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Enron Mail |
Cc: don.blake@firstunion.com, draack@firstunion1.com,
jhavila.houston_fannin1_po.central_dom@firstunion1.com, jkenny.houston_fannin1_po.central_dom@firstunion1.com, jtaylor.houston_fannin1_po.central_dom@firstunion1.com, kdowd.houston_fannin1_po.central_dom@firstunion1.com, klogsdo.houston_fannin1_po.central_dom@firstunion1.com, mdowd.houston_fannin1_po.central_dom@firstunion1.com, nwhitti@firstunion1.com, pdowd.houston_fannin1_po.central_dom@firstunion1.com, rchisho.houston_fannin1_po.central_dom@firstunion1.com, remery.houston_fannin1_po.central_dom@firstunion1.com, rnichol@firstunion1.com, sbenott.houston_fannin1_po.central_dom@firstunion1.com, tpullig.houston_fannin1_po.central_dom@firstunion1.com, vweir.houston_fannin1_po.central_dom@firstunion1.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: don.blake@firstunion.com, draack@firstunion1.com, jhavila.houston_fannin1_po.central_dom@firstunion1.com, jkenny.houston_fannin1_po.central_dom@firstunion1.com, jtaylor.houston_fannin1_po.central_dom@firstunion1.com, kdowd.houston_fannin1_po.central_dom@firstunion1.com, klogsdo.houston_fannin1_po.central_dom@firstunion1.com, mdowd.houston_fannin1_po.central_dom@firstunion1.com, nwhitti@firstunion1.com, pdowd.houston_fannin1_po.central_dom@firstunion1.com, rchisho.houston_fannin1_po.central_dom@firstunion1.com, remery.houston_fannin1_po.central_dom@firstunion1.com, rnichol@firstunion1.com, sbenott.houston_fannin1_po.central_dom@firstunion1.com, tpullig.houston_fannin1_po.central_dom@firstunion1.com, vweir.houston_fannin1_po.central_dom@firstunion1.com X-From: Henry Emery <hemery@firstunion1.com< X-To: Henry Emery <HEMERY.HOUSTON_FANNIN1_PO.CENTRAL_DOM@firstunion1.com< X-cc: don.blake@firstunion.com, draack@firstunion1.com, Julie Haviland <JHAVILA.HOUSTON_FANNIN1_PO.CENTRAL_DOM@firstunion1.com<, John Kenny <JKENNY.HOUSTON_FANNIN1_PO.CENTRAL_DOM@firstunion1.com<, Janie Taylor <JTAYLOR.HOUSTON_FANNIN1_PO.CENTRAL_DOM@firstunion1.com<, Kyle Dowd <KDOWD.HOUSTON_FANNIN1_PO.CENTRAL_DOM@firstunion1.com<, Kenneth Logsdon <KLOGSDO.HOUSTON_FANNIN1_PO.CENTRAL_DOM@firstunion1.com<, Mike Dowd <MDOWD.HOUSTON_FANNIN1_PO.CENTRAL_DOM@firstunion1.com<, nwhitti@firstunion1.com, Patrick Dowd <PDOWD.HOUSTON_FANNIN1_PO.CENTRAL_DOM@firstunion1.com<, Roderick Chisholm <RCHISHO.HOUSTON_FANNIN1_PO.CENTRAL_DOM@firstunion1.com<, Rocky Emery <REMERY.HOUSTON_FANNIN1_PO.CENTRAL_DOM@firstunion1.com<, rnichol@firstunion1.com, Steve Bennotti <SBENOTT.HOUSTON_FANNIN1_PO.CENTRAL_DOM@firstunion1.com<, Toby Pullig <TPULLIG.HOUSTON_FANNIN1_PO.CENTRAL_DOM@firstunion1.com<, Vincent Weir <VWEIR.HOUSTON_FANNIN1_PO.CENTRAL_DOM@firstunion1.com< X-bcc: X-Folder: \MHAEDIC (Non-Privileged)\Haedicke, Mark E.\Deleted Items X-Origin: Haedicke-M X-FileName: MHAEDIC (Non-Privileged).pst This research has been provided to First Union Securities through an arranged relationship with Credit Suisse First Boston(CSFB). Any questions should be directed through your First Union Securities Financial Consultant. Any contact of a CS First Boston analyst or any other CS First Boston representative is strictly prohibited. THIS FIRST CALL NOTE MUST BE SHOWN IN ITS ENTIRETY, INCLUDING ALL DISCLAIMERS. CREDIT SUISSE FIRST BOSTON CORPORATION Equity Research Americas Multi Utilities Curt Launer 212/538-4269 curt.launer@csfb.com Philip Salles 212/538-4221 philip.salles@csfb.com Andy DeVries 212/325-2518 andy.devries@csfb.com STRONG BUY Target Price: 25.00 (US$) Enron Corp. (ENE) 10Q Info Consistent With Plusses For DYN In Deal Summary ENE filed its 3Q'01 10Q last night with information ranging from updates on accounting restatements, balance sheet details and discussions of off-balance sheet obligations. Important disclosures were made related to acceleration of debt repayment due to recent credit rating downgrades, reduced 4Q'01 eps expectations and liquidity. ENE has $690 million in debt due on Nov 27 because of recent downgrades. We expect this obligation to be renegotiated, satisfied out of the current cash position of $1.5 billion or collateralized. A reduction in 4Q'01 eps expectations because of ENE issues and other items was part of our recent estimate reduction from $0.48 to $0.40 for 4Q'01, (before non- recurring items) discussed in a report dated Nov 5, 2001. We now expect 4Q eps to be in a $0.25-$0.35 range. Also in the 10Q, ENE describes other items discussed in the conference call of Nov 14 including $8 billion of "non-core" (principally international and broadband assets) that are for sale, an ability to issue $2 billion of additional equity before the Dynegy (DYN, 43.60, Strong Buy) deal closes and a total debt balance of $16.3 billion ($13.0 "on balance sheet" and $3.3 billion "off balance sheet"). The "material adverse change (MAC)" clause in the DYN/ENE deal was described as considered if other ENE liabilities (primarily litigation) exceed $2 billion net of insurance or reserves. If an additional $1.5 billion in liabilities is assessed a MAC is deemed to have occurred. In assessing a 90% probability that the DYN/ENE deal will be completed, we note that ENE is not a going concern without it, DYN demonstrably benefits by it (please see report dated Nov 9,'01) and Chevron/Texaco (CVX, 82.91) supports it. In our view, positive comments by CVX yesterday, and the $1.5 billion cash infusion to ENE from CVX on Nov 13, add to the support shown for the deal. We continue to rate DYN Strong Buy because of its earnings and valuation upside potential in this deal. Our current eps est for DYN of $2.55 for '02 moves to $3.25 or higher with a completed deal. Our DYN target price of $54 is subject to upward revision as well. For ENE, our Strong Buy rating expects that the deal spread, currently about 30% will narrow as progress is made toward a closing. The author's immediate family owns less than 250 shares of ENE. Price Target Mkt. Value 52-Week 19 Nov 01 (12 Months) Div Yield(%) ($m) Price Range 9.06($) 25.00($) 0.50 5.4% 6,928.68 84.63 - 8.41 Annual Prev. Abs. Rel. EBIDAX EV/ EPS($) EPS P/E(x) P/E(%) ($m) EBIDAX(x) 12/02E 1.60 5.8 12/01E 1.80 5.1 12/00A 1.47 6.3 Q1 Q2 Q3 Q4 2002E 2001E 0.47 0.45 0.43 0.45 2000A 0.45 0.34 0.34 0.41 ROGIC(12/00A %) 8.1% Net debt(12/00A $m) 11,965.0 Net debt/Total cap.(12/00A %) 44.4% Book value/share(12/00A) 13.18 Number of Shares(m) 749.86 1On 11/19/01 the S&P 500 index closed at 1151.06. 2Economic profit trend. Enron is one of the world's leading electricity, natural gas and communications companies. Enron is one of the world's leading electricity, natural gas and communications companies. N.B.: CREDIT SUISSE FIRST BOSTON CORPORATION may have, within the last three years, served as a manager or co-manager of a public offering of securities for or makes a primary market in issues of any or all of the companies mentioned. CREDIT SUISSE FIRST BOSTON CORPORATION CREDIT SUISSE FIRST BOSTON CORPORATION Curt Launer 212/538-4269 curt.launer@csfb.com CREDIT SUISSE FIRST BOSTON CORPORATION CREDIT SUISSE FIRST BOSTON CORPORATION Copyright © CREDIT SUISSE FIRST BOSTON, and its subsidiaries and affiliates, 2001. All rights reserved. CSFB may, to the extent permitted by law, participate or invest in financing transactions with the issuer(s) of the securities referred to in this report, perform services for or solicit business from such issuers, and/or have a position or effect transactions in the securities or options thereon. In addition, it may make markets in the securities mentioned in the material presented in this report. PLEASE REFER TO TICKER CSFBDISC FOR IMPORTANT LEGAL DISCLOSURES. = = ENRON CORP. = = ENE: STRONG BUY First Call Corporation, a Thomson Financial company. All rights reserved. 888.558.2500
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