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Enron Mail |
Enron: A Wake-Up Call
The Wall Street Journal, 12/04/01 Fall of a Power Giant: Dynegy Hits Back at Enron With Lawsuit --- Claim Is = That Failed Merger Entitles Concern to Get Northern Natural Gas The Wall Street Journal, 12/04/01 Enron Secures $1.5 Billion in New Financing --- J.P. Morgan, Citigroup Pact= Is First Step; Now, Lifeline Is Sought for Trading Unit The Wall Street Journal, 12/04/01 Fall of a Power Giant: Burst of Chapter 11 Filings Marks Big Year for the B= ankruptcy Bar The Wall Street Journal, 12/04/01 Fall of a Power Giant: Now Is the Time For Creditors to Vie Against Each Ot= her The Wall Street Journal, 12/04/01 Auditor Andersen Is Added To Enron 401(k) Lawsuit The Wall Street Journal, 12/04/01 Stadium Jinx: What To Call Enron Field? `Enron Folds,' Maybe --- Firms That= Put Their Names On Arenas Hit Hard Times; Former Trans World Dome The Wall Street Journal, 12/04/01 As KPN Prepares to Sell New Shares, Investors Remain Lukewarm Toward Dutch = Telecom Firm The Wall Street Journal, 12/04/01 Small-Stock Focus: Genesis Energy, Valentis Plummet, As Small-Cap Stocks Fa= ll Slightly The Wall Street Journal, 12/04/01 Treasurys Manage Modest Gains Despite Reports Suggesting That Economy Could= Be Rebounding The Wall Street Journal, 12/04/01 After Enron, `Mark to Market' Accounting Gets Scrutiny The Wall Street Journal, 12/04/01 J.P. Morgan, Citigroup Decline On Fears About Enron Exposure The Wall Street Journal, 12/04/01 Corrections The New York Times, 12/04/01 Hobbled Enron Tries to Stay On Its Feet The New York Times, 12/04/01 Sent Home To Sit and Wait By the Phone The New York Times, 12/04/01 Enron Causes 5 Major Japanese Money Market Funds to Plunge The New York Times, 12/04/01 Plenty of Pain to Go Around for Small Investors, Funds, Workers and Credito= rs The New York Times, 12/04/01 And the Winners in the Case Are . . . The New York Times, 12/04/01 Collapse May Reshape the Battlefield of Deregulation The New York Times, 12/04/01 As Investors Worry About Mideast and Enron, Shares Fall The New York Times, 12/04/01 THE MARKETS: CURRENCIES The New York Times, 12/04/01 A Defining Issue The New York Times, 12/04/01 Free Lessons on Corporate Hubris, Courtesy of Enron The Washington Post, 12/04/01 Enron Readies For Layoffs, Legal Battle; Rival Dynegy Sues For Pipeline Net= work The Washington Post, 12/04/01 Enron's 'Con' The Washington Post, 12/04/01 Enron's Fall The Washington Post, 12/04/01 Enron Slashes Jobs, Lines Up Financing Energy: Funding of $1.5billion is in= tended to keep trading operations going amid move to reorganize. Los Angeles Times, 12/04/01 Some Power Customers Could See Disruptions Los Angeles Times, 12/04/01 Markets Enron, Mideast Weigh on Stocks Wall St.: Dow declines 0.9%, and Nas= daq is down 1.3%. Oil prices rise; bond yields fall. Los Angeles Times, 12/04/01 Banks' Enron Losses Seen Limited Bankruptcy: The firm says it owes three ma= jor lenders $7.55 billion, but analysts say that total overstates the expos= ure. Los Angeles Times, 12/04/01 Enron Shares Trading; NYSE to Review Status Los Angeles Times, 12/04/01 Enron's Failure Los Angeles Times, 12/04/01 Enron lays off 4,000 Houston Chronicle, 12/04/01 In tit for tat, Dynegy says it will sue Enron Houston Chronicle, 12/04/01 Pain of bankruptcy to hurt many others Houston Chronicle, 12/04/01 Woes leave Enron Field's name in question Houston Chronicle, 12/04/01 Enron employees: Tell us your stories Houston Chronicle, 12/04/01 Lenders lining up, but hard fight looms Houston Chronicle, 12/04/01 Q&A on the Enron bankruptcy Houston Chronicle, 12/04/01 Enron's recent troubles Houston Chronicle, 12/04/01 Enron briefs=20 Houston Chronicle, 12/04/01 Enron tries to resurrect trading=20 Houston Chronicle, 12/04/01 REPEAT: EDF In Talks Over Enron Direct,Other Assets Dow Jones Energy Service, 12/04/01 Enron's Brazil Unit Not Part Of US Chapter 11 Filing Dow Jones International News, 12/04/01 Attorney Says Tender Offer For Enron Is 'Off The Wall' Dow Jones News Service, 12/04/01 USA: Before The Bell - Futures rise - Enron soars 41 percent. Reuters English News Service, 12/04/01 INDIA: WRAPUP 1-Enron assets in play, crisis funds give hope. Reuters English News Service, 12/04/01 Enron receives financing to operate, cuts 20 percent of staff Associated Press Newswires, 12/04/01 UK: UPDATE 1-PWC says U.S. finance deal will not affect Euro units. Reuters English News Service, 12/04/01 Enron Europe Pulp Co Up For Sale - Enron's Administrator Dow Jones International News, 12/04/01 Bankrupt Enron Corp. receives financing to operate, cuts 20 percent of staf= f Associated Press Newswires, 12/04/01 Enron Takes 1st Steps in Bid to Negotiate Bankruptcy (Update3) Bloomberg, 12/04/01 Enron Plans to Sell Asia Power Assets Amid Bankruptcy (Update1) Bloomberg, 12/04/01 Arthur Andersen CEO Calls for Accounting Review After Enron Bloomberg, 12/04/01 EDF Says It's in Talks to Buy Enron's European Retail Unit Bloomberg, 12/04/01 Enron Lines Up $1.5 Billion in Bankruptcy Financing (Update5) Bloomberg, 12/04/01 Enron's Collapse May Have Repercussions Throughout Houston Bloomberg, 12/04/01 Enron: A Wake-Up Call By Joe Berardino 12/04/2001 The Wall Street Journal A18 (Copyright © 2001, Dow Jones & Company, Inc.) A year ago, Enron was one of the world's most admired companies, with a mar= ket capitalization of $80 billion. Today, it's in bankruptcy.=20 Sophisticated institutions were the primary buyers of Enron stock. But the = collapse of Enron is not simply a financial story of interest to major inst= itutions and the news media. Behind every mutual or pension fund are retire= es living on nest eggs, parents putting kids through college, and others de= pending on our capital markets and the system of checks and balances that m= akes them work. My firm is Enron's auditor. We take seriously our responsibilities as parti= cipants in this capital-markets system; in particular, our role as auditors= of year-end financial statements presented by management. We invest hundre= ds of millions of dollars each year to improve our audit capabilities, trai= n our people and enhance quality.=20 When a client fails, we study what happened, from top to bottom, to learn i= mportant lessons and do better. We are doing that with Enron. We are cooper= ating fully with investigations into Enron. If we have made mistakes, we wi= ll acknowledge them. If we need to make changes, we will. We are very clear= about our responsibilities. What we do is important. So is getting it righ= t.=20 Enron has admitted that it made some bad investments, was over-leveraged, a= nd authorized dealings that undermined the confidence of investors, credit-= rating agencies, and trading counter-parties. Enron's trading business and = its revenue streams collapsed, leading to bankruptcy.=20 If lessons are to be learned from Enron, a range of broader issues need to = be addressed. Among them:=20 -- Rethinking some of our accounting standards. Like the tax code, our acco= unting rules and literature have grown in volume and complexity as we have = attempted to turn an art into a science. In the process, we have fostered a= technical, legalistic mindset that is sometimes more concerned with the fo= rm rather than the substance of what is reported.=20 Enron provides a good example of how such orthodoxy can make it harder for = investors to appreciate what's going on in a business. Like many companies = today, Enron used sophisticated financing vehicles known as Special Purpose= Entities (SPEs) and other off-balance-sheet structures. Such vehicles perm= it companies, like Enron, to increase leverage without having to report deb= t on their balance sheet. Wall Street has helped companies raise billions w= ith these structured financings, which are well known to analysts and inves= tors.=20 As the rules stand today, sponsoring companies can keep the assets and liab= ilities of SPEs off their consolidated financial statements, even though th= ey retain a majority of the related risks and rewards. Basing the accountin= g rules on a risk/reward concept would give investors more information abou= t the consolidated entity's financial position by having more of the assets= and liabilities that are at risk on the balance sheet; certainly more info= rmation than disclosure alone could ever provide. The profession has been d= ebating how to account for SPEs for many years. It's time to rethink the ru= les.=20 -- Modernizing our broken financial-reporting model. Enron's collapse, like= the dot-com meltdown, is a reminder that our financial-reporting model -- = with its emphasis on historical information and a single earnings-per-share= number -- is out of date and unresponsive to today's new business models, = complex financial structures, and associated business risks.=20 Enron disclosed reams of information, including an eight-page Management's = Discussion & Analysis and 16 pages of footnotes in its 2000 annual report. = Some analysts studied these, sold short and made profits. But other sophist= icated analysts and fund managers have said that, although they were confus= ed, they bought and lost money.=20 We need to fix this problem. We can't long maintain trust in our capital ma= rkets with a financial-reporting system that delivers volumes of complex in= formation about what happened in the past, but leaves some investors with l= imited understanding of what's happening at the present and what is likely = to occur in the future.=20 The current financial-reporting system was created in the 1930s for the ind= ustrial age. That was a time when assets were tangible and investors were s= ophisticated and few. There were no derivatives. No structured off-balance-= sheet financings. No instant stock quotes or mutual funds. No First Call es= timates. And no Lou Dobbs or CNBC.=20 We need to move quickly but carefully to a more dynamic and richer reportin= g model. Disclosurs needs to be continuous, not periodic, to reflect today'= s 24/7 capital markets. We need to provide several streams of relevant info= rmation. We need to expand the number of key performance indicators, beyond= earnings per share, to present the information investors really need to un= derstand a company's business model and its business risks, financial struc= ture and operating performance.=20 -- Reforming our patchwork regulatory environment. An alphabet soup of inst= itutions -- from the AICPA (American Institute of Certified Public Accounta= nts) to the SEC and the ASB (Auditing Standards Board), EITF (Emerging Issu= es Task Force) and FASB (Financial Accounting Standards Board) to the POB (= Public Oversight Board) -- all have important roles in our profession's reg= ulatory framework. They are all made up of smart, diligent, well-intentione= d people. But the system is not keeping up with the issues raised by today'= s complex financial issues. Standard-setting is too slow. Responsibility fo= r administering discipline is too diffuse and punishment is not sufficientl= y certain to promote confidence in the profession.=20 All of us must focus on ways to improve the system. Agencies need more reso= urces and experts. Processes need to be redesigned. The accounting professi= on needs to acknowledge concerns about our system of discipline and peer re= view, and address them. Some criticisms are off the mark, but some are well= deserved. For our part, we intend to work constructively with the SEC, Con= gress, the accounting profession and others to make the changes needed to p= ut these concerns to rest.=20 -- Improving accountability across our capital system. Unfortunately, we ha= ve witnessed much of this before. Two years ago, scores of New Economy comp= anies soared to irrational values then collapsed in dust as investors came = to question their business models and prospects. The dot-com bubble cost in= vestors trillions. It's time to get serious about the lessons it taught us.= =20 In particular, we need to consider the responsibilities and accountability = of all players in the system as we review what happened at Enron and the br= oader issues it raises. Millions of individuals now depend in large measure= on the integrity and stability of our capital markets for personal wealth = and security.=20 Of course, investors look to management, directors and accountants. But the= y also count on investment bankers to structure financial deals in the best= interest of the company and its shareholders. They trust analysts who reco= mmend stocks and fund managers who buy on their behalf to do their homework= -- and walk away from companies they don't understand. They count on banke= rs and credit agencies to dig deep. For our system to work in today's compl= ex economy, these checks and balances must function properly.=20 Enron reminds us that the system can and must be improved. We are prepared = to do our part.=20 ---=20 Mr. Berardino is managing partner and CEO of Andersen. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Fall of a Power Giant: Dynegy Hits Back at Enron With Lawsuit --- Claim Is = That Failed Merger Entitles Concern to Get Northern Natural Gas By Alexei Barrionuevo and Rebecca Smith Staff Reporters of The Wall Street Journal 12/04/2001 The Wall Street Journal A10 (Copyright © 2001, Dow Jones & Company, Inc.) Striking back in what is shaping up as a nasty fight, Dynegy Inc. sued Enro= n Corp. to try to take control of Enron's flagship Northern Natural Gas Co.= pipeline system, as investors continued to punish Dynegy for its failed ga= mbit to acquire Enron.=20 The suit was filed the day after Enron filed for protection under Chapter 1= 1 of the U.S. Bankruptcy Code and filed a $10 billion lawsuit against Dyneg= y, claiming its down-the-street rival breached its merger agreement by brea= king off the deal this past week. The suits escalate a war of words between the two Houston companies over wh= o was responsible for the merger breakup that contributed to Enron's tumble= into bankruptcy-court proceedings and they threaten to be a serious distra= ction for Dynegy, another energy-trading highflier.=20 Credit agencies continue to penalize Dynegy for gambling on an effort to bu= y Enron, and Dynegy's stock is off more than those of other companies with = significant energy-trading operations. As of 4 p.m. in New York Stock Excha= nge composite trading, Dynegy shares fell $3.18 to $27.17 each, below their= 52-week low.=20 "There is no question that something as high-profile as this will attract s= enior management's attention for some time," said Robert Grossman, chief cr= edit officer with debt-rating agency Fitch Inc., which has had Dynegy on it= s credit watch since Dynegy agreed to the merger. "The very fact that the l= awsuit is out there poses risk in some investors' minds and it could limit = the upper end of the stock for awhile," says Ronald Barone, an analyst with= UBS Warburg.=20 Still, Dynegy is aggressively trying to build up its energy-trading busines= s. Dynegy's president and chief operating officer, Steve Bergstrom, who wor= ked for Enron in the early 1980s, is considered one of the brightest lights= in energy trading and Dynegy has been moving to bulk up its base of pipeli= nes, production and power-plant capacity to complement its trading operatio= ns.=20 As Enron was cratering last week, Dynegy swiftly moved to capitalize on Enr= on's sudden inability to provide enough credit security for natural-gas-sup= ply deals. As Enron traders scrambled to match buyers and sellers and disgo= rge its obligations for delivering gas to its customers, "Dynegy was a dire= ct beneficiary," an Enron trader said yesterday. "When we couldn't do it, p= eople just thought `let's go across the street and talk to Dynegy.'" He sai= d Dynegy was offering the best deals late last week.=20 Since Oct. 1, the number of customers executing agreements on DynegyDirect,= Dynegy's online trading platform, has increased 20% and Dynegy's physical = trading business also has increased, Mr. Bergstrom told analysts yesterday.= "We continue to experience a clear flight to quality by customers," he sai= d. "We will not be distracted by these events."=20 Many Enron traders are said to be upset with management for the implosion o= f the company. "These traders are going to be looking for jobs and maintain= ing their relationships will be very important, and they may even be interv= iewing at Dynegy," said Jeff Dietert, an analyst at Simmons & Co. in Housto= n. Enron spokesman Mark Palmer declined to comment.=20 Meanwhile, the two companies are at odds over how to unravel the failed mer= ger. In an interview, Mr. Bergstrom said Dynegy sued Enron because his comp= any believes it has a legal right to take control of the Northern Natural G= as pipeline system without delay. In exchange for investing $1.5 billion in= Enron with the help of co-investor ChevronTexaco Corp., San Francisco, Dyn= egy received an option, on Enron's biggest pipeline system, that was to ser= ve as a kind of consolation prize if the deal fell through.=20 Enron, however, says Dynegy breached its contract by backing away from the = merger and isn't entitled to the pipeline. Enron's lawsuit claims that Dyne= gy contributed to Enron's failure by raising doubts about the company and t= hat Dynegy took advantage of Enron's precarious situation to further its ow= n business goals. "By terminating the merger agreement, Dynegy sought to pu= t an end to Enron as a competitive force," the lawsuit said.=20 "They [Dynegy] didn't have a legitimate reason for backing away from the de= al," said Mr. Palmer, the Enron spokesman.=20 Mr. Bergstrom called Enron's lawsuit the equivalent of a "drowning man grab= bing for something on the way down."=20 Mr. Bergstrom said that Dynegy "likely won't do any" post-bankruptcy busine= ss with Enron, "at least until they recognize our claim on Northern Natural= ." He added that "no amount of money can restore Dynegy's confidence and cr= edibility with Enron."=20 Dynegy has been growing at a breathtaking rate. Driven by gains from buying= an Illinois utility and power-generator in early 2000, Dynegy's net income= more than quadrupled to $500.51 million in fiscal 2000 from fiscal 1999. D= ynegy was expecting to report earnings up 40% this fiscal year, Mr. Bergstr= om said.=20 In addition to buying power-plant capacity and storage, Dynegy had continue= d to expand its marketing reach. Yesterday, the company said it had finaliz= ed a deal with ChevronTexaco to market all of the energy company's North Am= erican natural gas. Dynegy already had marketed natural gas for the former = Chevron Corp. ChevronTexaco is a 26% owner of Dynegy.=20 Recently, Dynegy also received regulatory approval in Europe to buy natural= gas storage assets in the United Kingdom from BG Group PLC, which should g= ive Dynegy "a strong beach head from which to continue to grow their Europe= an presence in marketing and trading," Mr. Dietert said.=20 --- Tug of War Dynegy reasserts its claim on Enron's Northern Natural Gas pipeline. Northern Natural Gas -- Current Owner: Enron -- Proposed Owner: Dynegy -- Length: 16,500 miles -- Peak capacity: 4.3 billion cubic feet per day -- Location: Extends from Texas to Great Lakes -- Total volumes transported*: 3,139 billion British thermal units per day -- Net revenue*: $500 million -- Other business: Operates three natural-gas storage facilities and two liquefied natural-gas-storage peaking units *For nine months ended Sept. 30 Source: Northern Natural Gas; Thomson Financial/Datastream Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Secures $1.5 Billion in New Financing --- J.P. Morgan, Citigroup Pact= Is First Step; Now, Lifeline Is Sought for Trading Unit By Wall Street Journal staff reporters Mitchell Pacelle, Jathon Sapsford an= d Ann Davis 12/04/2001 The Wall Street Journal A3 (Copyright © 2001, Dow Jones & Company, Inc.) Turning to some of its largest creditors as potential saviors, Enron Corp. = secured as much as $1.5 billion in new financing from J.P. Morgan Chase & C= o. and Citigroup Inc., and was deep in negotiations for an additional lifel= ine to salvage its flagship energy-trading operations.=20 The new agreement for debtor-in-possession financing, which will rank senio= r to most of Enron's existing debt obligations, represented a critical firs= t step to keeping the company alive as it reorganizes under bankruptcy-cour= t protection. The Houston-based energy firm is laboring to devise a plan to= navigate the Chapter 11 process without being forced into a hurried liquid= ation. The developments came as the Justice Department, following a recent = similar move by the Securities and Exchange Commission, began a criminal pr= obe into Enron's dealings, a person familiar with the matter said. Enron has been negotiating with three money-center banks -- J.P. Morgan, Ci= tigroup's Salomon Smith Barney unit, and UBS AG -- for a separate deal to p= ump capital into its trading operations through a joint venture that would = likely result in one of the banks controlling a new trading company, accord= ing to people involved in the matter. A spokesman for Citigroup said, "We a= re not at this time interested in the trading business." The other banks de= clined to comment.=20 Enron's advisers consider it vital to keep alive these wholesale energy-tra= ding operations -- once considered the crown jewel of Enron -- if the compa= ny is to have any hope of continuing to operate. In recent days, trading ha= s ground almost to a halt, with the exception of trades with counterparties= who want to unwind positions. Enron yesterday laid off 4,000 people in Hou= ston -- roughly 20% of its world-wide work force of 21,000 people.=20 Late yesterday afternoon, in the company's first hearing in the U.S. Bankru= ptcy Court, Southern District of New York, Judge Arthur J. Gonzalez, who wi= ll handle the case, approved a series of routine requests by Enron lawyers = to make $48 million of payments on everything from rent at its skyscraper i= n Houston to severance for employees who will be laid off.=20 Enron's plan for bankruptcy seems to be shaping up as a multifront effort. = The company first hopes to calm the markets with its new debtor-in-possessi= on financing, then revive its crippled trading arm by putting it under the = control of a new, credible partner. Chapter 11 bankruptcy protection tempor= arily shelters a company from creditors to provide time for the company to = reorganize.=20 Once some assets are sold to generate cash, the plan is to reorganize -- or= "skinny down," one adviser said -- into a new, smaller Enron around severa= l core assets, such as its pipeline business. Enron has agreed to sell its = Portland General utility.=20 The company will have to clear a number of major hurdles. For starters, it = will have to convince creditors they stand to recover more by keeping the c= ompany operating, at least for a while, than by liquidating the company in = a fire sale.=20 According to one bankruptcy lawyer who has been contacted by several credit= ors, it isn't yet obvious to creditors "that recoveries will be higher by k= eeping the company going."=20 The list of creditors in the case, the largest bankruptcy filing ever with = more than $31 billion in reported debt and billions more in as-yet unreport= ed off-balance-sheet liabilities, runs to more than 50 pages, and the most = powerful of the bunch are expected to maneuver aggressively for control of = the official creditors' committee. All told, Enron's top 10 bank lenders ac= count for between $7.5 billion and $8.5 billion of on- and off-balance-shee= t debt, one person involved in the workout said.=20 Among those with the most exposure are J.P. Morgan, Citigroup, Deutsche Ban= k AG, Credit Suisse Group's Credit Suisse First Boston, Royal Bank of Scotl= and Group PLC and Bank of America Corp., according to a senior banker invol= ved in the workout. Some of these banks have exposure of as much as $1 bill= ion, the banker said, in a variety of loans or other forms of credit, inclu= ding both secured and unsecured. J.P. Morgan has confirmed its exposure wit= hin that range. The other banks declined to comment, citing client privileg= e.=20 "There will be jockeying between and among the bank creditors, the bondhold= ers, and the trade creditors," predicted one lawyer who has been contacted = by several clients involved in the process. The creditors who control the c= ommittee, which is expected to take as long as several weeks to be formed, = will be able to steer the creditors' positions in court.=20 As all of this is going on, the Justice Department has decided to open a cr= iminal investigation into the company, a person close to the matter said, l= eading to competition among federal attorneys' offices that want to take th= e lead. Offices in New York, San Francisco, Los Angeles and Houston have al= l expressed interest. The probe comes in addition to an SEC investigation i= nto Enron and Arthur Andersen LLP's audit work for the company.=20 House members in Washington are also gearing up for an investigation. Ken J= ohnson, a spokesman for the House Energy and Commerce Committee, said commi= ttee representatives will be briefed by the general counsel and enforcement= chief of the SEC today. Tomorrow, top officials from Arthur Andersen and t= he Financial Accounting Standards Board are meeting with committee staff in= separate venues and on Thursday, three committee investigators are headed = to Houston to speak with Enron executives. "The committee is moving aggress= ively to pinpoint what went wrong with Enron to see what if anything Congre= ss can do to make sure it doesn't happen again," Mr. Johnson said.=20 For Enron, the key to survival may well be its ability to convince creditor= s not to rush the process. One bankruptcy expert noted that creditors of Dr= exel Burnham Lambert Inc., a securities company that sought bankruptcy prot= ection a decade ago, agreed to a multiyear unwinding of assets, which led t= o higher recovery to creditors than initially expected.=20 The debtor-in-possession financing will be doled out to Enron in three inst= allments, beginning with a $250 million piece this week, which was approved= by the court yesterday. That money, which will be syndicated to other bank= lenders, will be used in part to repay some of an existing $1 billion cred= it line extended earlier by Citigroup and J.P. Morgan.=20 The new money will be secured by Enron assets, including proceeds from its = sale of the Portland General utility, and by other pipeline assets. A senio= r banker involved in the deal said despite assumptions in the market that E= nron has pledged all of its assets to raise money, the banks in this latest= round have had little problem finding available assets for further financi= ng.=20 In the court hearing, Enron's lawyers said the company has $500 million in = cash.=20 The bankruptcy filings of Enron and its affiliates reveal a dizzying array = of creditors, ranging from banks to telecommunications firms such as Level = 3 Communications Inc. and 360networks Inc. Enron's loans, in some cases, ha= ve been syndicated to as many as 100 lenders and investors.=20 As a result, the pain for banks is likely to be felt widely, but not necess= arily deeply. The hit to the top lenders with as much as $1 billion in expo= sure to Enron is likely to be a fraction of their loan portfolios, which ar= e measured in the hundreds of billions of dollars.=20 Yet while wide distribution helps limit the damage to each lender, it can m= ake the bankruptcy process even more complicated. "When you have a syndicat= ion that large, you often have large constituencies forming sometimes with = cross purposes," said Walter Einhorn, president of Sunrock Capital Corp., a= n asset-based lender with experience in workouts. "You never know who's goi= ng to upset the apple cart."=20 Another potential stumbling block to Enron's restructuring effort is the my= riad off-balance-sheet partnerships that were key to many of Enron's transa= ctions. Creditors have yet to receive a clear picture of these liabilities,= which bankers involved in the process have put at around $27 billion.=20 ---=20 Michael Schroeder and John Emshwiller contributed to this article.=20 --- Keeping the Lights On Enron is maneuvering to continue operating as it seeks to reorganize under Chapter 11 bankruptcy protection. In the latest developments: -- Enron has secured debtor-in-possession financing of $1.5 billion to fund operations while it is in Chapter 11 proceedings. -- Enron is searching for a joint-venture partner to recapitalize the=20 company's wholesale energy-trading business. -- Dynegy files suit against Enron, reasserting its claim over the Northern Natural Gas pipeline in exchange for its $1.5 billion investment; the move comes after Enron's $10 billion suit against Dynegy filed Sunday for breaching its merger agreement. -- Enron lays off about 4,000 employees mostly among its 7,500 employees in its Houston head office. The layoffs come in addition to 1,100 jobs in London cut Friday. -- Congress steps up up its probe of Enron, with House Commerce Committee staff set to meet this week with the SEC and in Houston with=20 Enron executives. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Fall of a Power Giant: Burst of Chapter 11 Filings Marks Big Year for the B= ankruptcy Bar By Richard B. Schmitt Staff Reporter of The Wall Street Journal 12/04/2001 The Wall Street Journal A10 (Copyright © 2001, Dow Jones & Company, Inc.) How many lawyers does it take to file a Chapter 11 bankruptcy-law proceedin= g?=20 In the case of Enron Corp., about 30. That's the number of attorneys New Yo= rk law firm Weil, Gotshal & Manges, Enron's bankruptcy counsel, says it had= on the case before it was filed over the weekend in federal bankruptcy cou= rt in New York. Enron's Chapter 11 filing, one of the largest in corporate history, is also= apt to be one of the most lucrative -- for lawyers representing the compan= y and those counseling its creditors, as well as an expected army of financ= ial advisers and turnaround pros.=20 The slackening economy and the burst of large Chapter 11 cases -- five of t= he 15 biggest Chapter 11s of all time have been filed this year -- have lef= t the formerly insular bankruptcy bar busier than ever and with a new cache= t. With demand growing, rates are rising, reaching $700 an hour for the top= lawyers. That is starting to put bankruptcy lawyers in the same league wit= h merger specialists and trial attorneys. The pending Chapter 11 case of PG= &E Corp.'s utility unit this spring, some experts predict, could generate l= egal and other fees topping $400 million.=20 "The phone has been jumping off the hook," said Andrew Rahl, a partner and = bankruptcy specialist at Anderson Kill & Olick in New York. Mr. Rahl says h= is firm already has been retained by one client in the Enron case, who he d= eclines to identify, and is actively negotiating with two others.=20 Besides Weil, Enron has retained New York firm Skadden, Arps, Slate, Meaghe= r & Flom as "special counsel" to represent its outside board members, among= other tasks. Heading the team: mergers specialist Peter Atkins, best known= for representing a special committee of RJR Nabisco Inc. in the $25 billio= n takeover fight celebrated in the best-selling book, "Barbarians at the Ga= te."=20 Enron's bank creditors, who hold a chunk of the company's $13 billion in de= bt, have lined up two large Wall Street firms of their own. Shearman & Ster= ling is advising longtime client Citigroup Inc.'s Citibank while J.P. Morga= n Chase & Co. has retained Davis, Polk & Wardwell, and partner Donald Berns= tein, a restructuring specialist who has represented the bank in the pendin= g Bethlehem Steel Corp. Chapter 11 proceeding, also in New York, among othe= rs. Among other major creditor firms is Boston's Bingham Dana, which has be= en retained by the structured-finance unit of General Electric Co.'s Genera= l Electric Capital Corp.=20 Litigation between Enron and its erstwhile merger partner, Dynegy Inc., is = also expected to trigger many billable hours. Dynegy, which sued Enron yest= erday, seeking the right to complete the acquisition of Enron's crown jewel= pipeline system, has retained Houston firm Baker Botts, along with Akin Gu= mp Strauss Hauer & Feld, based in Dallas and Washington. Enron, which launc= hed its own pre-emptive lawsuit in bankruptcy court on Sunday against Dyneg= y, is represented by Weil securities litigator Greg Danilow and corporate c= hief Thomas Roberts, who recently handled AMR Corp.'s acquisition of Trans = World Airlines in Delaware bankruptcy court.=20 Martin Bienenstock, Weil Gotshal's chief bankruptcy lawyer on the Enron cas= e, said rates of firm partners likely to be involved in the matter range fr= om $450 to $700 an hour. Mr. Bienenstock, who charges a $675 hourly rate, h= as recently represented holders of millions in bonds issued by Excite@Home = Corp., as well as such bankruptcy-law debtors as Ames Department Stores Inc= . and G-I Holdings Inc., an asbestos concern. With 80 bankruptcy lawyers, o= ne of the largest such law-firm practices in the country, he added, "you ca= n do a lot more." Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Fall of a Power Giant: Now Is the Time For Creditors to Vie Against Each Ot= her By Henny Sender Staff Reporter of The Wall Street Journal 12/04/2001 The Wall Street Journal A10 (Copyright © 2001, Dow Jones & Company, Inc.) Enron Corp.'s Chapter 11 bankruptcy filing marks the beginning of complicat= ed jockeying as hundreds of creditors seek to get the most they can at the = expense of other creditors.=20 Filings expected to be submitted to the court subsequent to Enron's origina= l petition Sunday will at least partially lift the veil of secrecy that has= long hovered over the company's dealings. But for now, few of Enron's many= unsecured creditors have any idea how much they can hope to recover, thank= s to Enron's complex structure and the huge liabilities that were tucked aw= ay in partnerships not consolidated onto the company's balance sheet. In its Chapter 11 filing, Enron Corp. listed $13.15 billion in debt. When c= ombined with obligations of its 13 subsidiaries also in bankruptcy proceedi= ngs, on-balance-sheet debt totals $31.24 billion. Some bankers who are invo= lved estimate the parent company has an additional $27 billion in off-balan= ce-sheet and contingent liabilities. The combined list of creditors attache= d to Enron's bankruptcy filing is 54 pages long.=20 Precisely because there are so many claims, the contesting among Enron's cr= editors is expected to be especially fierce. While bankruptcy law specifies= a clear ranking of claims -- with senior secured creditors at the top of t= he pyramid, the mass of unsecured claims beneath them and equity holders at= the bottom -- bankruptcy proceedings aren't always set in stone.=20 "Chapter 11 is the only place in the legal system where you can alter the r= ights of one creditor against another and alter the distribution of losses,= " said Stephen Case, a bankruptcy lawyer with Davis Polk Wardell in New Yor= k.=20 In coming weeks, Enron will file other legal documents that will be widely = scrutinized by creditors and potential vulture investors, who buy distresse= d debt, for information about the ultimate value of the company.=20 Until now, many distressed-debt players have been on the sidelines, citing = the impossibility of understanding Enron's business operations, the extent = of its liabilities and the possibility that its financial records contain m= isstatements beyond the restatements announced last month by Enron.=20 "Traditionally, immediately after a bankruptcy filing, a flurry of opportun= istic investors will look at the company," said Edward Tillinghast, a bankr= uptcy lawyer with Coudert Brothers in New York. "It is easier to analyze af= ter bankruptcy because so much more information becomes available."=20 "After a filing, the paper tends to get concentrated," added Mr. Case of Da= vis Polk. "Many institutional investors have to dump their securities becau= se they don't want to be seen in [or aren't allowed to hold] defaulted pape= r. So they call the vulture funds and ask them to take it off their hands."= =20 Complicating the negotiations: Claimants and creditors are a varied lot wit= h diverse interests, reflecting Enron's combination of physical and financi= al assets -- thousands and thousands of financial contracts, whose value is= uncertain and likely to be highly contentious.=20 Usually, it is the unsecured creditors who compete most intensely for a sha= re of the assets. In order to compete, the savviest creditors, such as the = distressed-debt funds, which usually acquire debt positions at discounted p= rices, engage in a variety of strategies. For instance, they may threaten s= enior classes with the specter of a long drawn-out legal battle unless conc= essions are made. Or, because each class of creditors gets to vote on any s= ettlement, one party may buy up others' claims in order to control just ove= r a third of the debt of that class -- enough to influence the entire outco= me. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Auditor Andersen Is Added To Enron 401(k) Lawsuit 12/04/2001 The Wall Street Journal A10 (Copyright © 2001, Dow Jones & Company, Inc.) HOUSTON -- A lawsuit on behalf of members of Enron Corp.'s employee-retirem= ent plan has been expanded to allege that the company's independent auditor= , Arthur Andersen LLP of Chicago, "knowingly participated in Enron's breach= es of fiduciary duty" by actively helping Enron conceal its true financial = condition and the imprudence of investing in Enron stock.=20 The amended suit, filed yesterday in federal court in Houston by the Gottes= diener Law Firm in Washington, seeks to recover $1 billion in plan losses a= s well as the return of fees paid to Andersen, which totaled $52 million in= 2000, the law firm says. At least three other lawsuits have been filed on behalf of Enron's 401(k) r= etirement plan members.=20 Enron filed for Chapter 11 bankruptcy-court protection from creditors on Su= nday.=20 "As Enron collapses, we are obviously going to have to look elsewhere to ge= t some justice for Enron employees," said Eli Gottesdiener, lead counsel fo= r the plaintiffs.=20 Spokesmen for Arthur Andersen and Enron said the companies don't comment on= pending litigation. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Stadium Jinx: What To Call Enron Field? `Enron Folds,' Maybe --- Firms That= Put Their Names On Arenas Hit Hard Times; Former Trans World Dome By Scott Thurm Staff Reporter of The Wall Street Journal 12/04/2001 The Wall Street Journal A1 (Copyright © 2001, Dow Jones & Company, Inc.) Two years ago, standing outside a half-built baseball stadium, Enron Corp. = Chairman Kenneth Lay announced that the high-flying energy giant would pay = roughly $100 million over 30 years to put its name on the new home of the H= ouston Astros.=20 That was well before fatal questions arose about Enron's questionable finan= ces. But after that, Enron never had a chance. It was destined to join Frui= t of the Loom Inc., Trans World Airlines, PSINet Inc. and others that spira= led downward after emblazoning their brand names on sports stadiums. It's a= s if putting a corporate name on a stadium is an act of such hubris that th= e sports gods demand retribution. For Fruit of the Loom, that meant filing for Chapter 11 bankruptcy protecti= on in 1999, three years after putting its Pro Player athletic-wear label on= Miami's football and baseball stadium. TWA took down its shingle from the = home of football's St. Louis Rams earlier this year, after being acquired o= ut of bankruptcy by American Airlines. And PSINet, a new-economy telecom fi= rm that agreed in 1999 to pay more than $100 million over 20 years for nami= ng rights to the Baltimore Ravens' new football stadium, filed for bankrupt= cy protection in June.=20 Call it the stadium-naming jinx. "As soon as you put your name on something= , you might as well go to the lawyers and draw up the bankruptcy petition,"= jokes Paul Swangard, managing director of the Warsaw Sports Marketing Cent= er at the University of Oregon.=20 Shares of 3Com Corp., the maker of computer-networking equipment, were trad= ing at $39.50 on Sept. 7, 1995, when it agreed to pay $1 million a year to = put its name on San Francisco's windswept Candlestick Park, generating howl= s of local protest. Six years, several corporate reorganizations and one te= ch downturn later, 3Com last month said it had had enough and told football= 's San Francisco 49ers it didn't want to renew. 3Com shares closed at $4.66= in 4 p.m. Nasdaq Stock Market trading yesterday.=20 Compaq Computer Corp. doubled down on stadiums, attaching its name to indoo= r arenas in Houston, its hometown, and in San Jose, Calif. Now, Compaq is s= truggling to sell itself to Hewlett-Packard Co. Edison International, namer= of the Anaheim Angels' Edison Field, saw its Southern California Edison Co= . unit flirt with bankruptcy after California deregulated its electricity m= arket. Most recently, ANC Rental Corp., parent of National Car Rental, file= d for bankruptcy protection on Nov. 13, raising questions about the home of= hockey's Florida Panthers.=20 The hex is fodder for sports fans from the boardroom to the bleachers. "Wil= l it create some kind of stigma, and will people ask about it? Yes," says R= ichard Sherwood, president of Front Row Marketing Services, in Newtown, Pa.= , which works on stadium-naming deals.=20 In Baltimore, many fans had never heard of PSINet before its name was affix= ed, in big purple letters, to the Ravens' stadium. PSINet's bankruptcy fili= ng is "an embarrassment and predictable result of the shortsighted greed of= ownership," says attorney and football fan Neil Brafman. He suggests renam= ing the ballpark "Creditors' Committee Stadium." In Houston, longtime Astro= season-ticket holder Steve Cross proposes that Enron Field be renamed "Enr= on Folds."=20 "That way you'd only have to change a couple of letters," says the 58-year-= old financial adviser.=20 On-the-field success is no antidote. The Astros won their division this yea= r. The Ravens won the Super Bowl in January, as PSINet was sliding toward b= ankruptcy. Their predecessors as NFL champs were the Rams, playing under TW= A's soon-to-be-gone logo. "Maybe I should run a regression to see if I shou= ld bet the team and short the company," says New York hedge-fund manager Se= th Tobias. Mr. Tobias says he likes just two of the stadium-namers as stock= s: Qualcomm Corp. and FedEx Corp.=20 In August 2000, once-high-flying Internet incubator CMGI Inc. agreed to pay= football's New England Patriots more than $114 million over 15 years to pu= t its name on the Patriots' new stadium in Foxboro, Mass. Watching the new = stadium rise in the distance while attending a Patriots game earlier this y= ear, Mr. Tobias says he wondered to himself whether CMGI would still exist = by the time the new stadium opens next August. CMGI had a net loss of $5.4 = billion for the fiscal year ended July 31. Its shares, listed on the Nasdaq= Stock Market, have fallen from $150 in early 2000 to $1.90 yesterday.=20 Stadiums have carried corporate monikers ever since men such as William Wri= gley and August Busch put their names on stadiums used by teams they owned.= But the commercial name-game really started in 1973, when Rich Foods paid = $1.5 million to put its name on the home of football's Buffalo Bills for 25= years. It was another 15 years before Atlantic Richfield Co. and Great Wes= tern Financial Corp. put their names on basketball arenas in Sacramento, Ca= lif., and Los Angeles in 1988. Now, there are 62 major-league stadiums spor= ting the names of companies, which have agreed to pay a collective $3.4 bil= lion for the privilege, over as long as 30 years, according to Dean Bonham,= a naming-rights consultant in Denver.=20 As the deals have multiplied, the jinx has spread. Beyond bankruptcies and = other brushes with death, corporate stadium-namers are frequent takeover ta= rgets. Arco, for example, was acquired by BP PLC last year. Pacific Telesis= , parent of Pacific Bell, agreed to be acquired by SBC Communications the d= ay before it announced a $50 million naming-rights deal with the San Franci= sco Giants in 1996. Shawmut National Corp. paid to put its name on a new in= door arena in Boston in 1993, but the company was acquired by FleetBoston F= inancial Corp. before a single game was played. The Philadelphia arena form= erly known as the CoreStates Center morphed into the First Union Center and= will become the Wachovia Center as soon as next summer.=20 The deteriorating financial health of airlines imperils naming deals at six= indoor arenas. The former chief executive of UAL Corp., whose United Airli= nes unit named the arena in Chicago, raised the prospect of filing for bank= ruptcy next year. Some analysts believe the parent of America West Airlines= , namer of the arena in Phoenix, may have to file sooner, if it doesn't get= requested government aid.=20 Not every naming-rights deal leads inexorably to a company's demise. Genera= l Motors Corp. (whose name graces the arena of hockey's Vancouver Canucks) = and PepsiCo Inc. (the Denver Nuggets and Colorado Avalanche) are in no dang= er of disappearing. (Of course, the same would have been said about Enron a= few months ago.) Those who pay the big bucks believe they are getting thei= r money's worth for stadium deals, through improved name recognition and an= association with active lifestyles.=20 "It provided a unique branding opportunity that only comes around every so = often," says Robert Waldrop, senior vice president of communications at Rel= iant Resources Inc., another Houston energy firm. Reliant last year agreed = to pay roughly $300 million over 32 years to put its name on a football sta= dium for the Houston Texans, who will begin play next year, and adjacent li= vestock show and convention center. Mr. Waldrop says it would be "a real lo= ng stretch" to associate Enron's woes with its stadium-naming deal.=20 Consultants say the deals are particularly useful for companies that are no= t household names, such as European electronics giants Telefon AB L.M. Eric= sson and Koninklijke Philips Electronics NV. Philips uses part of the Atlan= ta arena that it named as a showcase for its products.=20 Still, consultants say prices for stadium-naming deals are drifting lower, = because of the weak economy and the disappearance of Internet firms, many o= f which were active bidders. More than a dozen U.S. stadiums and arenas are= seeking sponsors, including the Superdome in New Orleans, home to February= 's Super Bowl, Comiskey Park in Chicago, and the former Trans World Dome in= St. Louis. Wayne Huizenga, who owns the Dolphins and Pro Player Stadium, h= as been seeking a replacement sponsor for more than a year.=20 Some companies say they've learned to shy away. "It's very expensive," says= Kristin Schroer, a spokeswoman for Southwest Airlines, one of the few majo= r airlines that doesn't have its name on an arena. "We would rather be able= to charge our passengers lower fares so they can afford to fly to games an= d still have money in their pocket to buy a foam finger or eat out."=20 --- The Stadium Jinx What happened to the stock prices of companies that paid to have their names on sports stadiums. Year Cost of Stock Current Stock of Deal Price Stock Price Deal in at Price Loss Stadium City millions Deal Since PSINet Baltimore '99 $100 $51 $0.01* -100% Stadium plus Trans World St. Louis '95 26 12 0.04* -100 Dome Pro Player Miami '96 20 35 0.28* -99 Stadium Enron Field Houston '99 100 36 0.40 -99 CMGI Field Foxboro, '00 114 45 1.90 -96 Mass. Savvis St. Louis '00 72** 9 0.68 -92 Center 3Com Park San '95 7 40 4.66 -88 Francisco Conseco Indiana- '98 40 30 3.90 -87 Fieldhouse polis America West Phoenix '89 26 10 2.49 -75 Arena Amer. Miami '97 42 72 20.94 -71 Airlines Arena *Stock has been delisted and no longer trades on a major exchange. **Includes Savvis stock valued at $7.3 million at time of deal, and now worth $510,000. Sources: WSJ research, WSJ Market Data Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 World Stock Markets As KPN Prepares to Sell New Shares, Investors Remain Lukewarm Toward Dutch = Telecom Firm By Wall Street Journal staff reporter Silvia Ascarelli in London and Toby S= terling of Dow Jones Newswires 12/04/2001 The Wall Street Journal C11 (Copyright © 2001, Dow Jones & Company, Inc.) As KPN NV mounts its final push to sell five billion euros in new shares, i= nvestors remain lukewarm toward putting fresh cash in the Dutch telecom gro= up.=20 The offering, one of the biggest European share sales this year, will help = KPN cut a 22.3 billion euro pile of debt that earlier this year threatened = the company's survival. Investors also say they are pleased by the cost-cut= ting moves KPN is planning in conjunction with the offering. Yet even with KPN's share price already down 25% from the evening before th= e share sale was announced, some investors say it's still not low enough. K= PN closed at 4.94 euros yesterday, down from 6.6 euros on Nov. 19. Investor= s also want more information on how KPN intends to grow. One question mark = is whether the jump in margins at E-Plus, KPN's problematic German mobile u= nit, is sustainable.=20 The offering is "certainly a solution," said Susan Smith, head of the Europ= ean desk at M&G Investment Management Ltd., the investment arm of Prudentia= l PLC. "Do we find any value? Not in the equity, but as bondholders we're q= uite happy."=20 The first official indication of investor interest is expected early tomorr= ow, about 12 hours after the deadline passes for current shareholders to ex= ercise their rights to acquire more shares. Unlike a traditional European s= hare rights offering, however, these rights can't be traded. That structure= has helped keep hedge funds from selling shares in hopes of buying them at= a lower price.=20 The Dutch government has already committed itself to buying 34.7% of the ne= w shares, and a syndicate of banks have promised to buy the remaining 65.3%= shares at 2.75 euros, about half the current share price.=20 Some professional money-managers are expected to seek shares this way. But = others, including U.S. investors, who can't participate in the rights porti= on, are expected to wait until afterward. They have until Thursday evening = to order shares but, unlike with the rights issue, can specify at what pric= e they're willing to buy. Many aren't expected to place their orders before= Thursday.=20 "If you're a recent investor, you may well want to take up your full rights= ," said an asset manager at a major Dutch pension fund. "But if you purchas= ed shares in the last offering [in November 2000], at 17 euros, you're not = going to be eager to buy more KPN shares."=20 The share offering nonetheless comes at a time when investors are turning m= ore positive toward the telecom sector in general after shunning it for mor= e than a year. Finland's Sonera Corp., another heavily indebted telecom gro= up, raised one billion euros through a heavily discounted rights issue to e= xisting shareholders last month.=20 The mood has soured somewhat in recent days, hurt by signs that the U.S. ec= onomy won't recover as quickly as investors had been hoping. The collapse o= f Enron Corp. also has refocused investor attention on credit risk.=20 Investors note that it's particularly difficult to estimate KPN's fair valu= e because its heavy debt load means a small change in financial assumptions= about the company can create a big change in the valuation.=20 "We like telecoms as a house, and we think they should be overweighted" in = a portfolio, says Alia Baig, a London-based European portfolio manager at A= XA Investment Managers, which has GBP 160 billion in assets under managemen= t. "Individually we're very particular about what stocks we do like, and we= tend to prefer mobile [operators] over fixed-line [operators]."=20 KPN isn't a "must-own" stock, she said and she doesn't intend to exercise h= er rights. She predicts the final share price won't be above four euros and= says the price would have to be between three euros and 3.50 euros to be i= nterested. "That's just to reflect the risk in the turnaround and that ther= e's new management."=20 But Joost Eijsink, an asset manager at Dutch investment bank Eureffect, pre= dicted that while selling pressure will increase throughout the week, most = of the fall in the share price has already occurred.=20 "Last week there was a lot of optimism over the issue price, with a lot of = people seeing it somewhere between five euros and 5.50 euros," he said. "Pe= ople were maybe a little too positive."=20 Mr. Eijsink said funds the firm manages are likely to subscribe to the issu= e. But its advice to other clients will vary.=20 ---=20 Yesterday's Market Activity=20 Asian markets were mixed as Taiwanese stocks soared after the weekend parli= amentary elections and Tokyo stocks fell sharply. European shares were gene= rally lower, while Brazilian and Argentine shares jumped after Buenos Aires= introduced a series of capital controls. Overall, the Dow Jones World Stoc= k Index fell 1.56 points, or 0.90%, to 172.27. Excluding the U.S., the inde= x dropped 1.17 points, or 0.95%, to 121.59.=20 In TOKYO, the Nikkei Stock Average dropped 3.1%, or 326.82 points, to 10370= .62, its lowest close since Nov. 14. Credit-risk concerns prompted by Enron= 's collapse and a stronger yen unleashed selling in major banks and high-te= ch heavyweights. UFJ Holdings ended down 9.8% at 367,000 yen, while Sumitom= o Mitsui Banking lost 4.9% to 637 yen. Baby clothes wholesaler Kimuratan pl= unged 25% to 89 yen, and baby-care-goods maker Pigeon dropped 19% to 1,270 = yen. Baby-related stocks had been soaring following news of the Princess's = pregnancy but investors have begun selling ahead of her delivery.=20 In TAIPEI, the Weighted Price Index rose 4.6%, or 205.49 points, to 4646.61= following stronger-than-expected gains in the legislature for the Democrat= ic Progressive Party of President Chen Shui-bia. Stocks also got a boost fr= om Taiwan Semiconductor Manufacturing Co., the world's biggest contract chi= p maker, which forecast a sharp jump in fourth-quarter net profit. Its shar= es, which comprise a large part of the benchmark index, rose 6.2% to 77.50 = New Taiwan dollars.=20 In LONDON, the FTSE 100 Index closed down 0.7%, or 39.0 points, to 5164.6. = Banking stocks suffered on concerns over loan defaults stemming from the En= ron situation. Royal Bank of Scotland fell 34 pence, or 2.0%, to GBP 13.91 = following weekend news reports that it has a GBP 600 million exposure to En= ron. Enron also said Barclays was the largest unsecured creditor for one of= its divisions, Enron North America Corp., with a claim of $126.1 million. = Shares in Barclays fell 62 pence, or 2.8%, to GBP 20.88.=20 In BUENOS AIRES, the Merval Index closed 6.1%, or 12.30 points, higher at 2= 14.75. Over the weekend Economy Minister Domingo Cavallo announced a series= of capital controls to stem a run on banking deposits. The measures are al= so aimed at increasing transparency and government tax collections and maki= ng it necessary for more Argentines to hold checking or savings accounts. S= hares in Galicia, the country's largest private bank, jumped around 19% to = 47.9 centavos.=20 --- MSCI Indexes % FROM Nov. 30 Nov. 29 12-00 U.S. ........... 1079.0 1079.6 -13.7 Britain ........ 1582.1 1579.5 -14.1 Canada ......... 937.6 933.8 -18.9 Japan .......... 655.2 651.3 -18.9 France ......... 1485.2 1471.6 -21.9 Germany ........ 636.9 629.2 -22.1 Hong Kong ...... 5765.4 5676.6 -25.0 Switzerland .... 790.8 796.9 -22.2 Australia ...... 672.5 668.0 +5.1 World Index .... 997.9 992.7 -18.3 EAFE MSCI-p .... 1148.4 1134.4 -23.1 As calculated by Morgan Stanley Capital International Perspective, Geneva. Each index, calculated in local currencies, is based on the close of 1969 equaling 100. p-Preliminary. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Small-Stock Focus: Genesis Energy, Valentis Plummet, As Small-Cap Stocks Fa= ll Slightly By Larry Bauman Dow Jones Newswires 12/04/2001 The Wall Street Journal C6 (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -- Small-capitalization stocks fell moderately in unusually light = trading, though the group managed to retrace about a quarter of its intrada= y losses.=20 The overall Nasdaq market ended in negative territory, although the Nasdaq = Composite Index of both small and large stocks did close above its session = lows. The small-cap market was weighed down by the weakness of financial stocks, = which fell on concerns about the extent to which banks and financial-servic= es companies were exposed to the collapse of Enron, which filed for Chapter= 11 bankruptcy protection. Financial stocks make up the second-largest indu= stry group in the Russell 2000 small-stock index, following technology.=20 The Russell 2000 fell 3.75, or 0.81%, to 457.03, after posting an intraday = decline of 5.27, and the Nasdaq composite, at 1904.90, fell 25.68, or 1.33%= .=20 Investors "are concerned the economy will weaken," said David Wabnik, senio= r portfolio manager at Brinson Partners. "They're still concerned that four= th-quarter earnings and revenue numbers will be weaker than expected."=20 Genesis Energy (Amex), a Houston company plummeted $2.33, or 48%, to $2.57.= The company said its potential exposure to Enron is about $21 million unde= r a delivery contract. Genesis said that if Enron is unable to pay, Genesis= may default on its debt instruments and it may have to suspend its distrib= ution operations. The company also said it may also default under its maste= r credit-support agreement with Salomon Smith Barney and its working capita= l facility if Enron doesn't meet its obligations.=20 Valentis, a Burlingame, Calif., biotechnology company, sank 1.43, or 35%, t= o 2.67. The company said it would end development of an experimental cancer= drug following disappointing clinical-trial results. Valentis said final a= nalysis of the study failed to confirm interim results that suggested the d= rug, IL-2 GeneMedicine, used in conjunction with chemotherapy, halted the s= pread of the disease in patients with late-stage head and neck cancer.=20 PentaStar Communications tumbled 1.98, or 22%, to 7.10. The Denver communic= ations-services agent said its agency contract with Verizon Communications = won't be renewed March 1 because of Verizon's continuing efforts to reduce = costs related to its authorized-agent program. PentaStar, a Verizon agent i= n the Northeast, said its relationship with the telecommunications company = contributed $6.1 million, or 25%, of its $24.2 million in revenue for the n= ine months ended Sept. 30.=20 Avici Systems fell 28 cents, or 9.8%, to 2.57 after the North Billerica, Ma= ss., telecommunications company said it reduced its work force by 12%, or 4= 0 employees.=20 On Technology, a Waltham, Mass., developer of groupware applications and wo= rkgroup-utility software for local area networks, surged 1, or 50%, to 3. T= he company said its ON Command CCM system was selected by Home Depot to man= age its world-wide network of more than 150,000 retail workstations. Financ= ial terms of the deal weren't disclosed.=20 Keith Cos. jumped 1.66, or 19%, to 10.20. The Costa Mesa, Calif., engineeri= ng and consulting company said it acquired closely held Universal Energy an= d as a result raised its 2002 expectations. Keith said it expects to earn 8= 0 cents to 92 cents a share in 2002, an increase of 10 to 14 cents a share = from previous forecasts, and it expects revenue of $82 million to $88 milli= on, $11 million to $12 million above earlier predictions. The company said = its fourth-quarter outlook remains unchanged.=20 In the latest issue of Barron's, Scott Black of Delphi Management said he e= xpects the share prices of Parlex and Peak International will rise substant= ially during the next year. Parlex, a Methuen, Mass., designer of flexible = interconnect products, climbed 1.65, or 15%, to 12.40. Peak International, = a Fremont, Calif., maker of engineered transport products, gained 75 cents,= or 14%, to 6.31.=20 C-COR.net, a State College, Pa., broadband-services company, added 1.24, or= 13%, to 10.88. The company narrowed its projected second-quarter loss fore= cast, and said its sales will be 10% higher than expected.=20 Aviron rose 4.37, or 12%, to 41.42 after the Mountain View, Calif., biophar= maceuticals company agreed to be acquired by MedImmune in a stock swap valu= ed at roughly $1.29 billion. MedImmune said that with the acquisition it wi= ll gain Aviron's FluMist developmental product, a nasal-spray influenza vac= cine.=20 Merit Medical Systems was up 1.13, or 7.7%, to 15.80. Roth Capital initiate= d coverage of the South Jordan, Utah, medical-device company with a buy rat= ing and a $20 price target. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Credit Markets Treasurys Manage Modest Gains Despite Reports Suggesting That Economy Could= Be Rebounding By Michael S. Derby Dow Jones Newswires 12/04/2001 The Wall Street Journal C12 (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -- Treasurys eked out modest gains as the impact of falling stock = prices offset a stronger-than-expected report on the manufacturing sector.= =20 But the increases came on light volume as most people in the market settled= down to wait for a much anticipated Labor Department report on labor condi= tions in November, to be released Friday. At 4 p.m., the benchmark 10-year Treasury note was up 8/32 point, or $2.50 = per $1,000 face value, at 102 10/32. Its yield fell to 4.699% from 4.732% F= riday, as yields move inversely to prices.=20 The 30-year Treasury bond's price was up 4/32 point at 101 27/32 to yield 5= .250%, down from 5.259% Friday.=20 "I would have thought we would have had more of a selloff, but a lot of oth= er things came in to support the market," said David Coard, head of fixed-i= ncome sales at the William Capital Group, in New York.=20 Declines in equities were instrumental to gains in Treasurys, Mr. Coard sai= d. The Dow Jones Industrial Average fell 87.60 points to 9763.96. When stoc= ks fall, traders may bid up prices of Treasurys in anticipation of investor= s shifting money to the relative safety of government bonds.=20 But early in the session, Treasurys retreated some after the National Assoc= iation of Purchasing Management said its manufacturing index stood at 44.5 = for November, compared with economists' expectations of 42.6. That followed= a very weak 39.8 reported for October.=20 An index above 50 indicates expansion of activity in the manufacturing sect= or, while under 50 denotes contraction.=20 Separately, the Commerce Department said personal-consumption spending rose= 2.9% in October, while personal income was virtually unchanged. The increa= se in spending was the largest since 1959, when the series began.=20 The data were a "one-two-three punch," suggesting the economy could be gett= ing back on its feet, said Richard Yamarone, economist at Argus Research in= New York. He said the NAPM report's forward-looking components "suggest ma= nufacturing could be recovering as soon as December . . . the hemorrhaging = may have stopped."=20 But some investors were looking ahead to events later in the week. "There i= s a lot of data still ahead of us, and people are reluctant to make trad
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