586 mil= lion reduction in earnings for the past four years.=20 Ratings services have withheld new assessments of Enron's creditworthiness = while the companies attempt to restructure their deal.=20 The ratings assessments are critical because Enron's debt is now rated just= one step above junk bond status. If it sinks to that level, lenders could = begin demanding repayment on more than $3 billion in Enron debt, precipitat= ing what would likely be a fatal cash drain, analysts said.=20 "Enron's investment grade rating is based in great part on the expectation = that the merger with Dynegy will go forward," Pellecchia said.=20 Growing concerns about Enron's survival have stymied attempts by its banker= s, J.P. Morgan Chase & Co. and Citigroup Inc., to raise as much as $2 billi= on for Enron over the past two weeks. The two banks are prepared to advance= $250 million each and are trying to find other lenders willing to advance = up to $1.5 billion more, according to sources familiar with the plan.=20 Meanwhile, some companies have avoided selling energy to Enron's trading op= eration, fearing they won't be paid.=20 Investors and lenders urgently need a clear signal that Dynegy is determine= d to proceed, on new terms, Pellecchia and other analysts said. The combina= tion of the two companies would create a dominant trading operation in ener= gy products and related financial instruments, but regulatory reviews are l= ikely to extend for six months or more, and investors want to see whether D= ynegy is prepared to stay that course.=20 Another ongoing issue is the mounting lawsuits against Enron by shareholder= s and employees. Under the merger agreement, Dynegy can walk away if it jud= ges that the successful claims against Enron from such suits will exceed $3= .5 billion.=20 Several Enron employees have filed suit claiming that the company mismanage= d its 401(k) employee retirement plan, which, combined with concealment of = its financial problems, has devastated employees' savings.=20 The suit cites Enron's policy that the company's matching contributions wou= ld be made only in Enron stock, and that employees could not sell these sha= res until they reached age 50.=20 Additionally, Enron froze the retirement accounts from the close of trading= Oct. 26, about the time when the depth of its problems was becoming clear,= until the morning of Nov. 13, in order to make a planned change in the man= agement of the account, a company spokesman said. (The employee lawsuit con= tends that the freeze covered a slightly longer period.) During the freeze,= employees could not sell Enron shares that they had purchased as their ret= irement contribution.=20 "The message to employees [investing in Enron stock] was, everything was go= ing great," said Washington lawyer Eli Gottesdiener, who represents the emp= loyees in the suit. http://www.washingtonpost.com=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business; Financial Desk Dynegy Refigures Enron Offer Takeover: Buyer lowers price; energy trader's = stock stabilizes. Rating agencies show restraint. THOMAS S. MULLIGAN TIMES STAFF WRITER 11/28/2001 Los Angeles Times Home Edition C-3 Copyright 2001 / The Times Mirror Company NEW YORK -- The dramatic slide in the stock of energy trader Enron Corp. ha= lted Tuesday, as its intended rescuer, rival Dynegy Inc., confirmed that it= is renegotiating the terms of the takeover.=20 Wall Street read the news as a sign of at least some improvement in the cha= nces that the deal will go through. But Enron stock rose only 10 cents to $= 4.11 in New York Stock Exchange trading, so confidence in Enron's survivabi= lity remains tepid, traders said. Dynegy shares rallied $1.64, or 4%, to $40.89 on the Big Board, as investor= s anticipated a new deal at a lower price.=20 Reached Tuesday evening, a spokeswoman for Enron said, "We don't expect an = announcement tonight."=20 The two companies, both based in Houston, have agreed on a new price of 0.1= 5 Dynegy share for each Enron share, or $6.13 a share at Tuesday's closing = price for Dynegy, a person familiar with the negotiations said Tuesday. Tha= t revalued figure is more than 40% below the original price announced Nov.9= .=20 The terms also would include another interim infusion of cash to help stabi= lize Enron's trading business and enable it to make a $690-million payment = due creditors Dec. 14, the person said.=20 He said it was unclear how big the infusion would be and whether the money = all would come from Dynegy and its 26% owner, ChevronTexaco Corp., or wheth= er a portion would come from Enron's bankers as part of a restructuring of = Enron's debt.=20 ChevronTexaco provided Enron an immediate $1.5 billion in cash at the time = the takeover was announced. In return, Enron agreed to sell its Northern Na= tural Gas Co. pipeline subsidiary to Dynegy.=20 Enron's efforts to attract additional equity investments of up to $2 billio= n so far have failed. Bloomberg News reported Tuesday that Enron's bankers,= led by J.P. Morgan Chase & Co., have had their overtures rejected by Saudi= Prince Alwaleed bin Talal, Carlyle Group Inc. and Blackstone Group.=20 The major credit-rating agencies again Tuesday refrained from downgrading E= nron's bonds to junk status, awaiting word of a restructured deal.=20 Some analysts theorized that, by deferring a downgrade of Enron's bonds to = junk status, rating agencies were cutting the company more slack than norma= l because they are conscious that such a downgrade would send the company i= nto bankruptcy. That in turn could cause what one analyst termed a meltdown= of financial markets, given Enron's long reach in accounting for as much a= s 25% of all electric power and natural gas traded globally.=20 Ronald M. Barone, analyst at Standard & Poor's rating agency in New York, s= aid he was surprised no deal was struck as of Tuesday evening. "We're still= waiting," he said.=20 Under the terms of some of its controversial deals involving limited partne= rships established and run by former Enron executives, a rating cut to belo= w investment grade would trigger a requirement that Enron make immediate ca= sh payments to creditors. Such payments would total $3.9 billion, Enron sai= d in a recent filing with the Securities and Exchange Commission.=20 The SEC is investigating the limited-partnership arrangements and the circu= mstances that caused Enron to dramatically restate its official financial s= tatements, erasing more than $580 million in reported profit since 1997.=20 Enron also faces a raft of lawsuits by ordinary stockholders and by employe= es who contend they were misled about the firm's financial condition and in= duced to invest in company stock when executives knew it was overvalued.=20 Enron's core trading business has been deteriorating as nervous trading par= tners have reduced their exposure to a possible bankruptcy, said energy ana= lyst Michael Heim at A.G. Edwards & Co. in St. Louis.=20 Although Enron's trading volume reportedly has been holding up, reaching as= much as 80% of normal levels, Heim said such volume mainly represents shor= t-term trades.=20 Enron is best-known for long-term, structured trades, which are more comple= x and far more profitable; those deals are evaporating as Enron's fate rema= ins uncertain, he said. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Ratings agencies agree to hold off on ratings move on Enron for now - WSJ 11/28/2001 AFX News (c) 2001 by AFP-Extel News Ltd NEW YORK (AFX) - Representatives of Moody's Investors Service Inc, Standard= & Poor's Corp and Fitch Inc yesterday agreed to hold off on making any rat= ings move on the long-term debt of Enron Corp, which is currently just one = notch above junk status, the Wall Street Journal reported citing people clo= se to the talks.=20 The ratings agencies yesterday met with executives of Enron and Dynegy Inc,= which is trying to buy Enron, as the companies continued talks aimed at sa= lvaging their two-week old deal. A downgrade to junk status would be critical for the troubled Enron, as it = would trigger payment obligations on a large part of its debt, which totals= about 13 bln usd, 9 bln usd of which is due by the end of next year.=20 The company may find itself on the hook for an additional 7 bln usd in off-= balance-sheet debt and another 3.9 bln usd in potential liabilities, relate= d to troubled investment partnerships, if its credit rating drops to below = investment grade, Fitch analyst Ralph Pellecchia said, according to the pap= er.=20 It would also make it more expensive for the company to raise the financing= needed to keep its trading operations alive.=20 Enron yesterday informally agreed to a new share-exchange ratio of 0.12 sha= res of Dynegy for each Enron share owned, down more than 50 pct from the or= iginal ratio of 0.2685 Dynegy shares for each Enron share owned, the paper = said.=20 But the new ratio, which values Enron at 4.91 usd a share, or a total of 4.= 17 bln usd, compared with the original value of 10.98 usd a share, or a tot= al of 9.33 bln usd, has not been officially agreed upon, and talks -- which= are reported to be tense -- are set to continue.=20 The talks began at the weekend, sparked by a steep decline in Enron's share= price in the past two weeks following revelations of new liquidity problem= s in a filing to the SEC last week.=20 cl/jad Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Dynegy Completes BG Storage Ltd Buy 11/28/2001 Dow Jones News Service (Copyright (c) 2001, Dow Jones & Company, Inc.) HOUSTON -(Dow Jones)- Power holding company Dynegy Inc. (DYN) closed the ac= quisition of BG Storage Ltd. from BG Group PLC (BRG) for about $600 million= cash.=20 In a press release Wednesday, Dynegy said BG Storage -whose assets include = 30 wells, five offshore platforms and 19 miles of natural gas pipelines - s= hould be accretive to earnings in 2002 and beyond. Dynegy used cash on hand and short-term borrowings to pay for the acquisiti= on, which was announced in July.=20 The company expects to close its acquisition of Enron Corp. (ENE) by the en= d of the third quarter.=20 The Wall Street Journal reported that Enron's board late Tuesday informally= agreed to lower the initially proposed share-exchange ratio by more than 5= 0%, to value the deal at about $4.17 billion. Talks were still fluid as of = late yesterday, the Journal said.=20 -Pamela Tate; Dow Jones Newswires; 201-938-5400 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Dynegy Completes Acquisition of UK Natural Gas Storage Assets 11/28/2001 Business Wire (Copyright (c) 2001, Business Wire) HOUSTON--(BUSINESS WIRE)--Nov. 28, 2001--Dynegy Inc. (NYSE:DYN) today annou= nced the completion of the previously announced acquisition of BG Storage L= imited (BGSL) and its natural gas storage facilities and related assets in = the United Kingdom. The transaction has been approved by The Gas and Electr= icity Markets Authority and The Department of Trade and Industry and has be= en cleared by the Competition Minister following advice from the Director G= eneral of Fair Trading in the UK. Dynegy Europe Limited and BG Group plc (N= YSE:BRG.N) originally announced the signing of a definite agreement with re= spect to the transaction on July 16, 2001.=20 The acquisition of BGSL's 30 wells with five offshore platforms, nine salt = caverns, approximately 19 miles (32 kilometers) of pipelines and an onshore= natural gas processing terminal establishes the cornerstone of Dynegy's Eu= ropean physical energy convergence presence. BGSL's 260 employees will rema= in employed under its new name of Dynegy Storage Limited. "This acquisition strengthens our competitive position in the UK and is a s= ignificant step toward our long-term goal to replicate our North American e= nergy delivery network throughout Europe," said Chuck Watson, chairman and = chief executive officer of Dynegy Inc. "When combined with our marketing, r= isk management and logistics capabilities in the UK, these assets will supp= ort the creation of even greater value for our customers and our shareholde= rs."=20 Rough and Hornsea, two of the facilities included in the transaction, are k= ey providers of physical storage space in the UK natural gas market and are= used by approximately half of the UK's natural gas shippers. The deliverab= ility rate of Rough, an offshore depleted natural gas field, is 1.5 billion= cubic feet per day (455 GWh/day). The deliverability rate of Hornsea, an o= nshore salt cavity installation, is 620 million cubic feet per day (195 GWh= /day). The two facilities are capable of storing 111 billion cubic feet (Bc= f) of natural gas.=20 As part of this transaction, Dynegy also acquired the Easington natural gas= processing terminal. The facility processes Rough and third-party natural = gas streams and delivers into the UK natural gas transportation network. BG= SL previously announced plans to develop the Aldbrough storage facility, a = salt cavern with an expected storage capability of 6 Bcf and deliverability= rate of 600 MMcf/day (185 GWh/day). Dynegy Europe will examine the feasibi= lity of Aldbrough's development plans in the future.=20 Dynegy Europe has already consulted with existing and potential customers o= n enhancements and additions to the storage services and has established an= e-mail address (storage.consultation@dynegystorage.co.uk) to allow custome= rs to provide further views. To request information about storage services,= customers can also contact Dynegy at inquiry@dynegystorage.co.uk.=20 "We are committed to providing flexible and innovative products to meet the= special requirements of our new and existing storage customers," said Gary= Cardone, president of Dynegy Europe. "We are also committed to working wit= h our customers and incorporating their insight on essential storage needs = into our comprehensive product development portfolio."=20 Under the terms of the purchase agreement, Dynegy paid approximately $600 m= illion (421 million pounds) for BGSL and its assets. Dynegy used a combinat= ion of cash on hand and short-term borrowings to complete the purchase. The= ownership of BGSL is expected to be accretive to earnings in 2002 and beyo= nd.=20 Dynegy Inc. is one of the world's premier energy merchants. Through its glo= bal energy delivery network and marketing, trading and risk management capa= bilities, Dynegy provides innovative solutions to customers in North Americ= a, the United Kingdom and Continental Europe.=20 Through Dynegy Europe, Dynegy has been an active participant in UK energy m= arkets since 1994 when it became a leading player in the development of a l= iberalized natural gas market. In 1999, Dynegy Europe entered the UK and No= rd Pool electricity markets. With offices in Austria, Switzerland, Holland,= Italy and Spain, Dynegy Europe is one of Europe's largest energy marketers= and traders and is a significant participant in the communications marketp= lace.=20 Dynegy Inc. and Enron Corp. recently announced the execution of a definitiv= e agreement for a merger of the two companies. Upon completion of the merge= r, which is expected by the end of the third quarter 2002, the new Dynegy i= s expected to have revenues exceeding $200 billion and $90 billion in asset= s. In addition, the new Dynegy's delivery network will include more than 22= ,000 megawatts of generating capacity and 25,000 miles of pipelines.=20 Certain statements included in this news release are intended as "forward-l= ooking statements" under the Private Securities Litigation Reform Act of 19= 95. These statements include assumptions, expectations, predictions, intent= ions or beliefs about future events. Dynegy cautions that actual future res= ults may vary materially from those expressed or implied in any forward-loo= king statements. Some of the key factors that could cause actual results to= vary from those Dynegy expects include changes in commodity prices for ene= rgy or communications products or services; the timing and extent of deregu= lation of energy markets in the U.S. and Europe; the timing of required app= rovals for the Dynegy/Enron merger and the success of integration and cost = savings measures relating to the merger; the effectiveness of Dynegy's risk= management policies and procedures and the creditworthiness of customers a= nd counterparties; the liquidity and competitiveness of wholesale trading m= arkets for energy commodities, including the impact of electronic or online= trading in these markets; operational factors affecting Dynegy's power gen= eration or Dynegy's midstream natural gas facilities; uncertainties regardi= ng the development of, and competition within, the market for communication= s services in the U.S. and Europe; uncertainties regarding environmental re= gulations or litigation and other legal or regulatory developments affectin= g Dynegy's business; general political, economic and financial market condi= tions; and any extended period of war or conflict involving the United Stat= es or Europe. Moreover, Dynegy's expectation that the acquisition will be a= ccretive to earnings in 2002 and beyond is based upon achieving certain sal= es projections, meeting certain cost targets and successfully integrating t= he acquired assets. More information about the risks and uncertainties rela= ting to these forward-looking statements are found in Dynegy's SEC filings,= which are available free of charge on the SEC's web site at http://www.sec= .gov. CONTACT: Dynegy Inc. Media: U.S. John Sousa or Steve Stengel, 713/767-5800 = or Europe David Keane, 020 8334 7266 or Analysts: Margaret Nollen, Arthur S= hannon or Katie Pipkin, 713/507-6466=20 06:10 EST NOVEMBER 28, 2001=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 INDIA: India's ONGC says rejects BG offer on fields. 11/28/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, Nov 28 (Reuters) - India's Oil and Natural Gas Corporation (ONGC) h= as rejected a bid by British energy giant BG Plc to become the operator of = three prized oil and gas fields off India's west coast, an ONGC spokeswoman= said on Wednesday.=20 The decision could jeopardise the British oil and gas producer's $388-milli= on deal to buy a 30 percent stake in the fields from U.S. energy firm Enron= Corp . The deal, signed in October, was conditional on BG becoming the operator of= the fields with full control over day-to-day management.=20 The ONGC board, which met late on Tuesday evening, decided that BG's offer = was not "sufficiently responsive" for it to become the operator of the fiel= ds, the spokeswoman told Reuters. She did not elaborate on the reasons for = rejecting the BG bid. ONGC's move could also affect Enron, which desperatel= y needs cash to stave off a mounting debt crisis in the United States. The = Houston-based energy trader needs at least $1 billion cash to shore up its = balance sheet and keep rating agencies from junking its debt.=20 The spokesman for BG was not immediately available for comment.=20 The Panna, Mukta and Tapti fields, considered one of India's prized discove= ries in the last two decades, were being jointly owned by ONGC, Enron Oil a= nd Gas India Ltd, wholly-owned unit of Enron Corp, and Reliance Industries = Ltd , the country's biggest petrochemicals maker.=20 The Panna-Mukta oilfields have recoverable reserves of 184 million barrels = of oil and oil equivalent gas. They are proposed to be expanded to 214 (MMB= OE). The Tapti gas field has reserves of 96.3 billion cubic metres of gas e= quivalent.=20 Enron, with 30 percent stake, was the sole operator, and BG wanted that sit= uation to continue after the buyout.=20 But this was opposed by ONGC and Reliance. Both companies staked their own = independent claims, saying that they had the expertise to manage the fields= on their own.=20 BG then tried to solve the dispute by offering ONGC the right to operate an= other field in Brazil if it withdrew its claim for Panna, Mukta and Tapti. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 AUSTRALIA: Pacific Hydro to select wind turbine maker. 11/28/2001 Reuters English News Service (C) Reuters Limited 2001. MELBOURNE, Nov 28 (Reuters) - Renewable power generator Pacific Hydro Ltd s= aid on Wednesday it expected to select a wind turbine company to set up Aus= tralian manufacturing for its proposed A$300 million Portland wind farm by = mid-January.=20 Pacific Hydro managing director Jeff Harding said the company had shortlist= ed Danish company NEG Micon and a consortium of Enron Corp and Siemens . "We will select them within the next six to eight weeks or so, but the manu= facturing will only go ahead if we get approval for the project," he said.= =20 The selected manufacturer would initially provide turbines for the Portland= project, but Harding said it was expected to provide the base for other wi= nd project manufacturing.=20 A number of companies are looking at boosting wind generation in Australia = as a result of a Federal Government target to boost renewable energy use by= two percent by 2010.=20 Pacific Hydro's Portland project would comprise 120 wind generators with a = capacity of about 180 MW, and is expecting to gain environmental approvals = around April next year.=20 The company, which also has a range of hydro projects in Australia and Asia= , has identified 2,991 MW of potential Australian wind generation projects.= =20 "We expect to have a minimum of 500 MW operational within three to four yea= rs," Harding said.=20 Pacific Hydro is a joint venture partner with Aboitiz in the Phillipines 70= MW Bakun hydro project which started operation during the past financial y= ear.=20 Work on the second stage of Bakun, which will boost output by 50 percent, i= s due to start in 2002, with Pacific Hydro and Aboitiz, also planning anoth= er hydro project.=20 Pacific Hydro reported a net profit after tax and abnormals of A$26.9 milli= on for the year ended June 30, up from A$8.8 million the year previously du= e to the start of Bakun and an abnormal foreign exchange benefit.=20 Harding said the profit growth would slow this financial year, with the Por= tland project not likely to make its first contribution until 2002/03.=20 "It will be slightly ahead of last year but we won't have that quantum jump= which we had this last year, that reflected the completion of Bakun," he s= aid.=20 Pacific Hydro shares ended Wednesday up seven cents at A$4.30, while the br= oader market was down 0.1 percent. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 InPlay Dynegy confirms it's renegotiating Enron deal 11/28/2001 The Daily Deal Copyright (c) 2001 The Deal LLC Enron Corp. - Dynegy Inc.=20 Houston energy firm Dynegy Inc. confirmed Tuesday it is renegotiating its a= cquisition of crosstown rival Enron Corp. Dynegy spokesman Steve Stengel sa= id the company is in discussions with the parties involved in the transacti= on "in relation to the structure of the deal." He would not elaborate. Enro= n did not return calls seeking comment. Sources close to the transaction sa= id Monday the two were back at the negotiating table after a steep drop in = Enron's stock price, and analysts said Dynegy was pushing for $5.25 per sha= re. The Wall Street Journal said the two were discussing a valuation haircu= t of about 40%, from $10.41 per share, or a total of $9 billion, to less th= an $6 per share, or a total of about $5 billion. -Claire Poole www.TheDeal.= com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business Dynegy confirms move to renegotiate Enron takeover From Tribune news services 11/28/2001 Chicago Tribune North Sports Final ; N 3 (Copyright 2001 by the Chicago Tribune) The high-profile deal to merge energy marketers Enron Corp. and Dynegy Inc.= has gone back to the drawing board.=20 Meanwhile, Enron reportedly has made progress securing more than $1.5 billi= on in new cash to keep its business stable while it renegotiates with Dyneg= y. Dynegy confirmed Tuesday that it is in talks to renegotiate its $9 billion = deal to buy its larger but troubled rival.=20 The disclosure sent Enron shares up 2.5 percent, apparently easing some inv= estors' concerns that the deal would fall through.=20 In trading on the New York Stock Exchange, Enron shares rose 10 cents to cl= ose at $4.11--a stark contrast to days of double-digit declines. Dynegy sha= res rose $1.64, to $40.89.=20 "There are discussions occurring related to the structure of the transactio= n," said Dynegy spokesman Steve Stengel.=20 While news that the two Houston-based companies were renegotiating temporar= ily appeased investors, observers said they won't be confident about the de= al's future until they hear details about new cash infusions to help keep E= nron afloat.=20 "Putting more money into the deal to shore up Enron's credit situation, tha= t would be a sign that Dynegy would be committed to the deal going through,= " said analyst Mike Heim of A.G. Edwards & Sons.=20 Late Tuesday, The Financial Times of London reported on its Web site that a= consortium of investors is proposing a $1 billion equity investment in Enr= on, citing a person close to the talks. The newspaper didn't identify these= investors, but said an agreement could be announced Wednesday.=20 Separately, The Wall Street Journal reported on its Web site that J.P. Morg= an Chase & Co. and Citigroup Inc.'s Citibank, which are advising on the Dyn= egy buyout, have agreed to invest $500 million in the merged company and ha= ve said they would consider increasing that amount if they fail to find add= itional outside investors for the deal.=20 The Journal, citing people close to the discussions, also said Dynegy and E= nron have tentatively agreed to cut the value of the all- stock deal in hal= f. Under the new deal, Enron shareholders would get 0.12 Dynegy share for e= ach Enron share held.=20 That would value Enron at $4.17 billion. The original deal, valued at $9 bi= llion, was based on an exchange rate of 0.2685 Dynegy share for each Enron = share. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: UPDATE 6-Enron, Dynegy hammer away at new merger deal. By C. Bryson Hull and Arindam Nag 11/27/2001 Reuters English News Service (C) Reuters Limited 2001. HOUSTON, Nov 27 (Reuters) - Energy trader Dynegy Inc. and floundering rival= Enron Corp. hammered away at new terms for their proposed merger late Tues= day, and sources said talks included a buyout offer half the original price= and fervent efforts to secure financing to stave off a credit downgrade.= =20 The sources familiar with the negotiations said investment banks J.P. Morga= n and Citigroup, who are advisors and have already loaned Enron a total of = $1 billion, may have to step up with a combined $500 million to help save t= he deal. This follows several rebuffs of Enron by prominent private equity firms, al= though a source said the Houston company was entertaining an offer of $1 bi= llion from outside investors.=20 Dynegy had planned to buy its Houston rival for $9 billion in stock and is = currently in a "due diligence" examination of Enron's complex financial rec= ords that began before the Thanksgiving holiday last Thursday.=20 The first buyout offer, finalized Nov. 9, would have had Dynegy paying abou= t $10.41 for each share of Enron, but Enron's shares have since cratered to= near $4, stoking investor fears the merger will not go through.=20 It is abundantly clear that the deal will be changed if it is to proceed. S= ources close to the negotiations said the stock exchange ratio is likely to= fall into the range of 0.12 to 0.15 Dynegy shares for each Enron share, ab= out half of the originally proposed valuation of 0.2685 to 1.=20 Enron had tentatively accepted the lower end of that range, but a source ca= utioned that the talks were still very active and the terms very fluid.=20 Also on the table were negotiations to extend maturation of Enron's debt pa= st the close of the merger, expected in the third quarter of 2002, as anoth= er move against a credit cut.=20 OUTSIDE OFFER ENTERTAINED=20 As for the outside offer of $1 billion, a source said the investment is des= igned to shore up Enron's balance sheet and keep rating agencies from junki= ng its credit. A credit downgrade would cause some $3.9 billion in obligati= ons to become due immediately.=20 "It's all about getting money to protect assets and intellectual property,"= the source told Reuters.=20 An announcement could come as early as Wednesday, but it could take longer,= the source said.=20 The source declined to identify the parties, and would neither confirm or d= eny that Goldman Sachs was among them. Sources close to the investment bank= have told Reuters recently that Goldman is looking at ways to be part of E= nron's power trading business.=20 Dynegy spokesman John Sousa declined to comment on what he termed speculati= on about parties to the deal.=20 Enron's shares bounced slightly on Tuesday after Dynegy confirmed the restr= ucturing talks. Shares closed up 13 cents at $4.14 on the New York Stock Ex= change. Dynegy's shares gained 4.2 percent or $1.64 to $40.89 on the NYSE.= =20 Another set of clouds darkening Enron's sky is the fact that its pursuit of= private equity financing has found few takers among the more prominent pri= vate equity firms.=20 Three New York-based buyout firms, Blackstone Group, Clayton Dubilier & Ric= e and Warburg Pincus LLC have all passed on Enron, according to people fami= liar with Enron's efforts.=20 And Washington, D.C.-based Carlyle Group, another major private equity firm= , is also not interested in Enron, Carlyle spokesman Chris Ullman said.=20 Some private equity executives who have looked at Enron say too much remain= s unclear about Enron's financial condition to commit funds in the near fut= ure.=20 One certainty is that layoffs are in Enron's future. Three sources confirme= d to Reuters that Enron's equity trading unit is being closed and that the = roughly 60 employees there are being laid off. An Enron spokesman would not= comment on the cuts.=20 Those layoffs, part of broader job cuts expected as part of the Dynegy buyo= ut, point to an acute problem for Enron - the loss of volume in its trading= franchise, the crown jewel most coveted by Dynegy. Enron's trading partner= s have been cutting back transactions with North America's largest energy t= rader because of credit concerns.=20 "This business is hugely dependent on volumes and volume growth. It is the = principal reason that Dynegy is making the deal. If it's worth a lot less, = then Enron is worth less. It's vital to stop the bleeding in its core tradi= ng and marketing business," said Commerzbank analyst Andre Meade.=20 (Nag reported from New York. Additional reporting by Jeff Goldfarb, Dane Ha= milton, Janet McGurty and Jonathan Stempel in New York). Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 New negotiations for Dynegy purchase of Enron sends shares higher By JUAN A. LOZANO Associated Press Writer 11/27/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. HOUSTON (AP) - The high-profile deal to merge energy marketers Enron Corp. = and Dynegy Inc. has gone back to the drawing board.=20 Meanwhile, Enron reportedly has made progress securing more than dlrs 1.5 b= illion in new cash to keep its business stable while it renegotiates with D= ynegy. In a move that sent Enron shares higher after days of double-digit declines= , Dynegy confirmed Tuesday that it is in talks to renegotiate its dlrs 9 bi= llion deal to buy its larger but financially troubled rival.=20 The disclosure that the two companies are revisiting the terms sent Enron s= hares up 2.5 percent, apparently easing some investors' concerns that the d= eal would fall through.=20 "There are discussions occurring related to the structure of the transactio= n," said Dynegy spokesman Steve Stengel, who declined to elaborate.=20 While news that the two Houston-based companies were renegotiating temporar= ily appeased investors, observers said they won't be confident about the de= al's future until they hear details about new cash infusions to help keep E= nron afloat.=20 "Putting more money into the deal to shore up Enron's credit situation, tha= t would be a sign that Dynegy would be committed to the deal going through,= " said Mike Heim, an analyst with A.G. Edwards & Sons.=20 Late Tuesday, The Financial Times of London reported on its Web site that a= new consortium of investors is proposing making a dlrs 1 billion equity in= vestment in Enron, citing a person close to the talks. The newspaper didn't= identify these investors, but said an agreement could be announced as soon= as Wednesday.=20 Separately, The Wall Street Journal reported on its Web site that J.P. Morg= an Chase & Co. and Citigroup Inc.'s Citibank, which are advising on the Dyn= egy buyout, have agreed to invest dlrs 500 million in the merged company an= d have said they would consider increasing that amount if they fail to find= additional outside investors to take part in the deal.=20 The Journal, citing people close to the discussions, also said Dynegy and E= nron have tentatively agreed to cut the value of the all-stock deal in half= . Under a deal informally agreed to by Enron's board, Enron shareholders wo= uld get 0.12 Dynegy share for each Enron share held.=20 That would value Enron at dlrs 4.17 billion. The original deal, valued at d= lrs 9.3 billion, was based on an exchange rate of 0.2685 Dynegy share for e= ach Enron share.=20 As a condition of the reduced price, Enron executives were seeking more con= trol of the combined company, the Journal said.=20 Raymond James analyst Jon Kyle Cartwright said the buyout will hinge on Dyn= egy's ability to reinvigorate Enron's trading operation, which has been hur= t as some energy companies have stopped selling it power and natural gas fo= r fear they won't be paid.=20 Many energy traders who have shied away from doing business with Enron worr= y that the company will go bankrupt, said Charlie Sanchez, energy markets m= anager for Gelber & Associates, a Houston-based energy trading firm.=20 Restoring customer and investor faith "is not impossible. But it's more of = an issue of gradually rebuilding (Enron's) confidence and legacy and develo= ping confidence in the new legacy under Dynegy. It's just going to take tim= e," he said.=20 But Fadel Gheit, an analyst with Fahnestock & Co. Inc. said Enron is a bad = investment and that Dynegy underestimated its potential liabilities after i= t announced Nov. 9 that it would buy the company at a price valuing Enron a= t about dlrs 10 per share. Under the terms of the deal, Dynegy also would a= ssume dlrs 13 billion in Enron debt.=20 "Chasing Enron is like trying to catch a falling knife," Gheit wrote Tuesda= y in a research note to investors.=20 Stengel, the Dynegy spokesman, declined comment when asked if an announceme= nt of renegotiated terms is expected soon. Enron spokesman Vance Meyer said= the company had no comment about any discussions related to the merger and= that Enron expected the deal to be completed.=20 In trading on the New York Stock Exchange, Enron shares rose 10 cents to cl= ose at dlrs 4.11 - a stark contrast to trading a day earlier that saw Enron= shares dip to an all-time low of dlrs 3.76 before closing down 15 percent = at dlrs 4.01. Dynegy shares rose dlrs 1.64 to dlrs 40.89 on the NYSE.=20 Enron's stock has plummeted more than 95 percent from its February 52-week = high of dlrs 84.87, after a series of disclosures relating to the company's= complicated finances raised concerns about its financial viability.=20 Enron last month revealed that partnerships run by its executives had allow= ed the company to keep about half a billion in debt off its books and allow= ed the executives to profit from the arrangements. Enron's dealings with th= ose partnerships are now the subject of a Securities and Exchange Commissio= n investigation.=20 The company ousted its top financial officer in October, and several weeks = ago restated its earnings back to 1997 - eliminating more than dlrs 580 mil= lion in reported income.=20 ---=20 On the Net:=20 http://www.enron.com=20 http://www.dynegy.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Enron woes bite into its energy trading. By James Jelter 11/27/2001 Reuters English News Service (C) Reuters Limited 2001. SAN FRANCISCO, Nov 27 (Reuters) - Former energy trading giant Enron's finan= cial straits and plunging share price are drying up its core business as ot= her market players seek out safer trading partners.=20 While most U.S. utilities and trading houses say they are still striking de= als with Enron, they also admit now to slashing their financial exposure to= the battered company. "We haven't stopped trading with Enron," said Terry Francisco, a spokesman = for rival Duke Energy .=20 "We will continue to closely monitor the situation and make prudent adjustm= ents when necessary in accordance with our credit policies," he added.=20 For Enron, those policies are starting to sting.=20 The company has seen its credit rating cut to just above "junk" status foll= owing disclosure of off-balance sheet dealings by a senior officer and a do= wnward revision of its earnings for the past four years.=20 Enron, which until recently handled 20 percent of the North American electr= icity and natural gas market, has seen its share price plummet from a year = high of $84.88 to close today at a mere $4.14 on the New York Stock Exchang= e.=20 Cross-town rival Dynegy Inc. agreed earlier this month to buy Enron in a st= ock deal valued at $10.55 a share.=20 But given Enron shares' continued slump, Dynegy said Tuesday it was seeking= to renegotiate the deal.=20 DEARTH OF SELLERS=20 Amid all this bad news, energy traders said they were now reluctant to sell= energy to Enron.=20 This, in turn, has raised concerns Enron might have a hard time securing en= ough power and gas to meet its long-term sales commitments, though there so= far has been no evidence it has missed any deliveries or failed to pay for= what it buys.=20 Nevertheless, Mirant Corp. , another of the nation's top energy trading hou= ses, confirmed Tuesday it was no longer willing to sell energy products to = Enron.=20 "Right now, we're just purchasing from them," Mirant spokesman Chuck Griffi= n said.=20 This cautionary approach was also confirmed at several municipal and federa= l power companies, including the mighty Bonneville Power Administration (BP= A) in Portland, Oregon.=20 "We have severely limited our business with Enron," said Stephen Oliver, vi= ce president of power marketing for BPA, which sells wholesale electricity = from a string of huge dams along the Northwest's Columbia River.=20 Oliver said BPA, which has done business with Enron for six years, owes the= company money but he declined to say how much.=20 "We have zeroed out their credit limit, and any business going forward with= Enron would be within the amount of money owed to them," he said.=20 PAYMENT UP FRONT=20 Enron's shaky financial status has prompted some traders to demand payment = up front, a move taken by the Western Area Power Administration (WAPA), whi= ch markets hydroelectricity from 56 federal dams for the U.S. Department of= Energy.=20 WAPA spokeswoman LaVerne Kyriss said some of their regional offices have ha= lted spot market dealings with Enron and are seeking to renegotiate a 10-ye= ar deal to buy power from Enron.=20 "We are working to protect our utility customers and the federal government= ," Kyriss said.=20 Traders throughout the utility industry said they had curbed or dropped lon= g-term trades with Enron, which involve deals lasting anywhere from a week = to several years.=20 As Enron's financial woes deepen, traders said they are searching for "slee= ves", or middlemen, to provide a financial buffer in brokered spot market d= eals with the company.=20 In such a deal, a utility, for example, will offer to sell its surplus elec= tricity or gas through a broker, trusting the broker to line up the best an= onymous bid in the market.=20 If the top bidder turns out to be Enron, many utilities will turn down the = deal unless they have a middleman willing to take ownership and guarantee p= ayment of the energy being sold.=20 This allows a utility trader to indirectly conduct business with Enron whil= e staying within the utility's credit limits.=20 TAKING A TOLL=20 The toll all this is taking on Enron's business is hard to measure.=20 Enron, like most trading houses, does not disclose its market positions or = how much of its activity is wrapped up at any given time in natural gas or = electricity - its two biggest markets - or its other energy and financial t= ransactions.=20 "We don't break things out by type of product," Enron spokesman Eric Thode = said.=20 Thode said the company had seen a drop in trading volume, about 60 percent = of which is conducted over its prized EnronOnline Internet trading system a= nd 40 percent in the over-the-counter market.=20 But the company's 30-day rolling trade average showed Enron was doing about= 5,400 transactions a day, with a daily notional value of $2.8 billion, whi= ch is well within its daily average of 4,700 to 5,700 transactions this yea= r.=20 "Certainly, our volumes have dropped below our 30-day rolling average ... b= ut confidence is still being shown by the great majority of our trading par= tners," Thode said. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business Enron/Dynergy Renogotiate MergerCNNfn Bruce Francis, Kathleen Hays 11/27/2001 CNNfn: Markets Impact (c) Copyright Federal Document Clearing House. All Rights Reserved. BRUCE FRANCIS, CNNfn ANCHOR, MARKETS IMPACT: Well, some on Wall Street doub= t that Enron (URL: http://.www.enron.com/) can survive until the merger. An= d our next guest is one of them.=20 KATHLEEN HAYS, CNNfn ANCHOR, MARKETS IMPACT: Brian Youngberg is a utilities= analyst at Edward Jones. He`s joining us now from St. Louis. Welcome. BRIAN YOUNGBERG, UTILITIES ANALYST, EDWARD JONES: Thank you for having=20 me.=20 HAYS: Well, we`re happy to have you here, Brian.=20 But this unhappy situation with Enron, this is like a soap opera that just = gets worse and worse by the day. And you`re -- you are=20 then fairly pessimistic that anything`s going to come of this.=20 YOUNGBERG: Well, I think they may announce some sort of restructuring. You = know, the problem I have right now is really the time frame. You know, you`= re=20 talking of having the company, Enron, surviving for another nine months or = so on its own. It`s struggled to survive these last two weeks since the ori= ginal deal was announced.=20 So, you=20 know, Dynegy (URL: http://www.dynegy.com/) has to decide, you know, how muc= h more capital they want to put into Enron to help shore up the company bef= ore they get to closing. So, you know, even if they=20 do announce a restructuring, it`s still not a done deal.=20 FRANCIS: Could it be clear to Dynagy at this point that there are assets at= Enron that are worth accept -- taking on=20 all that risk?=20 YOUNGBERG: Well, I think Dynagy, you know, has to be evaluating that. You k= now, the thing they`re buying here as far as assets is really -- are really= the people and the trading=20 floor. The pipelines they`re acquiring, which are good pipelines, but they = have a lot of debt against them.=20 So, you know, they have to decide, you know, is this worth continuing to pu= rsue, or let it=20 go by the wayside and move forward on their own. You know, Dynagy in genera= l is viewed as a very solid company, whether or not they acquire Enron or n= ot.=20 HAYS: So -- and I guess besides=20 the debt they would take on, we were just -- Casey Wian in Houston just tal= king to an attorney who`s getting all kinds of clients who feel they were b= etrayed, and obviously=20 there`s, you know, legal ramifications. I guess that`s another liability th= at Dynagy has to assess in whether or not it makes this transaction.=20 YOUNGBERG: Right. I think Dynagy has already looked at -- you know, they as= sume that=20 there will be some significant litigation, you know, issues and losses, pos= sibly, as far as shareholder lawsuits and so forth. And I think they`ve alr= eady built that into it.=20 The question is, you know, is there something=20 more out there that we don`t know, and maybe even Dynagy itself doesn`t kno= w?=20 FRANCIS: Is there another potential acquirer out there, or is Dynagy the ac= quirer of the last resort for (inaudible)...=20 YOUNGBERG: I really=20 do believe that Dynagy is really the only party that`s really that interest= ed in Enron at this point in time. You know, there`s just too much hanging = over the company right=20 now with an SEC investigation, possible further losses, a declining share i= n mar -- in energy trading and so forth, liquidity issues.=20 There`s just too much for, I think, most other companies to really take on.= And if=20 any company knows the insides of Enron, I think it would probably be Dynagy= at this point in time.=20 HAYS: (inaudible), you know, this is -- I can`t think of anything to offset= any of=20 this, because everything you say, it`s hard to find an argument against.=20 In fact, if anything, you`d think Dynagy would be better off to wait until = they`re in bankruptcy proceedings and then buy=20 whatever pieces of the company are on the block.=20 FRANCIS: Or just steal the customers.=20 HAYS: Yes.=20 YOUNGBERG: Well, I think the problem with waiting for them to go into bankr= uptcy, and Dynagy has to weigh this=20 also, is that you get in that situation, you don`t know what the bankruptcy= judge could decide in those situations. There could be other parties that,= you know, partake in the bidding=20 for the pipelines, for example. You know, they may not get all the assets t= hey really do want.=20 So they do have to make some very tough decisions. And I think that`s why t= hey`re -- they`ve=20 taken this past weekend, they`ve taken at least a couple more days here, an= d they really want to make sure, you know, their next step is the right one= for=20 them. And, you know, we`ll just have to wait and see, you know, what comes = of this.=20 You know, our view is, we are recommending individual investors that hold s= hares of Enron to sell, move on. There`s plenty of=20 other better companies in the sector that have better track records, better= outlooks, and really just overall better fundamentals at this point in tim= e.=20 FRANCIS: Brian Youngberg, thank you for joining us, we=20 appreciate it.=20 YOUNGBERG: Thank you.=20 KATHLEEN HAYS, CNNfn ANCHOR, MARKETS IMPACT:=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Board Agrees to Lower Dynegy Purchase Price, Paper Says 2001-11-27 23:43 (New York) Houston, Nov. 27 (Bloomberg) -- Enron Corp.'s board agreed to a reduced Dynegy Inc. purchase offer that values the energy trader's equity at $4.17 billion, less than half of the original price, the Wall Street Journal reported, citing a personal familiar with the plan. The new exchange ratio of 0.12 share of Dynegy for each Enron share would value Enron at $4.91 a share, the Journal said. That's 19 percent above Enron's closing stock price today and down from the original ratio of 0.2685. The agreement isn't final, the paper said. Enron and Dynegy executives are trying to save the transaction amid growing concern about Enron's cash-flow problems. Enron shares have fallen 95 percent this year as investors questioned whether the company was using affiliated partnerships to hide losses and debt, and some lenders stopped providing Enron with cash. In exchange for a lower purchase price, some at Enron are seeking more control over the combined company, the Journal said. Dynegy is prepared to invest at least $500 million in Enron, on top of the $1.5 billion in cash from Dynegy investor ChevronTexaco Corp., the New York Times said, citing executives close to the talks. Dynegy wants the cash backed by assets, and the companies are having a hard time finding enough Enron holdings that aren't already mortgaged to creditors, the paper said. Enron Finding It Harder to Trade, Competitors Say (Update2) 2001-11-27 19:32 (New York) Enron Finding It Harder to Trade, Competitors Say (Update2) (Adds Magnum Hunter comment in 21st-23rd paragraphs.) Houston, Nov. 27, (Bloomberg) -- Enron Corp. is finding it harder to buy natural gas or power because some trading partners have lost confidence the company will have the cash to pay bills, spokesmen for other energy companies say. Mirant Corp. traders won't sell natural gas or power to Enron, though the Atlanta-based energy trader will buy from the company, said James Peters, Mirant spokesman. Aquila Inc.'s business with Enron also is ``all on the buy side,'' said Al Butkus, an Aquila spokesman. Dynegy is in talks to lower the price of its acquisition of Enron from its current $23 billion in stock and assumed debt. The talks are a sign that the trading operations, which provide more than 90 percent of Enron's revenue, are in trouble, analysts say. ``If they are renegotiating, it confirms our fears that Enron's crown jewel -- its marketing and trading business -- is deteriorating,'' said Andre Meade, an analyst with Commerzbank Securities. Enron spokesman Eric Thode said Enron's trading operations remain strong. Volume on EnronOnline, the company's Internet-based trading site, has averaged 5,400 transactions a day with a value of $2.8 billion over the last 30 days. EnronOnline handles about 60 percent of the company's trading business, Thode said. Paying Higher Premiums Companies that continue to do business with Enron are forcing it to pay premium prices, said Arthur Gelber, president of Gelber & Associates Corp. in Houston, which advises 18 producers on their trading strategies. Companies are charging Enron about $1.72 for a million British thermal units of natural gas, where they would charge a buyer with better credit $1.70, Gelber said. Profit margins on energy sales are slim, and ``it's very difficult'' for Enron's traders to turn a profit if they have to pay more than competitors, Gelber said. Other sellers are requiring Enron to provide large letters of credit showing it has the cash to complete a deal, Gelber said. A typical natural gas deal, such as a delivery of 10 billion British thermal units a day for a month, might require a letter of credit for as much as $690,000. Competitors don't face some of the problems that Enron does guaranteeing trades, analysts said, because they have their own power plants and natural gas supplies to meet commitments. Enron has few such assets, and must purchase most of its supplies. ``We're seeing the repercussion of Enron's strategy that had been so unorthodox -- for them to not rely on physical generation assets,'' said Will McNamara, director of electric industry analysts at consultant Scientech Inc. ``Because they don't have their own assets to rely on, they've got to go out and get the power from somebody else,'' which is becoming more difficult and expensive because of the company's credit problems, McNamara said. Lowering Exposure Some partners have long-term contracts with Enron and don't want it to fail until they can find alternative suppliers or hedge existing contracts, traders say. ``Most people want Enron to survive for a certain amount of time to get their exposure down,'' said Mike Loya, president of Vitol SA, a closely held energy company with offices in Houston. ``We continue to trade with Enron cautiously.'' Companies that are buying from Enron may be doing so to offset agreements to sell back to the company later, a technique for reducing the potential losses if a partner fails to meet its obligations, traders said. Shares Declined Enron shares have fallen 95 percent this year as the investors questioned whether the company was using affiliated partnerships to hide losses and debt, and some lenders stopped providing Enron with cash. Enron shares rose 13 cents to $4.14 today, down from a high of $84.63 on Dec. 28. Dynegy rose $1.64 to $40.89, down 4.3 percent from Nov. 9 when the merger was announced. Shares of ChevronTexaco, which owns 26 percent of Dynegy, rose 42 cents to $85.62. In October, the company said shareholder equity was lowered by $1.2 billion because it used stock to pay off a partnership's debt. On Nov. 8, the company lowered earnings back to 1997 by $586 million to reflect losses incurred by the partnerships. Last week, Enron said it may be forced to pay a $690 million note owed by one of the partnerships and may write off $700 million in the fourth quarter to reflect a debt it is backing for another partnership with stock. Debt Enron is trying to renegotiate more than $9 billion in debt payments owed before the end of 2002, as well as secure as much as $2 billion from outside investors who will take a stake in the company. Without more money, Enron may run short of cash it needs to guarantee trades, analysts say. Credit concerns prompted Magnum Hunter Resources Inc., an oil and natural gas producer in Irving, Texas, to stop selling gas to Enron from the largest producing property it controls in the Gulf of Mexico. The company is still selling gas to Enron from two smaller properties, with the purchases backed by letters of credit, because Enron was one of the few companies willing to give small companies credit a few years ago, when oil and gas prices were low. ``We have always appreciated them standing by us when commodity prices were low,'' said Magnum Hunter Chief Financial Officer Chris Tong. Some large industrial natural gas and electricity users are avoiding signing long-term contracts with Enron, industry consultants said. ``Why would you go with a supplier where there's uncertainty, when you can go with one where there's certainty?'' asked Mark Boyer, chief operating officer of Summit Energy Services Inc. in Louisville, Kentucky, which advises metals, chemical and paper companies on their energy-purchasing decisions. --Eileen O'Grady in Houston, (713) 353-4876