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Enron Mail |
S&P Lowers Enron Credit Linked Notes Trust Ratings; On Watch Neg
PR Newswire, 11/07/01 DJ CNBC's FABER REPORT: Enron/Dynegy Deal Talk Dow Jones, 11/07/01 Enron in Talks With Dynegy That May Include Merger, CNBC Says Bloomberg, 11/07/01 WSJ: Dynegy In Talks To Put About $2B Into Enron Now Dow Jones News Service, 11/07/01 Enron Shares Fall on Concern About Finding Investors (Update2) Bloomberg, 11/07/01 Enron Credit-Linked Note Ratings Reduced 6 Days Late (Update2) Bloomberg, 11/07/01 Former SEC Chairman Levitt (Transcript of Interview) Bloomberg, 11/07/01 USA: U.S. FERC watching Enron's impact on energy markets. Reuters English News Service, 11/07/01 Apache Unwinds Most Gas Hedges; Cites Enron Uncertainty Dow Jones News Service, 11/07/01 USA: Enron shares fall below $8 - set new nine-year low. Reuters English News Service, 11/07/01 Enron's stock drops 25 percent Associated Press Newswires, 11/07/01 Rabin & Peckel LLP Commences Class Action Against Enron Corporation and Cer= tain of Its Officers and Directors, Alleging Violations of Federal Securiti= es Laws Business Wire, 11/07/01 Enron's power company in India calls off Singapore meeting after Indian len= ders file lawsuit Associated Press Newswires, 11/07/01 USA: El Paso says it does not expect Enron bankruptcy. Reuters English News Service, 11/07/01 Energy traders are icing out Enron Shares trade at 9-year lows for 2nd straight day=20 CBS.MarketWatch.com, 11/07/01 Legal Group Plans Suit to Void California Power Contracts Bloomberg, 11/07/01 S&P Lowers Enron Credit Linked Notes Trust Ratings; On Watch Neg 11/07/2001 PR Newswire (Copyright © 2001, PR Newswire) NEW YORK, Nov. 7 /PRNewswire/ -- Standard & Poor's today lowered its rating= s on Enron Credit Linked Notes Trusts' credit linked notes and placed them = on CreditWatch with negative implications (see list).=20 The lowered ratings reflect the Nov. 1, 2001 rating action taken on Enron C= orp., which was based on Standard & Poor's belief that Enron's plan to empl= oy asset sales and other means to repair its damaged balance sheet will be = insufficient to restore its long-term credit quality to the historical trip= le-'B'-plus level. The CreditWatch placements recognize the uncertainties t= hat surround the company and its credit quality in the short run due to the= possibility of further unanticipated developments in the capital markets. These synthetic issues utilize a credit default swap that references Enron'= s senior unsecured debt and therefore the rating on the credit-linked notes= will reflect the current senior unsecured rating of Enron. OUTSTANDING RAT= INGS LOWERED AND PLACED ON CREDITWATCH NEGATIVE=20 Enron Credit Linked Notes Trust=20 US$500 million credit linked notes=20 Rating=20 To From=20 Notes BBB/Watch Neg BBB+=20 Enron Credit Linked Notes Trust II=20 US$500 million credit linked notes=20 Rating=20 To From=20 Notes BBB/Watch Neg BBB+=20 Enron Euro Credit Linked Notes Trust=20 EUR200 million credit linked notes=20 Rating=20 To From=20 Notes BBB/Watch Neg BBB+=20 Enron Sterling Credit Linked Notes Trust=20 GBP125 million credit linked notes=20 Rating=20 To From=20 Notes BBB/Watch Neg BBB+ /CONTACT: Mary Ryan, New York, +1-212-438-2090, or Frank J. Trick, New York= , +1-212-438-1108, both for Standard & Poor's/ 11:47 EST=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 DJ CNBC's FABER REPORT: Enron/Dynegy Deal Talk 2001-11-07 14:56 (New York) The following is a transcript of a report aired Wednesday by CNBC reporte= r David Faber:=20 =20 Enron is in discussions with Dynegy about a range of options that include= a merger of the two companies.=20 While such an outcome is only one of a number of options being discussed, sources close to the talks tell me such an outcome is being considered.=20 Enron is trying to raise equity capital and restore confidence amid the complete collapse of its stock price.=20 Today, the Houston-based energy trading concern's shares have fallen anot= her 25%, while its bonds, perhaps a better barometer of the market's concerns a= bout credit quality, have shed roughly ten points.=20 Enron will not comment. But sources close to the situation tell me the company continues to speak with a handful of private equity firms about an investment. Those talks are still in the early stages.=20 Talks with Dynegy, a cross-town rival of Enron's that also markets and tr= ades energy, have progressed at a faster pace.=20 Dynegy is unlike Enron in that it owns more hard assets, many of which ca= me along with the acquisition of Illnova, completed in 2000.=20 While many potential acquirers have shied away from Enron due to continue= d concern about unknown liabilities the company may have, Dynegy is very fami= liar with its energy trading business.=20 Dynegy is the number two player in the U.S. energy trading market and wou= ld clearly become the dominant player were it to merge with or acquire Enron. = A Dynegy spokesman declined comment.=20 While Dynegy has off-balance sheet financings that are similar to Enron's= , those financings are not guaranteed by the parent.=20 It is such guarantees that have concerned Enron investors along with a se= ries of questionable investments.=20 Given the massive decline in Enron's stock price, Dynegy now has a market value that is twice that of Enron.=20 That decline in Enron's stock price would make any equity infusion heavil= y dilutive, if private equity firms were to choose to invest in Enron they wo= uld likely do so in the form of a security that converted to equity and paid a dividend.=20 Still, because Enron now has a market value of only $5.3 billion, the rou= ghly $2 billion it may want represents an enormous percentage of its overall equ= ity value.=20 Hence, discussion with Dynegy may have taken on the form of a merger, rat= her than a strategic investment.=20 =20 Enron in Talks With Dynegy That May Include Merger, CNBC Says 2001-11-07 13:39 (New York) Houston, Nov. 7 (Bloomberg) -- Enron Corp. is talking with rival energy company Dynegy Inc. about a number of options, including merger, to help it raise equity capital and restore confidence, financial news network CNBC reported. Spokesmen for Dynegy and Enron declined to comment. WSJ: Dynegy In Talks To Put About $2B Into Enron Now By Robin Sidel 11/07/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) Of The Wall Street Journal=20 NEW YORK -(Dow Jones)- Dynegy Inc. (DYN) is in advanced discussions to infu= se about $2 billion into Enron Corp. (ENE) in a transaction that may lead t= o a full-blown merger between the two companies, sources familiar with the = matter told The Wall Street Journal. A formal transaction could be unveiled as early as Thursday, these people s= aid. The situation is very fluid and is subject to change, these people not= ed.=20 (This report and related background will be available at the Journals' Web = site, WSJ.com.)=20 Enron has been rocked by last month's disclosure of a $1.2 billion reductio= n in its equity base partly tied to financial dealings with company partner= ships headed by Enron's former chief financial officer. Last month, it repo= rted a third-quarter loss of $618 million. The Securities and Exchange Comm= ission has launched a formal investigation into the matter. Last week, Enro= n secured $1 billion in new credit lines, using gas-pipeline assets as coll= ateral.=20 Enron needs the infusion in part because its previously announced plans to = raise cash through the sale of power assets is going more slowly than expec= ted. Mostly, though, it needs to restore its credibility with Wall Street a= t a time when its access to the financing markets is drying up.=20 Enron shares recently traded down $1.57, or 16%, at $8.10. -Robin Sidel; Th= e Wall Street Journal; 212-274-7991 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Shares Fall on Concern About Finding Investors (Update2) 2001-11-07 14:06 (New York) Enron Shares Fall on Concern About Finding Investors (Update2) (Adds CNBC report on talks with Dynegy in fifth paragraph.) Houston, Nov. 7 (Bloomberg) -- Enron Corp.'s shares fell as much as 28 percent, to their lowest level in more than a decade, amid reports that the No. 1 energy trader is struggling to find investors to help it out of a cash crunch. Shares of Enron fell $1.17, or 12 percent, to $8.50 in midafternoon trading. The shares dropped to $7 earlier. At yesterday's close, they had fallen 88 percent this year. Enron will have a hard time raising a large amount of cash in a short time, said Sean Egan, managing director of Egan-Jones Rating Co. ``It takes time to sell assets, and many shrewd investors like Goldman Sachs might find it more profitable to just pluck off key employees rather than invest in Enron,'' Egan said. The shares pared some of today's losses after CNBC reported that Enron is talking with rival Dynegy Inc. about options, including a merger. Both companies are based in Houston. ``We don't comment on market rumors,'' Dynegy spokesman Steve Stengel said. ``Enron does not comment on speculation on mergers and acquisitions,'' Enron spokesman Mark Palmer said. Berkshire Hathaway Inc. Chairman Warren Buffett decided against investing in Enron because he wasn't willing to sign a confidentiality agreement that would keep him from trading Enron's debt, the New York Times reported today, citing an unidentified person close to the talks. Other companies approached by Enron, including Clayton Dubilier & Rice, the Blackstone Group and Kohlberg Kravis Roberts & Co. have also shown little interest, the newspaper said. The U.S. Securities and Exchange Commission is investigating Enron partnerships run by the company's former chief financial officer. The entities bought and sold Enron shares and assets, with trades costing Enron $35 million and $1.2 billion in lost shareholder equity. Enron ousted CFO Andrew Fastow last month. Rating Downgraded Standard & Poor's today reduced its rating on Enron's credit- linked notes, just six days after the ratings company downgraded Enron's senior unsecured bonds. S&P cut four Enron credit-linked issues valued at about $1.36 billion combined to ``BBB'' from ``BBB+'' and indicated it may lower the grades again. Fearing that an Enron collapse might cripple the natural gas- derivatives market, oil and gas producer Apache Corp. said it backed out of most of its gas hedges, realizing a $70 million gain so far. ``We have been unwinding our hedge positions because of uncertainty created by Enron's credit problems,'' Apache spokesman Bill Mintz said. The company now has only one position with Enron that it's trying to unwind. The Apache news was reported earlier by the Times. `Fragile Business' ``Their trading business is a very fragile business,'' Egan said. ``If partners on either side get concerned, trading volumes decline, which is what is happening now.'' Other companies mentioned in reports as possible buyers of all or part of Enron have denied an interest in the idea. General Electric Co. Chief Executive Officer Jeffrey Immelt told CNN today that ``Enron's really not on our list right now.'' BP Plc Chief Executive John Browne said ``no'' at a press conference in London yesterday when asked whether the London-based company would be interested in buying Enron or a stake in the company. Among shares of other energy traders, Dynegy fell $1.70 to $34.30. Mirant Corp. fell 15 cents to $25.40. Williams Cos. fell 4 cents to $28.97. --Margot Habiby in Houston, (713) 353-4872=20 Enron Credit-Linked Note Ratings Reduced 6 Days Late (Update2) 2001-11-07 14:46 (New York) Enron Credit-Linked Note Ratings Reduced 6 Days Late (Update2) (Adds background and stock price in fourth through sixth paragraphs.) New York, Nov. 7 (Bloomberg) -- Standard & Poor's Corp. downgraded notes linked to Enron Corp.'s credit quality to match the No. 1 energy trader's credit rating six days after the ratings company reduced its corporate debt ratings. S&P said it cut four Enron credit-linked notes, valued at $1.36 billion, to ``BBB'' from ``BBB+'', and indicated it may lower the grades again. ``This isn't an additional downgrade and should have happened last week,'' said Todd Shipman, a director at the ratings company that follows the company. Last week Shipman downgraded Enron's long-term ratings to ``BBB'' from ``BBB+,'' and left them on watch for a further downgrade. Enron shares today fell as much as 28 percent, to their lowest level in more than a decade, amid reports that the No. 1 energy trader is struggling to find investors to help it out of a cash crunch. Shares of Enron fell $1.17, or 12 percent, to $8.50 in mid- afternoon trading. The shares dropped to $7 earlier. At yesterday's close, they had fallen 88 percent this year. The federal Securities and Exchange Commission is investigating Enron partnerships run by the company's former chief financial officer, Andrew Fastow, who was ousted last month. The entities bought and sold Enron shares and assets, with trades costing Enron $35 million and $1.2 billion in lost shareholder equity. Notes Holders of the credit-linked notes, sold by Enron Euro CLN Trust, Enron Sterling CLN Trust, and Enron CLN Trust and Trust II, may have received a higher coupon than an Enron corporate obligation offers. The notes, which are obligations of the special purpose entities, are tied to specific credit events, such as a bankruptcy or Enron's failure to pay on obligations. Proceeds from the notes were to be used to acquire the Trusts' initial investments, and buyers are to be paid interest from the proceeds of those certain assets, according to an offering memorandum. The Trusts can invest in securities with short-term ratings of at least ``A1'' from S&P and ``P1'' from Moody's Investors Service, as long as they mature before the maturity dates of the notes. There are four notes, each divided into two offerings, some offered publicly and some privately sold. All the notes are scheduled to mature in August 2005 or May 2006 and were sold by a group of banks led by Salomon Smith Barney, a unit of Citigroup. In the event of an Enron credit event, Citibank, which acted as a swap counter-party to the trusts, can take the trusts' investments in return for Enron debt obligations. The Enron debt is then liquidated by the trust, with the proceeds paid to the investors. Neither Enron nor Citibank have direct obligations to the holders of the notes, according to an offering memorandum. Enron's credit-linked notes utilize a credit-default swap that the trusts have with Citibank that references Enron's senior unsecured debt, so the rating on the credit-linked notes will reflect the senior unsecured rating, S&P said in a report. --Liz Goldenberg and Terence Flanagan in the New York=20 Former SEC Chairman Levitt (Transcript of Interview) 2001-11-07 12:52 (New York) ****THE FOLLOWING IS AN UNOFFICIAL TRANSCRIPT.**** BLOOMBERG L.P. DOES NOT GUARANTEE THE ACCURACY OF THIS TRANSCRIPT. New York, Nov. 7 (Bloomberg) -- The following is a transcript of a Bloomberg interview with Former Securities and Exchange Commission (SEC) Chairman Arthur Levitt. The reporter is Dylan Ratigan. RATIGAN: As you've probably heard, Enron under investigation by the SEC, the SEC looking into partnerships run by their former CFO. If you come into the Bloomberg with me, I want to show you what it's done to the stock price here over the course of the past month, month and a half. You're talking about a move from a price in the mid 40s, which was not that long ago, mind you, early mid- October, to a price that is now $9.67 a share. This has absolutely decimated the company's stock price. Arthur Levitt, the former chairman of the SEC, with us, looking, first of all, at what's going on with this company. But, before I do that, let me say good morning to you. LEVITT: Good morning, Dylan. RATIGAN: Talk to me. LEVITT: You know, there are certain warning signs here that investors have to be careful of: related party transactions. Anytime you see a related party transaction, an investor should be very careful. What they were doing, was they were simply setting up these partnerships to move off the balance sheet acquisitions and borrowings that would really have hurt the balance sheet and I think given investors a very different picture. RATIGAN: Well, let's just make it real clear to people, because they can easily get confused. I'm a company. LEVITT: Yes. RATIGAN: .and I create - and I'm an executive of that company, and I create a partnership that has nothing to do with that company, legally, on paper. LEVITT: But all the risks and rewards still belong to the parent company. The affect of this is the subsidiary borrows the money to make the acquisition from another partnership set up by the parent. This stays totally off the balance sheet of the parent company. Why does this happen? RATIGAN: So, in other words, Company ABC exists, they set up Subsidiary 123. LEVITT: Yes. RATIGAN: Subsidiary company 123 borrows money from. LEVITT: To make an acquisition. RATIGAN: A bank? LEVITT: No. RATIGAN: They borrow money from who? LEVITT: They issue bonds. RATIGAN: OK. They borrow money from the world. LEVITT: Yes. RATIGAN: . whoever wants to lend them money. LEVITT: Yes. RATIGAN: . they borrow money, they make an acquisition. Now Subsidiary 123 down here has big debts that don't reflect upstairs on Company ABC? LEVITT: Precisely. RATIGAN: But ABC still gets to use the asset that was bought by 123? LEVITT: Yes. RATIGAN: OK. LEVITT: Exactly. Now, how does it happen? The accounting firm that handled this transaction, Arthur Andersen, received $25 million for an audit of the company - that's a huge amount - and $27 million for consulting services - another danger sign. A lot of dough. Those consulting services were to validate these transactions; $52 million dollars went to the accountants. The problem here is an audit committee was not doing its work. If you look at Enron's statements - and how many times have we heard they were confusing? It's the job of the auditing firm to see to it that it is not confusing. That's the real problem. Now, what can you do about it? RATIGAN: Tell me. LEVITT: I think, actually, the FASB, the independent standards setter, could put through a rule, which says. RATIGAN: And FASB is the Federal Accounting Standards Board. They set the rules. LEVITT: Yes. Located in Norwalk, Connecticut. They could say, if a company sets up another legal entity, and the company retains all the risks and rewards of that entity, then the public company, that public company that set up these entities, must consolidate in the P&L, in the balance sheet, all of these transactions. Now, how does that come about? I think the SEC could urge the FASB to do this. In 1990, the present chief accountant of the SEC called for that action to be taken place, but at that point, the then-chief accountant didn't support the move. RATIGAN: And this creates, in your mind, a rallying call to reiterate that request with more venom and more passion than before? LEVITT: I don't know about venom, but I. RATIGAN: But with passion. LEVITT: I certainly think that passion - I think this is clearly a call for better disclosure. RATIGAN: Fair enough. I will see you next week, OK? LEVITT: Good. Nice to see you. RATIGAN: You, too. ***END OF TRANSCRIPT*** USA: U.S. FERC watching Enron's impact on energy markets. 11/07/2001 Reuters English News Service (C) Reuters Limited 2001. WASHINGTON, Nov 7 (Reuters) - The Federal Energy Regulatory Commission is w= atching what effect Enron Corp.'s financial problems may have on interstate= electricity and natural gas markets, FERC chairman Pat Wood said on Wednes= day.=20 However, Wood said FERC does not have a direct role in the ongoing federal = investigation of the company. "We're watching the impact that Enron or any other firm would have on the o= verall workings of the market, but we're not intervening where other agenci= es have jurisdiction," Wood told reporters during a briefing after the agen= cy's regular meeting.=20 Enron, the nation's largest trader of natural gas and electricity, is under= attack for failing to explain off-balance sheet transactions that led to a= $1.2 billion write-down of shareholder equity.=20 The deals, conducted with partnerships run by ousted Chief Financial Office= r Andrew Fastow, are under investigation by the U.S. Securities and Exchang= e Commission. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Apache Unwinds Most Gas Hedges; Cites Enron Uncertainty By Christina Cheddar Of DOW JONES NEWSWIRES 11/07/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- Over the last few days, Apache Corp. (APA) has unwou= nd nearly all of its hedges on natural-gas prices due to concerns about wha= t would happen to the marketplace for energy derivatives if Enron Corp. (EN= E) collapsed.=20 According to Tony Lentini, a spokesman for the Houston natural-gas producer= , many of the hedges were established to lock in the value of acquisitions = the company made. Apache unwound all but one hedge, a transaction that involved Enron and oth= er parties, Lentini said.=20 Apache has a gain of about $70 million from the various transactions, but t= he company hasn't determined yet how the gain will be accounted for in its = financial results, the spokesman said.=20 Apache has been an outspoken critic of the merchant energy trading because = of the company's perception that the system is underregulated and creates e= xcessive energy price volatility.=20 -Christina Cheddar, Dow Jones Newswires; 201-938-5166; christina.cheddar@do= wjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Enron shares fall below $8 - set new nine-year low. 11/07/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Nov 7 (Reuters) - Shares of Enron Corp. fell in a new round of se= lling on Wednesday that set new nine-year lows, amid concerns about the ene= rgy trading giant's ability to raise cash.=20 The company's stock slid $1.77, or 18.3 percent, to $7.90 in late morning t= rading on the New York Stock Exchange, diving below $8 for the first time s= ince February 1992. The shares are down almost 77 percent since the company= released its earnings results on Oct. 16, which set off the recent tumble. The issues that have plagued the Houston-based company over the past three = weeks continue to weigh on it, according to Jeff Dietert, an analyst at Sim= mons and Co.=20 "It's a bit of a vicious cycle," he said. "The stock price declines, credit= concerns go up, counterparties attempt to reduce their exposure and the ea= rnings power of the company deteriorates."=20 He added that Enron needs to "get all its ducks in a row" so that it can me= et with the holders of its stocks and bonds to discuss issues such as the c= ompany's capitalization and plans for strengthening its balance sheet.=20 Enron, the nation's largest trader of natural gas and electricity, is under= attack for failing to explain off-balance sheet transactions that led to a= $1.2 billion write-down of shareholder equity.=20 The deals, conducted with partnerships run by ousted Chief Financial Office= r Andrew Fastow, are under investigation by the U.S. Securities and Exchang= e Commission. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron's stock drops 25 percent 11/07/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. HOUSTON (AP) - Enron Corp.'s stock price continued its free fall Wednesday = as shares fell 25 percent to a new 10-year low amid reports the company was= having trouble attracting a large investor to allay worries about its fina= ncial health and restore confidence.=20 Shares of the largest U.S. natural gas and power marketer dropped dlrs 2.41= to dlrs 7.26 in midday trading Wednesday on the New York Stock Exchange. Enron has been rebuffed by more than a dozen buyout firms as well as Warren= Buffett's Berkshire Hathaway, The New York Times reported Wednesday, citin= g a person close to the talks.=20 Houston-based Enron's stock is off more than 79 percent since Oct. 16, when= the company said shareholder equity had been reduced by dlrs 1.2 billion, = in part due to partnerships managed by Enron's former chief financial offic= er, Andrew Fastow.=20 At the same time, reported a dlrs 618 million third quarter loss last month= , dragged down by a one-time charge of dlrs 1.01 billion attributed to vari= ous losses. Fastow was ousted a week later.=20 The company's financial stability was further weakened after the Securities= and Exchange Commission began an inquiry, which was upgraded to a formal i= nvestigation, of the partnerships and possible conflicts of interest result= ing from them.=20 On Tuesday, Jeff Skilling, Enron's former chief executive officer, testifie= d before the SEC in Washington D.C.=20 Enron's woes have prompted speculation about a possible takeover of the com= pany. Some of the potential buyers that have been mentioned include General= Electric's GE Capital unit and Royal Dutch Shell.=20 GE Capital has not ruled out an investment, the Times said, citing a source= close to the talks.=20 Enron has cashed in about dlrs 3 billion in revolving credit it has with va= rious banks to shore up investor confidence.=20 Last week, Enron secured dlrs 1 billion in new financing, using some of its= natural gas and pipeline assets as collateral.=20 Enron officials said Tuesday seeking additional financing is one of the man= y options the company is exploring to firm up investor and market confidenc= e.=20 Meanwhile, Standard & Poor's Corp. on Wednesday lowered its ratings on some= of Enron's credit linked notes and placed them on CreditWatch. S-and-P sai= d Enron's plan to repair its damaged balance sheet through asset sales and = other means will be insufficient.=20 Moody's Investors Service and Fitch Inc. have also downgraded the company's= credit ratings.=20 Last week, Enron announced it created a special committee headed by Univers= ity of Texas law school dean William Powers to respond to the SEC investiga= tion. Powers also was elected to Enron's board of directors. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Rabin & Peckel LLP Commences Class Action Against Enron Corporation and Cer= tain of Its Officers and Directors, Alleging Violations of Federal Securiti= es Laws 11/07/2001 Business Wire (Copyright © 2001, Business Wire) NEW YORK--(BUSINESS WIRE)--Nov. 7, 2001--A class action complaint has been = filed in the United States District Court for the Southern District of Texa= s on behalf of all persons or entities who purchased Enron Corporation ("En= ron" or the "Company") (NYSE: ENE) common stock between January 18, 2000 an= d October 17, 2001, inclusive (the "Class Period"). The complaint was broug= ht against defendants Enron, Kenneth Lay, Jeffrey K. Skilling and Andrew Fa= stow. The case is numbered H-01-3736. The Honorable Melinda Harmon is the J= udge presiding over the case.=20 The Complaint alleges that defendants violated Section 10(b) and 20(a) of t= he Securities and Exchange Act of 1934 by issuing a series of material misr= epresentations to the market between January 18, 2000 and October 17, 2001,= thereby artificially inflating the price of Enron common stock. Specifical= ly, the Complaint alleges that Enron issued a series of statements concerni= ng its business, financial results and operations which failed to disclose = (i) that the Company's Broadband Services Division was experiencing declini= ng demand for bandwidth and the Company's efforts to create a trading marke= t for bandwidth were not meeting with success as many of the market partici= pants were not creditworthy; (ii) that the Company's operating results were= materially overstated as a result of the Company failing to timely write-d= own the value of its investments with certain limited partnerships which we= re managed by the Company's chief financial officer; and (iii) that Enron w= as failing to write-down impaired assets on a timely basis in accordance wi= th Generally Accepted Accounting Principles ("GAAP"). During the Class Peri= od, Enron insiders disposed of over $73 million of their personally-held En= ron common stock to unsuspecting investors. On October 16, 2001, Enron surprised the market by announcing that the Comp= any was taking non-recurring charges of $1.01 billion after-tax, or ($1.11)= loss per diluted share, in the third quarter of 2001, the period ending Se= ptember 30, 2001. Subsequently, Enron revealed that a material portion of t= he charge was related to the unwinding of investments with certain limited = partnerships which were controlled by Enron's chief financial officer and t= hat the Company would be eliminating more than $1 billion in shareholder eq= uity as a result of its unwinding of the investments. When this news hit th= e market, the price of Enron common stock dropped significantly.=20 Plaintiff is represented by the law firm of Rabin & Peckel LLP. Rabin & Pec= kel LLP and its predecessor firms have devoted its practice to shareholder = class actions and complex commercial litigation for more than thirty years = and have recovered hundreds of millions of dollars for shareholders in clas= s actions throughout the United States. You can learn more information abou= t Rabin & Peckel at www.rabinlaw.com.=20 If you purchased Enron common stock during the Class Period described above= , you may, no later than December 21, 2001, move the Court to serve as lead= plaintiff. To serve as lead plaintiff, however, you must meet certain lega= l requirements. You can join this action as a lead plaintiff online at www.= rabinlaw.com. If you wish to discuss this action further or have any questi= ons concerning this announcement, or your rights or interests, please conta= ct plaintiff's counsel, Maurice Pesso and Eric Belfi, Rabin & Peckel LLP, 2= 75 Madison Avenue, New York, NY 10016, by telephone at (800) 497-8076 or (2= 12) 682-1818, by facsimile at (212) 682-1892, or by e-mail at email@rabinla= w.com. CONTACT: Rabin & Peckel LLP Maurice Pesso/Eric Belfi, 800/497-8076 or 212/6= 82-1818 Fax: 212/682-1892 email@rabinlaw.com www.rabinlaw.com=20 12:41 EST NOVEMBER 7, 2001=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron's power company in India calls off Singapore meeting after Indian len= ders file lawsuit By SATISH NANDGAONKAR Associated Press Writer 11/07/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. BOMBAY, India (AP) - Enron Corp.'s Indian power unit canceled a meeting wit= h four Indian creditors after they filed a lawsuit against the company and = three other parties on Wednesday to demand that the energy project resume o= perations.=20 The two-day meeting was scheduled to begin in Singapore on Thursday to disc= uss bids by two Indian companies to acquire a stake in the troubled $2.9 bi= llion Dabhol Power Co. The lenders - Industrial Bank of India, Industrial Finance Corporation of I= ndia, State Bank of India and ICICI - approached the Bombay court to demand= that work on the power project in the western Indian state of Maharashtra = resume to ensure adequate cash flows to the project and help its promoters = pay dues to the four financial institutions.=20 Dabhol Power Co., the state utility Maharashtra State Electricity Board, th= e Government of India and the Maharashtra government were the four parties = named in the lawsuit.=20 Indian banks and financial institutions, which have invested more than $1.3= billion in the project, want Dabhol to continue work on the project and th= e MSEB to buy the power produced.=20 The two-day meeting in Singapore was scheduled to discuss the bids made by = the two Indian companies, Tatas and the Bombay Suburban Electricity Supply,= to acquire a stake in DPC. Enron had offered to sell the stake in DPC for = $850 million, at a 30 percent discount, while Tatas wanted a 50 percent dis= count.=20 On Monday, Enron began its pullout from the Dabhol power project by issuing= a notice that it will sell its stake in the project to its sole customer, = the Maharashtra State Electricity Board.=20 The asset transfer notice issued by the Dabhol Power Project to the MSEB co= mes after a prolonged payment dispute with the electricity board.=20 The dispute forced the Houston-based company to shut down the Dabhol plant = in May.=20 Fairfield, Conn.-based General Electric Co. and Bechtel Group Inc. of the U= nited States each hold 10 percent stakes each in the company.=20 Enron has moved a London court for international arbitration, but says it w= ould prefer a negotiated settlement with the federal government and the Mah= arashtra state government.=20 The company still prefers a negotiated purchase of the project by the India= n government and Indian term lending bodies that have funded the equity of = foreign sponsors. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: El Paso says it does not expect Enron bankruptcy. 11/07/2001 Reuters English News Service (C) Reuters Limited 2001. HOUSTON, Nov 7 (Reuters) - Energy company El Paso Corp. said on Wednesday i= t does not expect beleaguered competitor Enron Corp. to file for bankruptcy= .=20 Ralph Eads, who heads El Paso's merchant energy business, which includes el= ectricity and natural gas marketing and trading, told analysts at a meeting= in Houston that the prospect of an Enron bankruptcy was "remote". El Paso has gained some market share from Enron in recent weeks as a result= of some companies' reluctance to do business with Enron, Eads said, but he= added that El Paso has not scaled back its own business dealings with Enro= n.=20 Eads said El Paso does not expect Enron's problems to result in a "domino e= ffect" that could lead to reduced liquidity in U.S. electricity and natural= gas markets, a scenario that has been troubling some analysts and investor= s recently.=20 El Paso Chief Executive Bill Wise told the meeting, which was broadcast ove= r the Internet, that El Paso might be interested in acquiring some energy a= ssets from Enron but was not interested in acquiring an equity stake in the= rival company, which is reported to be seeking an injection of new capital= . Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Energy traders are icing out Enron Shares trade at 9-year lows for 2nd straight day=20 By Lisa Sanders,=20 CBS.MarketWatch.com Last Update: 1:47 PM ET Nov. 7, 2001=20 =20 NEW YORK (CBS.MW) -- Amid mounting questions about Enron's liquidity and cr= editworthiness, players in the energy-trading business have already begun t= o limit their exposure to the embattled power merchant. The revelations came Wednesday as Enron's stock (ENE: news, chart, profile)= plunged 24 percent following news that Standard & Poor's cut its ratings f= or the company's credit-linked notes to two notches above junk status. "Everybody's trying to balance out their exposure to Enron as best they can= ," said an energy trader who spoke on condition of anonymity. "That means n= ot doing business or minimizing their business with Enron." 1 of 4 energy trades Traders' attempts to isolate the company underscore concerns about the stab= ility of the overall energy-trading market, in which Enron is involved in 1= out of every 4 trades.=20 However, some industry watchers are confident that the energy market can su= rvive if Houston-based Enron were to disappear. "Even though they quote-unquote make the market, the market exists whether = Enron is there or not," said Phil Flynn, senior markets analyst at Alaron.c= om. "Those that think this is the end of energy trading have another thing = coming." Enron, its shares trading at levels not seen since 1992, saw the stock fall= $2.27 to $7.40 on in afternoon volume of 58 million. On Wednesday, Standard & Poor's, which just last week downgraded Enron's co= rporate credit rating, cut the rating on the credit-linked notes of Enron C= redit Linked Notes Trusts to BBB from BBB-plus. S&P also added a "Watch neg= ative" designation, meaning the rating agency is poised to issue further do= wngrades if warranted.=20 "The CreditWatch placements recognize the uncertainties that surround the c= ompany and its credit quality in the short run due to the possibility of fu= rther anticipated developments in the capital markets," the rating agency w= rote. Wednesday's downgrade affects $500 million worth of notes, which are deriva= tives linked to Enron's senior unsecured debt, now rated BBB. "The investors are taking the risk of Enron credit" by purchasing the secur= ities from the trusts even though these are not issued by Enron," said Tom = Fritz, a Standard & Poor's managing director. In addition, Standard & Poor's cut to BBB Yosemite Securities Co. Series 20= 00-A. The obligations use Enron's corporate rating as a backstop.=20 The counterparty to Yosemite and the credit-linked notes is Citibank, Fritz= said. Last week, J.P. Morgan joined with Salomon Smith Barney, which along= with Citibank is a unit of Citigroup (C: news, chart, profile), to extend = $1 billion in new credit to Enron to help the company's liquidity. 'Not business as usual' "With these downgrades, it's not business as usual," the energy trader said= . "We're already in the process of losing a counterparty that contributed a= good deal of liquidity to the energy-trading market." The trader cited Calpine (CPN: news, chart, profile), Dynegy (DYN: news, ch= art, profile), and El Paso Energy (EPG: news, chart, profile) as energy tra= ders that have a chance to gain market share, but he conceded that Enron wo= n't be replaced overnight, should it cease to exist. "Energy trading won't be destroyed at all," the trader said. "It will certa= inly be diminished but not gone." What Enron's absence would do is make it more difficult for lesser creditwo= rthy companies to participate in the market. Exchanges such as the New York= Mercantile Exchange and the Intercontinental Exchange may gain a higher pr= ofile.=20 Both of them are trying to establish a clearinghouse for the unregulated ma= rket for derivative-energy transactions, as the NYMEX already does with fut= ures.=20 In other news, Enron is preparing to close most of its Asian broadband tele= communications business, part of a global restructuring that comes as the c= ompany is seeking a capital infusion of as much as $2 billion to help it th= rough a financial crisis. See previous story. "Poor demand for broadband is being exacerbated by falling prices, requirin= g Enron to consider the best options for managing its global broadband busi= ness," according to a recent company memo obtained by CBS.MarketWatch.com. Lisa Sanders is a Dallas-based reporter for CBS.MarketWatch.com.=20 Legal Group Plans Suit to Void California Power Contracts 2001-11-07 14:20 (New York) Legal Group Plans Suit to Void California Power Contracts Escondido, California, Nov. 7 (Bloomberg) -- A conservative legal foundation said it will file a lawsuit tomorrow to void long- term contracts California signed with power generators, claiming they put an unfair burden on taxpayers. The United States Justice Foundation intends to sue in Sacramento County Superior Court, said Richard D. Ackerman, lead counsel on the case for the group. The USJF wants a court to terminate the long-term power contracts and require money already paid to the generators to be returned to the state. The USJF proposes a class action to represent California taxpayers and alleges violations of the state's business and open- meeting laws. Ackerman said his group may need to forge new law to succeed in the case. ``You're gonna have some serious legal battles that may go to the appeals level in this case,'' Ackerman said. California officials last spring signed about $43 billion in long-term power contracts after two investor-owned utilities became insolvent. Governor Gray Davis has said the contracts were needed to bring stability to California's energy market. Since then, the cost of power has dropped, leaving California with contracts to buy electricity above spot-market prices. Enron Corp., Southern California Edison Company, Pacific Gas & Electric Company, Green Mountain Energy, San Diego Gas & Electric Company, Reliant Energy Company, PacifiCorp Power Marketing, Inc., Alliance Colton LLC, and Calpine Energy Company have electricity contracts with the state, according to a USJF press release. The USJF said it sent a letter to California officials giving them notice of its intent to sue. The group, which calls itself ``Your conservative voice in the courts'' on its Web site, is supported by individual donations, Ackerman said. --Michael B. Marois in Sacramento (916) 503-1612
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