|
|
Enron Mail |
Enron Says It May Have to Pay Off $690 Mln Note Next Week
Bloomberg, 11/19/01 USA: INTERVIEW-Pepco sees electricity deregulation slowing. Reuters English News Service, 11/19/01 Lawmaker/Andersen -2: Co 'Confident' About Quality Dow Jones News Service, 11/19/01 Some Pension Funds Consider Legal Action Against Enron Dow Jones Business News, 11/19/01 Gold Bennett Cera & Sidener LLP Announces Class Action Lawsuit Against Enro= n Corporation and Certain Officers and Directors PR Newswire, 11/19/01 USA: UPDATE 2-Congressman urges probe of Andersen on Enron. Reuters English News Service, 11/19/01 Enron delays closing Indian plant after creditors' legal action AFX News, 11/19/01 USA company - Enron's trials have just begun. EIU Viewswire, 11/19/01 $1 Billion Secured Credit Hasn't Calmed Fears About Enron High Yield Report, 11/19/01 Kaplan Fox Expands Class Period For Investors Who Purchased Enron Corp. Sec= urities Internet Wire, 11/19/01 DYNEGY TO BUY ENRON: CHEVRONTEXACO PROVIDES $2.5 BILLION CASH FLOW Octane Week, 11/19/01 ENRON MELTDOWN & HIGH GAS PRICES? Gas Processors Report, 11/19/01 U.S.'s Dingell Seeks Probe of Arthur Andersen, Dow Jones Says Bloomberg, 11/19/01 Enron's Azurix May Have to Sell Assets If It Can't Borrow Bloomberg, 11/19/01 Enron Says It May Have to Pay Off $690 Mln Note Next Week 2001-11-19 18:16 (New York) Enron Says It May Have to Pay Off $690 Mln Note Next Week Houston, Nov. 19 (Bloomberg) -- Enron said a drop in its credit rating may force it to pay off a $690 million note by Nov. 27 if it doesn't find collateral to guarantee the debt. Repayment was triggered by the Nov. 12 downgrade in Enron's senior unsecured debt rating to BBB- by Standard & Poor's, the company said in a securities filing. Enron must post collateral equal to the amount of the note or repay it, the Securities and Exchange Commission filing said. Without repayment, partners in a Limited Partnership that owns natural gas assets in Brazil can immediately begin to liquidate the partnership's assets, Enron said. Enron said it's working with lenders to come up with an acceptable agreement on the debt. A further drop in its debt rating, which would put it below investment grade, would trigger repayment of $3.9 billion in debt owed by two affiliated companies. The rating drop would trigger repayment of $2.4 billion in debt owed by Osprey Trust, and $915 million owed by Marlin Water Trust, the company said in the filing. Enron is being bought by Dynegy Inc. for $25 billion in stock and debt. Enron also said in its filing that if shareholder lawsuits result in judgments totaling more than $2 billion, the Dynegy deal could collapse. The filing was released after the stock market closed. Shares of Houston-based Enron rose 6 cents to $9.06. Dynegy shares rose $1.13 to $43.60. Shares of ChevronTexaco Corp., which owns 26 percent of Dynegy, fell 54 cents to $82.91. USA: INTERVIEW-Pepco sees electricity deregulation slowing. By Christopher Doering 11/19/2001 Reuters English News Service (C) Reuters Limited 2001. WASHINGTON, Nov 19 (Reuters) - Several states that delayed plans to deregul= ate power markets were scared off by the woes of beleaguered energy trader = Enron Corp., California's failed electricity market restructuring, and the = Sept. 11 attacks, the head of Potomac Electric Power Co. said on Monday.=20 John Derrick, chief executive of Washington-based Pepco, said in an intervi= ew, while utility deregulation will eventually regain momentum, uncertainty= in the market has left some states questioning the effectiveness of any ne= ar-term change to the volatile power market. Several states have delayed power deregulation, including Nevada, Oregon, N= ew Mexico, Oklahoma, Arkansas, West Virginia and Montana.=20 "All things that are happening to the margin, whether it be California, 9-1= 1 (the Sept. 11 attacks), or Enron , will tend to slow down changes that ha= ve gone down that path," Derrick said after addressing an Energy Department= conference here on coal technology.=20 Derrick was optimistic about the future of deregulation. "Where it already = exists, it's working, and I think we'll stay the course," he said.=20 To boost customer choice, 23 states and the District Columbia have deregula= ted retail electricity markets. Deregulation breaks up utility monopolies, = giving customers a choice of providers and driving down prices.=20 Electricity competition is set to begin in Texas, Illinois, Michigan, and V= irginia next year.=20 Derrick said state deregulation efforts will pick up momentum if consumers = demand more choice and lower prices.=20 "People who (live in a market that is deregulated), and move to a place whe= re it doesn't exist, are going to say 'Gee, why can't I have it here'," Der= rick said.=20 "Customers are going to start to demand choice," he added.=20 Pepco is part of the Pennsylvania, New Jersey, Maryland (PJM) power pool, w= hich operates the electricity grid in the mid-Atlantic region. PJM, which c= urrently coordinates a pooled generating capacity of more than 59,000 megaw= atts, plans to expand generating capacity by 25 percent in the next few yea= rs to meet demand.=20 PJM also operates a wholesale electricity market with more than 200 buyers,= sellers and traders.=20 California dealt the first blow to electricity deregulation last year, when= state power prices soared, bankrupting PG&E Corp.'s Pacific Gas & Electric= unit, and forcing rolling blackouts to some customers.=20 Experts have blamed the California power crisis on the state's ill-fated de= regulation plan, which prohibited utilities from passing on wholesale price= increases to consumers.=20 The decline of Enron may slow restructuring because uncertain customers wil= l stick with existing power suppliers rather than seek new energy providers= . Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Lawmaker/Andersen -2: Co 'Confident' About Quality 11/19/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) "Congressman Dingell may not be aware that accounting firms are required to= report litigation involving allegations of audit failures to the quality-c= ontrol inquiry committee of the SEC practice section, which the Public Over= sight Board oversees," Andersen spokesman David Tabolt said after reviewing= Dingell's request.=20 Tabolt wasn't sure if Andersen has notified the committee of class-action l= itigation filed against the firm for its audit of Enron, but said it will d= o so within the required 30-day deadline. After it is notified of any legal action, the inquiry committee must study = the matter and determine if it represents evidence of systemic quality-cont= rol problems.=20 "We are confident that this process will confirm the quality of our auditin= g processes," Tabolt said.=20 -By Judith Burns, Dow Jones Newswires; 202-862-6692; judith.burns@dowjones.= com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Some Pension Funds Consider Legal Action Against Enron By Christiane Bird 11/19/2001 Dow Jones Business News (Copyright © 2001, Dow Jones & Company, Inc.) Dow Jones Newswires=20 NEW YORK -- Some pension funds with major stakes in Enron Corp. are conside= ring taking legal action against the Houston energy giant following its rec= ent stock collapse and disclosures of possible conflicts of interest among = management. Other institutional investors are taking a more passive approach, waiting t= o see how developments unfold.=20 Among those pension funds looking into possible lawsuits are the $112 billi= on New York State Common Retirement Fund and the five New York City pension= funds, which handle a total of $85 billion in assets for the city's firefi= ghters, police, teachers and other workers. The state fund holds about 2.1 = million Enron (ENE) shares and the city funds hold about 2.9 million.=20 "We're looking at a possible lawsuit, but we're not leaning one way or anot= her," said Frank Sobrino, spokesman for the New York State Common Retiremen= t Fund.=20 "We're looking into [possible legal action], but nothing's been decided yet= ," said David Neustadt, spokesman for the New York City Comptroller's Offic= e, which oversees the city's five pension funds.=20 Barclays Global Investors, which manages about $790 billion, mostly for pen= sion funds and other institutional clients, said it would join others in a = class-action suit, but wouldn't be the lead plaintiff. Barclays is the four= th-largest investor in Enron, with about 21 million shares as of Sept. 30.= =20 "Our style doesn't lend itself to taking that lead role, but we would be me= mbers of a class suit," said Linda Selbach, head of corporate governance. A= s primarily a passive money manager, Barclays invests according to market f= orces, not according to company information, and so couldn't claim to have = been misled by false information, she explained.=20 However, "on the macro level, we've been very involved in the shaping of th= e law with respect to securities litigation, and would be again," she said.= The company would be especially inclined to get involved if the suit promi= sed to set a precedent for other cases further down the line, she said.=20 Pension Funds Among Largest Enron Investors=20 Institutional investors such as pension funds, mutual fund companies and mo= ney management firms are among the largest investors in Enron, once a top-p= erforming company whose stock has plunged 89% year-to-date and is now the s= ubject of a Securities and Exchange Commission probe into outside partnersh= ip deals. Several law firms already have sued the company on behalf of shar= eholders, accusing Enron of misleading investors and artificially inflating= its share price.=20 Last week, the $143 billion California Public Employees' Retirement System,= or Calpers, issued a release stating their intention to oppose the appoint= ment of any current Enron board member to the board of any company with whi= ch Enron may be contemplating a merger.=20 The statement came following reports that Enron might be acquired by smalle= r rival Dynegy Inc. (DYN), and that Enron was seeking the right to appoint = three members to the combined company board.=20 "Until all of these issues are sorted out, the interests of shareholders ar= e best served by retirement of all the current directors," Michael Flaherma= n, chair of Calpers' investment committee, said in the statement.=20 However, Calpers has no comment regarding possible legal action against Enr= on, spokesman Brad Pacheco said.=20 Calpers owns about three million shares of Enron and also invests in Dynegy= .=20 The $105 billion California State Teachers Retirement System, or Calstrs, i= s "taking a keen interest, and reviewing our holdings and options" regardin= g Enron, said a spokeswoman. The board has made no decisions yet, but plans= to discuss the subject in a closed session at the next board meeting, she = said.=20 The $96 billion Florida Retirement System, which holds 9.7 million Enron sh= ares, is "still evaluating the situation," spokeswoman Lee Baldwin said. "O= ur feeling is that there's so much news going on, and the decision is so fa= r off, that we're waiting to see what will happen."=20 Similarly, among mutual fund companies, Janus Capital Corp., the second-lar= gest holder of Enron with 41.4 million shares as of Sept. 30, is not yet co= nsidering legal action, as a spokeswoman said it would be premature.=20 Alliance Capital Management LP, the largest holder of Enron with 42.9 milli= on shares as of Sept. 30, and Fidelity Management & Research, the fifth-lar= gest holder with 20.8 million shares as of Sept. 30, said that they have po= licies of not commenting on individual company holdings. The largest active= ly managed U.S. mutual fund, the $71.6 billion Fidelity Magellan fund, held= 5.7 million shares of Enron as of Sept. 30, according to a semiannual repo= rt released last week.=20 -- John Shipman and Frank Byrt contributed to this article.=20 Write to Christiane Bird at christiane.bird@dowjones.com=20 Copyright © 2001 Dow Jones & Company, Inc.=20 All Rights Reserved. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Gold Bennett Cera & Sidener LLP Announces Class Action Lawsuit Against Enro= n Corporation and Certain Officers and Directors 11/19/2001 PR Newswire (Copyright © 2001, PR Newswire) SAN FRANCISCO, Nov. 19 /PRNewswire/ -- Gold Bennett Cera & Sidener LLP anno= unced today that it has filed a class action in the United States District = Court Southern District of Texas, Houston Division, Case No. H-01-4009, on = behalf of purchasers of Enron Corporation (NYSE: ENE) ("Enron") common stoc= k during the period of November 15, 1998 through November 8, 2001, inclusiv= e (the "Class Period"). Plaintiff seeks to recover damages on behalf of all= purchasers of Enron securities during the Class Period.=20 The plaintiff is represented by the San Francisco law firm of Gold Bennett = Cera & Sidener LLP. For over 30 years, Gold Bennett Cera & Sidener LLP and = its predecessors have successfully engaged in complex commercial litigation= , including shareholder, consumer and antitrust class actions, in federal a= nd state courts throughout the United States, recovering hundreds of millio= ns of dollars for its clients. Purchasers of Enron securities may http://ww= w.gbcsf.com for additional information about the Firm's practice. The Complaint alleges that Enron and certain officers and directors violate= d Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule= 10b-5 promulgated thereunder. Specifically, the Complaint alleges that def= endants misrepresented and/or omitted to state material facts regarding Enr= on's business and financial results during the Class Period to artificially= inflate and maintain the price of the Company's securities.=20 On November 8, 2001, prior to the opening of the market, Enron shocked the = investing public by announcing that it would restate its financial results = for 1997, 1998, 1999 and 2000, and the first two quarters of 2001 to correc= t accounting irregularities which had caused Enron's to overstate its net i= ncome by hundreds of millions of dollars. Enron also admitted that the audi= t reports which had been issued for its financial reports during those peri= ods could not be relied upon. As a result of the restatements, Enron was fo= rced to reduce shareholders' equity by $1.2 billion. Upon revelation of thi= s news, Enron's stock plummeted to $8.41 per share, down from a Class Perio= d high of approximately $90 per share.=20 If you are a member of the Class described above, you may, no later than De= cember 21, 2001, move the Court to serve as lead plaintiff of the Class, if= you so choose. In order to serve as lead plaintiff, however, you must meet= certain legal requirements. If you wish to discuss this action or have any= questions concerning this case or your rights or interests, please contact= Gwendolyn Giblin, Esq. of Gold Bennett Cera & Sidener LLP, 595 Market Stre= et, Suite 2300, San Francisco, California 94105, by telephone at 800-778-18= 22 or 415-777-2230, by facsimile at 415-777-5189 or by e-mail at Enron@gbcs= f.com.=20 MAKE YOUR OPINION COUNT - Click Here=20 http://tbutton.prnewswire.com/prn/11690X53166224 /CONTACT: Gwendolyn Giblin, Esq. of Gold Bennett Cera & Sidener LLP, 800-77= 8-1822, or +1-415-777-2230, or fax, +1-415-777-5189 or Enron@gbcsf.com/ 16:= 11 EST=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: UPDATE 2-Congressman urges probe of Andersen on Enron. By Kevin Drawbaugh 11/19/2001 Reuters English News Service (C) Reuters Limited 2001. WASHINGTON, Nov 19 (Reuters) - A U.S. Congressman has called for an investi= gation of Big Five accounting firm Arthur Andersen LLP in connection with i= ts audits of Enron Corp. and Waste Management Inc. , according to a letter = released on Monday.=20 Turning up the heat under the conflict-of-interest issue among the world's = largest bean-counters, Rep. John Dingell asked the Public Oversight Board f= or "an oversight review or special investigation of Arthur Andersen LLP," s= aid the letter made available to Reuters. Dingell also asked the board to look into peer reviews of Arthur Andersen c= onducted in recent years by other accounting firms, including Deloitte & To= uche, and questioned the value of a triennial peer review process in place = since 1978.=20 "The best accounting standards in the world are meaningless if the accounti= ng and audit processes are so inept or corrupt that they produce unreliable= numbers and untruthful reporting," wrote Dingell, a Michigan Democrat, in = the letter.=20 "I request that POB's investigation or review include adequate, transparent= and public disclosure of all significant issues identified," Dingell wrote= .=20 As accounting has consolidated into fewer and larger firms with more lines = of business from auditing to consulting, it has come under increasing fire = on the conflict-of-interest issue. The Dingell letter is only the latest in= a continuing barrage of criticism leveled in recent years at Big Five firm= s.=20 Arthur Andersen, based in Chicago, was auditor to Houston energy trading gi= ant Enron, rocked in recent weeks by a Securities and Exchange Commission p= robe of certain outside partnership deals involving company officers. Enron= 's stock price has plunged, several managers have resigned and numerous sha= reholder lawsuits are pending. Enron earlier this month said it planned to = be bought out by rival Dynegy Inc. .=20 Critics have said Arthur Andersen should have done more as Enron's auditor = to draw investors' attention to its unusual finances. A lawsuit filed in Or= egon alleged Arthur Andersen's judgment was swayed by lucrative consulting = fees that it was collecting from Enron while it was also being paid as audi= tor.=20 ANDERSEN SAYS CONFIDENT IN PROCESS=20 Responding to Dingell, Andersen spokesman David Tabolt said accounting firm= s must report litigation involving allegations of audit failures within 30 = days to a committee of the SEC's practice section, which the Public Oversig= ht Board oversees.=20 "Under the profession's self-regulatory processes, which the POB oversees, = the committee is responsible for conducting an inquiry to determine whether= the matters that are the subject of litigation indicate systemic quality c= ontrol problems that need to be addressed either by the firm involved or by= the profession," Tabolt said.=20 "We are confident that this process will confirm the quality of our auditin= g processes," he said.=20 After the SEC said last month that it was investigating Enron, the company = appointed a special internal committee to look into the unusual partnership= deals at the heart of the probe. Deloitte & Touche, also a Big Five accoun= ting firm, was named to assist the committee in its inquiry, Enron said.=20 But, according to Dingell, Deloitte is conducting a triennial peer review o= f Andersen under a system set up in the 1970s to ensure quality accounting.= The peer review process is also supervised by the Public Oversight Board, = based in Connecticut. Neither the board nor Deloitte could be reached.=20 Dingell said Deloitte's dual roles as peer reviewer of Andersen and as inte= rnal investigator of its audit client Enron raise further questions of pote= ntial conflicts of interest.=20 "Given the appearance of conflicts of interest, the public record to date r= egarding allegations of professional malpractice or worse by Andersen in bo= th the Waste Management fraud and the evolving Enron Corp. accounting debac= le, as well as the considerable damage to investors, there appears to be li= ttle reason for the public to have faith in Andersen or the peer review pro= cess," wrote Dingell, ranking member of the House Committee on Energy and C= ommerce.=20 In June, Arthur Andersen was fined $7 million by the SEC to settle charges = that it filed false and misleading audit reports of Waste Management, a gar= bage hauling concern, in the largest ever civil penalty against a Big Five = accounting firm. Andersen did not admit or deny the charges. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron delays closing Indian plant after creditors' legal action 11/19/2001 AFX News © 2001 by AFP-Extel News Ltd BOMBAY (AFX) - Enron Corp's Indian subsidiary said it had to delay serving = a final termination notice to close its power project in western Maharashtr= a state after local creditors filed legal action.=20 The Dabhol Power Company Ltd (DPC) was originally going to serve the notice= to Maharashtra State's Electricity Board (MSEB) after today, when the six-= month deadline for resolving a payment dispute ends, an Enron official told= Agence France-Presse. Now, however, it has to wait until after Dec 3, because Indian banks and fi= nancial institutions that have lent money to Dabhol Power recently filed a = lawsuit to ensure they get their funds back.=20 "The domestic lenders have gone to the court and secured a stay order again= st our final notice till their next nearing which is on December 3," an Enr= on official said.=20 "We are working on a strategy to help resolve the issue as soon as possible= , but obviously can't disclose it now."=20 The lawsuit was filed by the State Bank of India, ICICI Ltd, the Industrial= Development Bank of India and IFCI Ltd.=20 The Enron official said the bankers have gone to court demanding an immedia= te resumption of work at the plant to ensure cash flow and to help the owne= rs repay money owed to the lenders.=20 jds/cmr/jsa=20 For more information and to contact AFX: www.afxnews.com and www.afxpress.c= om Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA company - Enron's trials have just begun. 11/19/2001 EIU Viewswire © 2001 The Economist Intelligence Unit Limited. All rights reserved. COUNTRY BRIEFING=20 FROM THE ECONOMIST NEW YORK: Lawyers are swarming all over Enron's old financial statements an= d press releases in the hope of reaping huge fees from securities litigatio= n. More than 20 class-action lawsuits have been filed in recent weeks, and = new ones are popping up every day. A formal process has been started to con= solidate litigation in Houston, where the troubled energy company is based,= with all lawyers interested in the case required to stake their claims by = December 21st.=20 The broadest accusations will be of fraud and material misstatement, legal = ways of saying that the company's financial statements were garbage. This w= eek, Enron's founder and chairman, Kenneth Lay, decided to forgo a severanc= e package worth over $60m while admitting that the company's problems "had = been exacerbated by the extensive use of debt capital, both on and off the = balance sheet". America's Financial Accounting Standards Board (FASB) is lo= oking again at off-balance-sheet financing, having fretted about it on and = off for a decade.=20 There will also be charges of insider trading, because even as Enron was is= suing securities amid glowing profits reports, top executives were dumping = over $1 billion of Enron shares to "unsuspecting investors", a group that i= ncludes anybody who, however briefly, has held one of the company's 750m sh= ares in the past two years. "The number of class members will be huge," say= s Maurice Pesso, a lawyer at a New York firm that has filed a claim.=20 There are, however, limits to the company's liability. It has already resta= ted its results going back five years, but federal law restricts litigation= to the past three. Moreover, Enron will not take the rap alone. Its audito= r, Arthur Andersen (now plain Andersen), is also named as a defendant in at= least one of the complaints already filed. The litigation comes after a ro= ugh decade for Andersen. It has had to pay hundreds of millions of dollars = in settlements after sloppy audits on such companies as Waste Management, S= unbeam and Discovery Zone.=20 Because Enron evolved from an energy company into a financial firm, it beca= me much like an unregulated bank. The lack of supervision meant that the ro= le of the company's auditor was crucial. Andersen was certainly paid as if = it was. In 2000, it collected $25m for auditing Enron's books and another $= 27m for consulting services. Now how do you account for that?=20 SOURCE: The Economist. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 $1 Billion Secured Credit Hasn't Calmed Fears About Enron John Hintze 11/19/2001 High Yield Report Copyright © 2001 Thomson Financial, Inc. All Rights Reserved. A new $1 billion loan has not done much to calm market participants' fears = about the future of Enron Corp. Many bankers are concerned about the energy= giant's liquidity, and fear the worst may be yet to come.=20 The banks in charge of Enron, though, are tight lipped. Lead arrangers for = the $1 billion loan - JP Morgan Chase and Citibank/SSB - had scheduled a ba= nk meeting for Nov. 9, but it was postponed, and officials at both institut= ions declined to say whether or not a new meeting has been set. Market play= ers are speculating that the meeting was postponed partly because of a fear= that new troubles may arise as outside auditors review the company's books= . That process will take at least a few weeks, Enron chairman and CEO Kenne= th Lay said in a conference call Nov. 15. To be sure, Enron is not in the best financial position. The company has a = $1.75 billion loan coming due in April, a facility that will be nearly impo= ssible to refinance at that date if any components of its complicated rescu= e package fall through in the meantime (this includes a $1.5 billion cash i= nfusion by Dynegy, which last week agreed to buy Enron; another $500 millio= n to $1 billion in private equity that Lay said was in negotiations last we= ek; and the success of a planned $800 million sale of assets by year's end)= .=20 The $1.75 billion loan is part of a $3 billion revolving facility, also led= by JP Morgan Chase and Citibank/SSB, that was drawn down in October to pay= off about $1.8 billion in commercial paper obligations and calm the market= 's concerns about Enron's liquidity. The facility also includes a $1.25 bil= lion portion that matures in 2005.=20 "One of the big credit issues from a corporate standpoint is Enron's abilit= y to renew the 364-day facility that matures in 2002," said Ralph Pellechia= , a credit analyst at Fitch.=20 The lead banks declined to comment on the ongoing loan discussions, which i= nclude the already agreed to $1 billion facility that is secured by Enron p= ipeline assets, and other bankers in the close-knit loan syndication commun= ity admitted to being in the dark.=20 It is likely, though, that the discussions have included an attempt to addr= ess bankers' concerns about the loan maturing in five months, Pellecchia sa= id.=20 "I think that in conjunction with the new $1 billion loan, they are attempt= ing to address the revolver," Pellecchia said.=20 The $1 billion loan, hammered out in late October, was expected to be syndi= cated among a small, select group of lenders. Incorporating the maturing re= volver into the current solution would likely bring in a wider circle of ba= nks, one banker said, noting that "just about everybody was in that [existi= ng] deal."=20 JPM/Citi Must Save Enron=20 However the financing unfolds, arrangers JP Morgan Chase and Citibank/SSB's= tight control of the deal reflects the banks' urgency in aiding a major co= rporate client to which they have a broad range of business exposure. That = exposure extends beyond corporate loans to credit derivatives and short-ter= m loans financing the company's myriad energy trading-related transactions.= =20 "[JP Morgan and Citi] have the most to gain but also the most to lose with = respect to Enron," said one rival banker, adding that the banks' rapid resp= onse to Enron's deteriorating situation reflected the importance of those r= elationships. "I was amazed how quickly that [$1 billion] deal came togethe= r, and how Enron - which never did anything secured - pledged its most valu= able [pipeline] assets."=20 The $1 billion loan is secured by Enron's Trans Western and Northern Natura= l Gas pipeline systems, the latter of which is also pledged to Dynegy for i= ts $1.5 billion investment.=20 "From a risk standpoint, it's probably the best peace of Enron paper that C= hase and Citi have - it's the only secured stuff out there," said one banke= r. But despite the impressive collateral, the $1 billion loan was priced at= tractively at 250 basis points over Libor, he said. "I think it's a comment= on how bad the news was. Enron's going to have to put up one of its major = jewels for a $1 billion credit at Libor plus 250."=20 In addition to playing major roles in financing Enron's off-balance sheet v= entures, such as the Dahbol power project in India, JP Morgan Chase and Cit= ibank/SSB have also been major players in the company's complicated financi= ng initiatives. For example, Citibank/SSB runs Enron's Yosemite credit-link= ed note program and, along with JP Morgan Chase, is active in other Enron-r= elated credit derivative business.=20 A recent research report by Goldman Sachs noted that the one-stop shop conc= ept closely tied the banks to Enron and has also made them crucial in these= trying times.=20 "The two banks most involved with Enron in terms of magnitude of credit/der= ivatives exposure, Citi and JP Morgan, were also obviously involved in sell= ing the company, with each acting as a financial advisor in the sale," the = report stated. "The banks were critical (given Enron's liquidity needs and = the related high risk to further rating agency downgrades) and likely influ= ential to the outcome reached to sell the company as a means to sustain the= operations of Enron and protect all creditors involved. Consequently, in a= way, this is another win for the bank/broker model," the report says.=20 In a separate report, Goldman's fixed income power analyst, Robert Rubin, s= aid that despite Enron's questionable business practices bringing it close = to the brink, a merger that maintains its core energy market-making operati= ons is preferable to leaving a vacuum in that arena. He added that despite = concerns raised by the ratings agencies and other parties, Goldman believes= the merger will close.=20 "The balance sheet of a combined company could be strong, if Enron complete= s its asset sales," Fitch's Pellecchia said. "But there are still a lot of = moving pieces." Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Kaplan Fox Expands Class Period For Investors Who Purchased Enron Corp. Sec= urities 11/19/2001 Internet Wire © Copyright 2001 Internet Wire, Inc. NEW YORK, NY -- (INTERNET WIRE) -- 19-11-2001 -- Kaplan Fox (kaplanfox.com)= has filed a class action against Enron Corp. and certain of the Company's = officers and directors in the United States District Court for the Southern= District of Texas. The suit is brought on behalf of all persons or entitie= s who purchased securities of Enron Corporation ("Enron") (NYSE: ENE) betwe= en January 20, 1998 and November 8, 2001, inclusive (the "Class Period").= =20 The complaint charges Enron Corp. and certain of its officers and directors= with violations of the Securities Exchange Act of 1934. The complaint alle= ges that during the Class Period, the defendants engaged in asset and secur= ities sales to closely related affiliates and interested parties, which dis= guised Enron's true financial position. Many of the details of these transa= ctions were hidden from the public. Defendants used these asset sales to fa= lsely improve Enron's balance sheet, thereby maintaining Enron shares at an= artificially inflated price. Certain Enron executives, who held positions = in the affiliates that presented clear conflicts of interest, reaped millio= ns of dollars in personal gains from these transactions. The complaint further alleges that during the Class Period, defendants made= misleading statements regarding the potential value of Enron's Broadband b= usiness, in order to artificially boost Enron's share price. With knowledge= that Enron's Broadband business would never post a profit and was seriousl= y overvalued, Defendants continued to make misleading statements about the = Broadband business in order to maintain the share price at its artificially= inflated levels. Defendants used the artificially inflated value of Enron'= s Broadband business in order to gain millions of dollars in financing. Def= endants failed to disclose the risk of these financing arrangements. Defend= ants hid the true nature of Enron's earnings, its hedging, its businesses, = and the correct state of Enron's finances from its investors and the market= , further artificially inflating Enron's share price. While the stock was a= rtificially inflated for the above reasons, Enron executives engaged in ext= ensive insider trading, gaining personal proceeds of more than $482 million= during the Class Period, before the public became aware of the above pract= ices.=20 Plaintiff seeks to recover damages on behalf of the Class and is represente= d by Kaplan Fox & Kilsheimer LLP. Our firm, with offices in New York, San F= rancisco, Chicago and New Jersey has many years of experience in prosecutin= g investor class actions and actions involving financial fraud. For more in= formation about Kaplan Fox & Kilsheimer LLP, you may visit our website at w= ww.kaplanfox.com=20 If you are a member of the Class, you may move the court no later than Dece= mber 21, 2001 to serve as a lead plaintiff for the Class. In order to serve= as a lead plaintiff, you must meet certain legal requirements.=20 If you have any questions about this Notice, the action, your rights, or yo= ur interests, please e-mail us at mail@kaplanfox.com or contact:=20 Kaplan Fox & Kilsheimer LLP - 805 Third Avenue, 22nd Floor - New York, NY 1= 0022=20 Kaplan Fox & Kilsheimer LLP - 100 Pine Street, 26th Floor - San Francisco, = CA 94111=20 Contact: Frederic S. Fox, Esq, Kaplan Fox & Kilsheimer LLP=20 Voice: 800-290-1952=20 Fax: 212-687-7714=20 Email: mail@kaplanfox.com=20 or=20 Contact: Laurence D. King, Esq., Kaplan Fox & Kilsheimer LLP=20 Voice: 415-336-1238=20 Fax: 415-677-1233=20 Email: mail@kaplanfox.com=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 DYNEGY TO BUY ENRON: CHEVRONTEXACO PROVIDES $2.5 BILLION CASH FLOW 11/19/2001 Octane Week © 2001 Phillips Business Information, Inc. ChevronTexaco Corp. is backing Dynegy Inc.'s proposed buyout of ailing Enro= n Corp. by putting $2.5 billion of new equity in Dynegy to support the deal= . ChevronTexaco, which currently owns approximately 26% of Dynegy's outstan= ding common stock, will invest $1.5 billion immediately. The $1 billion bal= ance would be made at the closing of the Dynegy-Enron merger.=20 "Our relationship with Dynegy has proven to be highly beneficial for both c= ompanies, and we are optimistic we will continue to see comparable or bette= r performance in the future," said David O'Reilly, chairman and CEO of Chev= ronTexaco. Chevron first took a stake in Dynegy in 1996. Dynegy is one of t= he industry's largest marketers and traders of natural gas, power and coal,= as well as a leading producer of electricity. Dynegy Midstream Services is= one of the largest marketers and producers of natural gas liquids. "We are also hopeful that the combination of Dynegy and Enron will restore = market and credit confidence in this important energy sector," O'Reilly con= tinued. In October, the Securities and Exchange Commission began investigat= ing Enron's relationship with two questionable partnerships once run by its= former Chief Financial Officer Andrew Fastow. In November, Enron revealed = that certain off-balance sheet entities should have been included in its fi= nancial statements, and the company would restate four years worth of filin= gs The company's stock price plunged from a 52- week peak of $84.87 to $7 t= wo weeks ago. Shell was reported at one time to be a potential buyer of Enr= on.=20 Together, Dynegy and Enron have natural gas sales of approximately 40 billi= on cubic feet per day and 25,000 miles of gas pipelines.=20 -Carol Cole=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 ENRON MELTDOWN & HIGH GAS PRICES? 11/19/2001 Gas Processors Report © 2001 Phillips Business Information, Inc. October Henry Hub Bidweek Cash Price $1.87, November $3.16. Why?=20 Over the past several weeks there have been several articles in the trade p= ress about how the wholesale markets for natural gas and electricity, where= Enron holds a commanding 25% market share, have been "unaffected" by the c= risis enfolding the Houston trading giant. Enron was having no trouble duri= ng October finding counterparties for its trades, so not to worry, there wa= s no lack of liquidity plaguing the market. Gas prices were responding "nor= mally to supply and demand fundamentals." So the rosy scenario observers we= re saying, anyway. Excuse us? November's bid week price was a full 70% over October's, and we = can find no earthly fundamental reason for that surge. This had nothing to = do with fundamental supply and demand. The weather during October was warm;= storage was chock-full, so much so that little could be injected because c= avern pressures were too high. Sure, there was a lot of weather hype about = a cold winter coming, but that was only a forecast. That was meaningless ev= en if it came true, because the winter would have to be 7-8% colder than no= rmal just to burn up the 375 billion cubic feet (Bcf) surplus already in st= orage, to get next April's inventories in line with last April's levels. An= ybody could see that surplus was also due to get much bigger by the end of = November because there were huge 70-90 Bcf weekly withdrawals last year due= to the fact that month was bitterly cold in 2000.=20 In face of all those bearish facts, which could have been willing to bid ca= sh prices up at spot for most of October, then bid them up even higher duri= ng the last week, which was bid week for November? We are talking about obl= igations that committed the buyers for baseload supply for the entire month= of November - not just a spot price for a day or two of swing supply. No B= ig Storage Arbitrage Game, Either=20 No, the cash market strength couldn't be explained by the arbitrage game of= buying cash gas cheap, injecting it into storage and then shorting the out= months' futures to lock in a margin. There wasn't much of a gap between th= e November screen index and cash prices. Most cash deals went at index minu= s a few cents during October. True, there was a nice gap between cash and t= he December futures screen, but there was not much chance to profit by this= . Storage was so full that little volume could have been injected during Oc= tober.=20 So if someone says the price surge that month was all due to "the expected = workings of supply and demand," we would have to ask him what he was smokin= g. Sunspots would have been a more likely explanation. Lack of Confidence i= n Enron as a Counterparty is a More Likely Explanation=20 A better idea emerges after we note that spot prices continued high into No= vember, in spite of continued record- breaking warmth. Henry Hub cash tags = reached $3.24 on Friday, Nov. 2. Then that all reversed suddenly on Nov. 7-= 9, which was just when serious rumors that Dynegy was going to buy Enron an= d put it out of its misery began, and then became fact. By presstime last W= ednesday, Nov. 14 -- a mere one week later -- the Henry Hub had collapsed a= ll the way to $2.29 and was still falling like a stone -- getting back to w= here it should have been all October. Can this be just a coincidence?=20 We think it likely that the reason prices were not that low in October is t= hat with rumors of Enron troubles circulating, the wholesale market had bee= n given a flat tire by a fear of a potential lack of liquidity. There could= have been a perceived need for somebody with a better credit rating to bac= k up the Enron traders who took the opposite side of one trade in four nati= onally. In fact, recent news reports say that after the first reports of En= ron's problems emerged in mid-October, there was a falloff in the willingne= ss of commercial users of gas (and electricity as well) to buy fixed- price= supply contracts with Enron because the firm's corporate credit risk hampe= red its ability to hedge its obligations. "How comfortable would you feel s= igning a fixed-price deal with a company with no assets of its own to produ= ce your gas or generate your power, and whose ability to obtain those suppl= ies via futures or swaps was eroded because its credit was on the verge of = being downgraded to junk?" an energy banker asked. This Could Have Favored = the Long Side of the Market=20 In normal circumstances, consumers such as utilities could almost have stay= ed out of the November bid week cash market, backed as they were by huge st= orage and warm weather. Instead they must have bought heavily, perhaps fear= ing that with Enron sick there wouldn't be enough counterparty weight to ta= ke the other side and supply them later if they stayed short. The fear coul= d have been that over the counter swaps to hedge later spot purchases might= just not be available on Enron Online the way they usually are. Other trad= ers might not have been able to take up the slack, since they trade often w= ith Enron. Commercial players might have perceived them as being infected w= ith some of the same weakness.=20 After the Dynegy deal was announced, however, prices could have been freed = to fall back to where they were at the end of September, with users now una= fraid to play the short side because Enron was back in business with a bett= er credit rating. By Nov. 14, with cash prices more than $1 below where the= y were during bid week, Enron spokesman Eric Thode said, "Volumes on Enron = Online have returned to the normal range. The 30-day moving average has imp= roved to a more normal 5,700 transactions per day with a notional value of = $1.7 billion." Even allowing for some exaggeration by Enron's PR man to ins= till market confidence, that points to a correlation of falling prices and = a revived Enron. They Don't Speak German at Enron, Do They?=20 If so, what happened to gas prices last month could have been the mirror im= age of the Metallgesellschaft AG- induced crisis on the oil futures market = in early 1994. That crisis pushed oil prices down instead of shoving gas pr= ices up. This German firm, a trader and user of oil, had used a very aggres= sive strategy to obtain its supplies of oil. In order to lock in a price fo= r the coming year, the Germans "stacked" all their contracts covering their= oil needs for the coming year as long positions on the near month. They wo= uld go to delivery on just the portion they needed for the next four weeks,= then would "roll" the rest of the contracts onto the next futures month. T= hey did that by selling the remainder of the expiring month's contracts and= using the money to buy the same number of the next month's contracts. But = to be sure of being able to do that without losing their lederhosen, the Ge= rmans had to be sure that the next month's contracts would be cheaper than = the prompt month ones they had just sold. Well, due to last minute purchase= s by consumers going to delivery, the prompt month usually is higher than t= he next one. So the Germans thought they had a strategy that would guarante= e them a profit every month when they flipped their futures stack, a nice k= icker on top of having locked in the underlying cost of the oil they would = use for the year. Yeah, right. Well, one month that didn't happen, mostly b= ecause other traders got wind of what the Germans were doing and decided to= hold their feet to the fire by bidding up the next month (which is a varia= nt of what happened to Long Term Capital Management four years later.) So, = losing another Battle of the Bulge, this time to Nymex traders instead of t= o General Patton, Metallgesellschaft cratered. As a trustee unwound the tra= in wreck of long futures, he went on a selling spree that kept the Nymex pr= ice low for months.=20 NGL PRICE BOXSCORE Data from Altrade(tm) NGL Indexes MTD Averages in Italics Mont Belvieu TX Eth Pro Norm Iso Pen+ NGL Bbl=20 Nov 8 - 14, '01 22.53 35.45 41.44 39.36 45.34 $13.99=20 Nov 1 - 7, '01 23.85 35.91 41.24 40.38 45.5 $14.28=20 Oct 25 - 31, '01 24.63 39.22 43.74 43.15 ### $15.30=20 Oct 18 - 24, '01 23.95 39.27 43.96 43.34 47.84 $15.07=20 Oct '01 24.05 39.44 45.06 44.44 50 $15.34=20 Sept '01 25.62 42.4 52.65 51.8 59.68 $17.19=20 3rd Qtr '01 26.55 41.12 49.94 49.7 56.31 $16.75=20 2nd Qtr '01 36.27 49.57 55.22 64.89 64.68 $20.50=20 3rd Qtr '00 39 59.39 66.99 66.35 75.29 $23.47=20 Nov 9 - 15, '00 43.46 61.35 73.24 72.02 82.94 $25.39=20 Conway KS: Group 140 Nov 8 - 14, '01 21.08 37.67 37.13 41.5 44.16 $13.78=20 Nov 1 - 7, '01 22.57 40.69 38.5 43.68 43.78 $14.48=20 Oct 25 - 31, '01 22.21 44.22 39.86 48.5 49.21 $15.41=20 Oct 18 - 24, '01 21.72 44.74 40.84 47.17 50.44 $15.50=20 Oct '01 21.7 44.21 39.63 46.37 54.04 $15.59=20 Sept '01 21.83 46.97 44.93 51.87 78.11 $18.00=20 3rd Qtr '01 23.86 45.33 44.72 52.77 74.4 $17.88=20 2nd Qtr '01 32.27 54.15 53.99 76.12 76.01 $21.44=20 3rd Qtr '00 37.11 63.91 65.8 67.48 78.9 $23.93=20 Nov 9 - 15, '00 42.26 62.63 73.27 74.8 83 $25.43=20 Individual product prices in cents per gallon. NGL Barrel: dollars per=20 42=20 gallons. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 U.S.'s Dingell Seeks Probe of Arthur Andersen, Dow Jones Says 2001-11-19 15:24 (New York) Washington, Nov. 19 (Bloomberg) -- U.S. Representative John Dingell, a Michigan Democrat, has requested a special investigation of Arthur Andersen LLP's audits of Enron Corp. and Waste Management Inc., Dow Jones Newswires reported. Dingell sent a letter to Public Oversight Board Chairman Charles Bowsher asking for the review, the newswire said. Andersen, the world's fifth largest accounting firm, served as Enron's outside auditor for more than a decade, assuring investors the company's financial statements conformed with generally accepted accounting principles. Earlier this month, the company reported that it overstated earnings by $586 million over four-and-a-half years, inflated shareholder equity by $1.2 billion because of an ``accounting error,'' and failed to consolidate results of three affiliated partnerships into its balance sheet. In June, Andersen reached a $7 million settlement with the Securities and Exchange Commission in which it neither admitted nor denied allegations of fraud related to its audit of Waste Management, Inc. Andersen is now undergoing a peer review by Deloitte & Touche, Dow Jones said. Enron's Azurix May Have to Sell Assets If It Can't Borrow 2001-11-19 14:35 (New York) Enron's Azurix May Have to Sell Assets If It Can't Borrow Houston, Nov. 19 (Bloomberg) -- Azurix Corp., Enron Corp.'s water unit, may have to sell assets if it can't find financing to continue operations, the company said in a regulatory filing. Enron took Azurix public in June 1999 and then, after the water company's stock plunged, took it private and paid off investors in March. Azurix isn't sure it will be able to renew or refinance about $113.3 million in long-term debt, including bank loans, that matures before Sept. 30 at a ``reasonable'' cost, it said in a filing with the U.S. Securities and Exchange Commission. The company also had $326.3 million in short-term debt as of Sept. 30. The loans are Azurix's ``primary sources of liquidity,'' the filing said. If the company can't raise the funds, it might have to use the proceeds from planned asset sales to refinance debt and get cash, the filing said. If those asset sales don't generate enough money, ``Azurix may need to sell other assets, which could result in Azurix incurring losses in future periods,'' the company said. Azurix, though it still must file with the SEC, no longer trades as a separate stock. The shares of Houston-based Enron fell 8 cents to $8.92 in early afternoon trading. Enron agreed earlier this month to be acquired by rival Dynegy Inc. in a transaction currently valued at $24.9 billion. The buyout came after Enron's shares plunged amid an SEC investigation of the company's dealings with affiliated partnerships.
|