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Enron Mail |
EnronOnline Competitor Reports Record Trading Volumes
Dow Jones Energy Service, 11/13/01 Fitch Dwngr Portland General Electric; On Rtg Watch Evolving Business Wire, 11/13/01 USA: Enron chief could walk away with $80 million. Reuters English News Service, 11/13/01 US Spot Coal:Prices Drift Lower On Slack Demand, Enron Dow Jones Energy Service, 11/13/01 Dynegy Deal Sets Path Of Resolution For Enron - Analyst Dow Jones News Service, 11/13/01 Enron Corp. to Hold Conference Call and Webcast to Provide Investor Update PR Newswire, 11/13/01 UK: Enron Metals say business normal, no changes seen. Reuters English News Service, 11/13/01 INTERVIEW: Dynegy To Continue Asset Push In Europe Dow Jones Energy Service, 11/13/01 S&P Lowers Rtg on Enron-Related Synthetic Obligations Business Wire, 11/13/01 UK: INTERVIEW-U.S. Dynegy still hungry for assets in Europe. Reuters English News Service, 11/13/01 Help Wanted: Enron Trader Resumes Hit The Streets Dow Jones Energy Service, 11/13/01 USA: ICE sets record energy, metals trade volume. Reuters English News Service, 11/13/01 UK: Dynegy sees no problem for BG Storage deal. Reuters English News Service, 11/13/01 Enron Direct and the Alberta Urban Municipalities Association ("AUMA") Seal= a Natural Gas Supply Deal Canada NewsWire, 11/13/01 Enron CEO May Get at Least $60.6 Million After Buyout (Update6) Bloomberg, 11/13/01 Dynegy Saved Enron Merger With Last Minute Pact (Update1) Bloomberg, 11/13/01 Enron Corp. Raised to `Maintain Position' at Edward Jones Bloomberg, 11/13/01 Lemon Laws Won't Save Dynegy RealMoney.com, 11/13/01 Dynegy asked FERC to revise regs=20 CBSMarketWatch.com, 11/13/01 Compaq, Continental Eliminate Jobs, Houston Feels the Pain Bloomberg, 11/13/01 EnronOnline Competitor Reports Record Trading Volumes 11/13/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- IntercontinentalExchange, an Internet-based energy a= nd metals trading operation, saw record trading volumes last week, due in p= art to troubles at Enron Corp. (ENE), an ICE press release said Tuesday, wi= thout mentioning Enron by name.=20 Investors have been watching to see if Enron's trading partners in its core= business - North American gas and power marketing - significantly reduce a= ctivities with the financially troubled top energy marketer. ICE is conside= red a primary alternative to Enron's Internet-based commodities market, Enr= onOnline. ICE's volume of North American bulk power trades last week totaled a record= 54 million megawatt-hours, a 34% increase over the October weekly average.= North American natural gas volumes rose 13% from October to 950 billion cu= bic feet last week. Oil trading rose 45% to a record 55 million barrels, an= d metals trading volumes was up 66%.=20 "We believe that this has resulted, in part, from the uncertainty that has = been exhibited in several key energy trading venues over the pas several mo= nths," said ICE chief executive, Jeffry Sprecher.=20 EnronOnline is different from ICE because EnronOnline is a mechanism for co= mpanies to buy from, and sell to, Enron. ICE is a neutral multiparty exchan= ge, allowing energy trading companies to trade with all other members.=20 ICE's trading system, which has been installed in 7,000 desktops worldwide,= covers 600 commodity and derivative contract types. ICE also owns the Inte= rnational Petroleum Exchange of London, Europe's largest energy futures exc= hange.=20 ICE is owned by companies including American Electric Power (AEP), Aquila E= nergy (ILA), BP Amoco PLC (BP), Deutshe Bank AG (G.DBK), El Paso Corp. (EPG= ), Goldman Sachs Group (GS), Morgan Stanley Dean Witter & Co. (MWD), Relian= t Energy (REI), Royal Dutch/Shell Group (RD), Societe General SA (F.SGF), M= irant Corp. (MIR) and TotalFina Elf SA (TOT).=20 -By Mark Golden, Dow Jones Newswires; 201-938-4604; mark.golden@dowjones.co= m Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Fitch Dwngr Portland General Electric; On Rtg Watch Evolving 11/13/2001 Business Wire (Copyright © 2001, Business Wire) NEW YORK--(BUSINESS WIRE)--Nov. 13, 2001--Fitch has lowered Portland Genera= l Electric Co.'s (PGE) securities as follows: senior secured debt to 'BBB+'= from 'A'; senior unsecured debt to 'BBB' from 'A-'; preferred stock to 'BB= B-' from 'BBB+'. The Rating Watch status has been revised to Evolving from = Negative for all intermediate- to long-term securities. A Rating Watch Evol= ving means the ratings may be raised, lowered or maintained. PGE's commerci= al paper has been downgraded to 'F2' from 'F1', with a Stable Outlook.=20 The downgrades for PGE reflect substantial ongoing uncertainty at its paren= t, Enron (ENE). ENE's senior unsecured debt is rated 'BBB-', with a Rating = Watch Evolving. ENE's financial flexibility has been severely impaired as a= result of recent developments primarily surrounding its investment in stru= ctured transactions. On Oct. 16, 2001, ENE announced a $1 billion after tax= charge to third quarter 2001 earnings and a $1.2 billion reduction to bala= nce sheet equity relating to the unwinding of structured transactions. In a= ddition, the company has restated its financial results for the 1997-2000 p= eriod, incorporating off-balance sheet entries related to the structured tr= ansactions and is the subject of a Securities and Exchange Commission (SEC)= investigation focusing on the company's accounting for the partnerships. These events badly eroded investor confidence in the company, effectively b= locking its ability to access capital markets, and forcing management to se= ek a corporate suitor. On Nov. 9, 2001, Dynegy (DYN) announced that it reac= hed a definitive agreement to acquire ENE in a stock-for-stock transaction = under which ENE shareholders will receive a fixed amount of DYN shares. The= proposed DYN transaction will provide significant financial support to ENE= , and should enable ENE to fund its cash needs through the first quarter of= 2002 under expected business conditions, despite ENE's significant refinan= cing risk. The merger requires regulatory approvals, including Hart-Scott-R= odino, the SEC, and the Federal Regulatory Energy Commission; assuming regu= lators approve the merger, we would expect the transaction to close in six-= to nine-months. The merger agreement includes termination provisions that = add an element of uncertainty to its completion. Fitch anticipates that the= surviving company's rating would move to the mid-'BBB' range assuming the = successful execution of its interim plans to delever its capital structure = and the completion of the merger. If the merger were terminated Fitch belie= ves ENE's ability to manage its business would be severely impaired and wou= ld expect to downgrade its securities to highly speculative levels.=20 PGE's new ratings also recognize its strong standalone credit profile, the = prospective regulatory ring-fencing required by Oregon regulators, and the = pending sale of PGE to Northwestern Natural Gas (NWN), in addition to its i= nterim status as a subsidiary of ENE. The Evolving status for PGE recognize= s that its ratings could drop if the ENE/DYN merger were terminated, or imp= rove, if ENE's credit rating is upgraded in the future.=20 PGE's credit quality ratios and financial strength are expected to temporar= ily weaken in 2001, reflecting the absence of cash recovery of unusually hi= gh wholesale power costs. In August 2001, the Oregon Public Utility Commiss= ion (OPUC) authorized higher PGE rates, effective October 1, 2001, to recov= er such costs. Importantly, the commission order adopted a power cost adjus= tment mechanism that will allow the company to pass through the lion's shar= e of its power procurement costs to customers on a timely basis in the futu= re. The cash recovery of power procurement costs allowed in the OPUC order,= combined with declining wholesale power procurement costs over the balance= of this year should alleviate financial pressure at PGE and facilitate imp= roving credit measures in 2002.=20 The PGE ratings consider Fitch's assessment of NWN's acquisition funding pl= an and the anticipated post-merger holding company structure. NWN recently = announced an agreement to acquire PGE from ENE in a transaction valued at $= 2.9 billion, including the assumption of $1.1 billion of PGE debt. The tran= saction is expected to close by the end of 2002 and requires several regula= tory approvals, including the SEC, the OPUC, and the Washington Utilities a= nd Transportation Commission. As part of the transaction, NWN expects to fo= rm a new holding company (HoldCo), which will raise the new debt and equity= required to complete the purchase of PGE. Post-merger, PGE and NWN will op= erate as wholly owned first tier subsidiaries of HoldCo. As currently conte= mplated, the approximate $1.8 billion cash portion will be funded at HoldCo= with approximately 78% debt and 22% common equity and hybrid convertible p= referred stock. As a result, HoldCo's consolidated and individual credit me= asures are expected to be relatively weak, as consolidated debt to capitali= zation could reach 75% at closing.=20 PGE's ultimate post-merger ratings will depend on several factors, includin= g, the ability to gain operating synergies from its affiliation with NWN, t= he credit ratings Fitch assigns to HoldCo, and the structural protections p= rovided PGE investors by state utility regulators. The current regulatory r= ing-fencing applied by the OPUC requires PGE to maintain a 48% common equit= y ratio, thereby limiting the amount of cash PGE can dividend up to its par= ent company. It is expected that similar ring-fencing from the OPUC will co= ntinue under the new HoldCo structure. CONTACT: Fitch, New York Philip Smyth, 1-212/908-0531 Ralph Pellecchia, 1-2= 12/908-0586=20 15:54 EST NOVEMBER 13, 2001=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Enron chief could walk away with $80 million. 11/13/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Nov 13 (Reuters) - Enron Corp.'s top executive could walk away wi= th more than $80 million if the acquisition of the financially troubled ene= rgy trader by its smaller rival Dynegy Corp. closes this year, according to= an Enron filing with the Securities and Exchange Commission.=20 Under the terms of his employment, Enron Chairman and Chief Executive Ken L= ay will receive $20.2 million annually through 2005 for each full calendar = year following the close of the Dynegy deal or any material change in contr= ol of Enron. If the Dynegy takeover closes this year, he will receive four such payments= starting in 2002; if the transaction closes next year, he will receive thr= ee of the payments, starting in 2003.=20 According to Lay's contract, the company would also pay his taxes if the an= nual payments were deemed to be an "excess parachute payment" for income ta= x purposes.=20 Lay reassumed the posts of president and chief executive in August followin= g the resignation of Jeffrey Skilling. His Enron contract expires on Dec. 3= 1, 2005.=20 Lay is considered by many as the visionary who presided over Enron's growth= from a medium-sized natural gas pipeline company, created in 1986 in the m= erger of Houston Natural Gas and InterNorth, to the world's largest and mos= t innovative energy trader.=20 Enron's market capitalization has fallen almost $19 billion in just the the= past month as investor confidence has waned amid a regulatory probe of off= -balance-sheet transactions.=20 Dynegy has agreed to acquire Enron in a stock swap worth some $9 billion, a= fraction of what Enron was worth a year ago.=20 Shares of Enron were up 43 cents, or 4.65 percent, at $9.67 in afternoon tr= ade on the New York Stock Exchange. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 US Spot Coal:Prices Drift Lower On Slack Demand, Enron 11/13/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- Coal prices continued to drift lower last week, as t= rading was slowed by Enron Corp's (ENE) much publicized financial woes, tra= ders and brokers said Monday.=20 Market participants also said trading was slowed by mild weather, which has= kept utility stockpiles higher than usual in the East. Prices have slackened due to the lack of demand. The over-the-counter price= for Central Appalachian coal, with a heat rate of 12,000 British thermal u= nits, has slipped more than $6 a ton since it peaked at $42.75 a ton in Aug= ust.=20 "A lot of emotion went into the run up, and now reality is factoring in," a= trader said. "The East is finding its floor."=20 In the West, the price of Powder River Basin coals with heat rates of 8,800= BTU and 8,400 BTU remained mostly unchanged in very thin trade.=20 On the New York Mercantile Exchange, the price of the December contract set= tled at $31.50 a ton Monday. Open interest was 25, down from 54 on Nov. 5, = when the contract settled at $33.75 a ton.=20 "Nymex coal is cheap, but no one is buying," one market watcher said.=20 Another coal trader attributed the inactivity to companies' unwillingness t= o do business with Enron, the energy giant which saw its credit ratings dow= ngraded to the lowest investment-grade level last week.=20 "You take a big market-maker out, and it's bound to have an effect," he sai= d.=20 In the East, Central Appalachian barges for calendar year 2002 slid 50 cent= s to $31.75 a ton free on board from last week's level. Five barges for del= ivery in calendar year 2003 traded at $31.50 a ton FOB Monday.=20 Five barges traded at $31.50 a ton FOB for December delivery to the Big San= dy River, losing 50 cents.=20 Rail deliveries were pegged between $36 and $38 a ton FOB. No deals were co= nfirmed.=20 In the West, Powder River Basin coal with a heat rate of 8,800 BTU traded o= n Wednesday at $7.25 a ton for prompt delivery, down 30 cents. Other PRB pr= ices were steady. Deals for calendar year 2002 were done between $8.10 and = $8.15 a ton, unchanged from last week.=20 PRB 8,400 BTU for delivery in calendar year 2002 traded at $6.45 a ton, but= traders said very few deals were done.=20 According to the Energy Information Agency, total U.S. coal production thro= ugh Nov. 3, the latest date for which figures were available, ticked upward= by 4% over the comparable week of 2000 to 22.7 million tons.=20 Appalachian coal production, year to date, was 1.9% ahead of last year. Tot= al Appalachian production in 2001 is 365,211 tons, up from 358,356 tons in = the same period last year.=20 U.S. Western coal production year to date remains steady at 6.4% ahead of 2= 000 figures. EIA reports total western coal production through Nov. 3 at 45= 8,068 tons, up from 430,636 tons in the year-earlier period.=20 Railcar loadings through Nov. 3 were 5% higher than comparable 2000 figures= , according the EIA.=20 U.S. Spot Coal Prices=20 Deals done in Nov Dollars/ton;Averages not Volume Weighted=20 4Q'01 1Q'02 CAL 2002=20 Central Appalachia Low Sulfur=20 F.O.B. Barge $30.00-31.50 $31.50-32.00 $31.00-31.75=20 Average/Change 30.75/-1.15 31.75/-0.37 31.37/-1.13=20 F.O.B. Rail $36.00-38.00 N/A $36.00-38.00=20 Average/Change 37.00/ 0.00 N/A 37.00/ 0.00=20 Powder River Basin=20 8400 B.T.U. $5.75-6.00 $6.45-6.60 $6.35-6.45=20 Average/Change 5.85/ 0.00 6.50/ 0.00 6.40/ 0.00=20 8800 B.T.U. $7.00-7.50 $8.10-8.25 $8.10-8.25=20 Average/Change 7.25/-0.25 ' 8.12/-0.13 8.12/-0.03=20 Note to U.S. spot coal prices:=20 Prices are dollars per short ton, based on actual deals done during the mon= th for the delivery period indicated.=20 Averages are straight mathematical averages and aren't volume weighted.=20 Change is from the average of deals done in the previous month.=20 The Central Appalachian low-sulfur category uses benchmark of 12,000 Britis= h thermal units per pound. Barge delivery is to the Big Sandy River. Rail d= elivery is to the Norfolk Southern.=20 For Central Appalachian coal, prices are accepted for coal within 500 Btu o= f the benchmark Btu and standardized adjustments are made.=20 Powder River Basin categories are quoted FOB mine.=20 -By Jennifer Morrow, Dow Jones Newswires; 201-938-4377; jennifer.morrow@dow= jones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Dynegy Deal Sets Path Of Resolution For Enron - Analyst By Christina Cheddar Of DOW JONES NEWSWIRES 11/13/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- Dynegy Inc.'s (DYN) proposed acquisition of Enron Co= rp. (ENE) "creates a clear path for the resolution" of the liquidity and fi= nancial issues plaguing Enron, said Ted Izatt, a high-grade debt research a= nalyst at Lehman Brothers Holdings Inc. (LEH).=20 Izatt made the comments during a conference call held Tuesday with bondhold= ers to discuss the proposed acquisition, which was announced late last Frid= ay.=20 Lehman's investment bankers advised Dynegy on the transaction. Enron was ad= vised by J.P. Morgan Chase & Co. (JPM) and Citigroup Inc. (C). On Monday, the marriage of the two Houston energy traders received a warm r= eception as equity investors bid up shares of both companies.=20 Recently, Enron shares traded at $9.25, up 1 cent, or 0.2%, while Dynegy sh= ares changed hands at $45.00, up 69 cents, up 1.6%.=20 Enron shares had fallen more than 80% in the weeks leading up to the transa= ction as the company posted more than $1 billion in write-offs of failed in= vestments and was forced to restate its earnings going back to 1997 because= it improperly accounted for the results at some of its partnerships. The r= estatement reduced Enron's profits over the period by 20% and added million= s to its debt level. Also, the Securities and Exchange Commission launched = an investigation of the financial dealings of Enron's former chief financia= l officer, Andrew Fastow.=20 The chain of events prompted a series of credit rating downgrades and raise= d doubts about Enron's liquidity. Eventually, the concerns threatened Enron= 's core energy marketing and trading business because a perception of credi= tworthiness is vital to the business.=20 Izatt said a combination of $1 billion in newly secured bank lines and the = $1.5 billion equity infusion from Dynegy has bolstered Enron's financial po= sition.=20 With this additional cash on hand, the greatest risk to bondholders is whet= her the deal closes, said Izatt.=20 The analyst added he expects the merger to close because both companies are= committed to the deal, and he expects regulators to approve the transactio= n.=20 "There is a lot of commitment to get the deal done," he said.=20 However, if the transaction doesn't close, Izatt said he believes Dynegy's = bondholders are "very well protected" in the transaction.=20 According to Izatt, Dynegy's bonds are at an "attractive level." The spread= on the bonds had widened ahead of the announcement of the deal as rumors b= egan to leak into the market, leaving the price of the bond in a weaker pos= ition.=20 But Izatt does expect Dynegy will merge with Enron, and the resulting compa= ny will emerge as a "much stronger company," he said.=20 For example, the analyst expects Dynegy has the potential to achieve more t= han $400 million to $500 million in pretax, merger cost savings Dynegy is p= rojecting.=20 Also, Izatt said Dynegy's cash infusion and purchase will help Enron to ret= ain its position in the energy market.=20 "Dynegy is there for real," Izatt said. "They intend to see this through to= fruition and energy players will view this and (feel confident enough to t= rade with Enron.)"=20 Under terms of the acquisition, Dynegy will pay Enron shareholders 0.2685 o= f a Dynegy share for each Enron share outstanding. The value of the stock s= wap at the close of the market Monday was $10.12 billion.=20 Dynegy is making an immediate cash investment in Enron with the assistance = of ChevronTexaco Corp. (CVX). Later, when the deal closes, ChevronTexaco wi= ll make an additional $1 billion investment in the combined company.=20 -By Christina Cheddar, Dow Jones Newswires; 201-938-5166; christina.cheddar= @dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Corp. to Hold Conference Call and Webcast to Provide Investor Update 11/13/2001 PR Newswire (Copyright © 2001, PR Newswire) HOUSTON, Nov. 13 /PRNewswire/ -- Enron Corp. (NYSE: ENE) will hold a confer= ence call and webcast to provide an investor update on Wednesday, Nov. 14, = 2001 at 9:30 a.m. EST. A live webcast of the call will be available through= the "Investors" section of www.enron.com .=20 Enron is one of the world's leading energy, commodities and services compan= ies. The company markets electricity and natural gas, delivers energy and o= ther physical commodities, and provides financial and risk management servi= ces to customers around the world. Enron's Internet address is www.enron.co= m . The stock is traded under the ticker symbol "ENE". Karen Denne=20 713-853-9757=20 MAKE YOUR OPINION COUNT - Click Here=20 http://tbutton.prnewswire.com/prn/11690X17125372 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 UK: Enron Metals say business normal, no changes seen. 11/13/2001 Reuters English News Service (C) Reuters Limited 2001. LONDON, Nov 13 (Reuters) - Enron Metals said on Tuesday it is trading norma= lly with counterparties and customers and will maintain its current role wi= thin the market after its U.S. parent company Enron Corp agreed to be taken= over.=20 "It is business as usual - yesterday was our second highest day in terms of= turnover. Today looks like it will be up there as well. Our clients and co= unterparties are happy to trade with us," Mike Hutchinson, Managing Directo= r of Enron Metals Ltd, told Reuters. Some talk had circulated on Monday that Enron Metals may downsize its activ= ities after the troubled parent Enron agreed to a $9 billion takeover by Dy= negy Inc. .=20 However, Hutchinson said that Enron Metals was not currently altering its s= tatus within the market. This includes its position on the London Metal Exc= hange (LME).=20 Enron Metals is the former MG Plc, which was bought by Enron in May 2000. T= he company is one of the 11 ring-dealing members (RDMs) of the LME.=20 Enron Corp, which is North America's biggest buyer and seller of both natur= al gas and electricity, agreed to a Dynegy buyout after it was overwhelmed = by problems, including a U.S. regulatory probe into the off-balance sheet d= ealings, a $1.2 billion cut in shareholder equity and credit rating downgra= des. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 INTERVIEW: Dynegy To Continue Asset Push In Europe By Sarah Wachter Of DOW JONES NEWSWIRES 11/13/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) PARIS -(Dow Jones)- Even before Enron's (ENE) financial woes were made publ= ic, Dynegy Inc. (DYN) was discussing ways of beefing up its European operat= ions by consolidating with a U.S. company such as Enron.=20 Dynegy Europe Ltd. CEO, Gary Cardone, told Dow Jones Newswires Tuesday from= the company's European headquarters in London: "We floated the Enron ballo= on about six to eight weeks ago." Enron was one of a couple of U.S. compani= es Dynegy was considering at the time for a merger of technology and assets= in Europe. Houston-based Dynegy plans to buy Enron Corp. in a stock swap w= orth close to $10.12 billion. In Europe, the deal is tantamount to a grasshopper swallowing a sow. Enron = has a huge regional presence, while Dynegy is small by comparison, and trad= ing is focused on the U.K. Enron has close to 5,400 employees and 28 office= s in Europe. Dynegy has 150 people in five locations. Enron owns or manages= 4,374 megawatts of power production and also owns Wessex Water in southwes= t England. Dynegy doesn't own or operate power plants, although this year i= t did acquire its first big European asset, BG Storage Ltd., from BG Gas Gr= oup PLC for $590 million.=20 The most important synergy Dynegy will get by acquiring Enron is to catapul= t Dynegy's trading presence - in the U.K., Germany, the Netherlands and Sca= ndinavian countries, boosting wholesale trading and expanding Dynegy's scop= e in the retail market.=20 But the deal hasn't curbed Dynegy's appetite for bidding on power generatio= n assets, or from seeking other partners, Cardone said.=20 "We'll continue to pursue joint ventures and acquisitions, where appropriat= e," he said, naming Italy, Germany, Spain and the Netherlands as key expans= ion areas. Dynegy is widely expected to make the short list of bidders for = Eurogen, Italian utility Enel's next and largest tranche of power generatio= n assets for sale.=20 Cardone added that assets are for sale in the Netherlands. He also expects = power assets to come on the block in the next 18 months in Germany. A new G= erman power company, Neue Kraft is in the midst of forming, and is seeking = partners.=20 While Dynegy's European CEO said it's too soon to discuss the details of ho= w Enron and Dynegy will merge their European operations, one area he said w= as ripe for consolidation will be the two group's commercial offices. Dyneg= y and Enron each have offices in Madrid, London, Milan and in Switzerland.= =20 But once the deal is done and dusted, Dynegy expects the combined group to = conquer a sizable slice of the European Union gas and power markets, which = are gradually deregulating and where trading is starting to develop on the = Continent.=20 "Europe is the next growth engine, with $400 billion in electricity and nat= ural gas sales. It's a huge market. There's no reason that Dynegy and Enron= (together) can't obtain 10% of this across Europe," Cardone said.=20 -By Sarah Wachter, Dow Jones Newswires; 331-4017-1740; sarah.wachter@dowjon= es.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 S&P Lowers Rtg on Enron-Related Synthetic Obligations 11/13/2001 Business Wire (Copyright © 2001, Business Wire) LONDON--(BUSINESS WIRE)--Standard & Poor's--Nov. 13, 2001-- Standard & Poor= 's today lowered its rating on the GBP200 million 8.75% series 2000-A linke= d Enron obligations issued by Yosemite Securities Co. Ltd. to 'BBB-' from '= BBB'.=20 The rating action is a consequence of the lowering of Enron Corp.'s senior = unsecured debt rating, which acts as support to Yosemite Securities Co. Ltd= ., to 'BBB-' from 'BBB' on Nov. 9, 2001. The downgrade of Enron Corp. was prompted by the credit implications of the= company's restatement of financial statements going back to 1997 due in pa= rt to a legal and accounting review of certain related-party transactions b= y a special committee of Enron's board of directors.=20 The rating on the series 2000-A obligations was lowered on Nov. 7, 2001 fol= lowing Enron Corp.'s previous downgrade on Nov. 1. For information on all r= ating actions please see the related press releases on RatingsDirect, Stand= ard & Poor's Web-based credit analysis system. CONTACT: Standard & Poor's, London Perry Inglis, (44) 20-7826-3857 or Rebec= ca Geen, (44) 20-7826-3857=20 12:21 EST NOVEMBER 13, 2001=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 UK: INTERVIEW-U.S. Dynegy still hungry for assets in Europe. By Stuart Penson 11/13/2001 Reuters English News Service (C) Reuters Limited 2001. LONDON, Nov 13 (Reuters) - U.S. energy group Dynegy wants to buy power stat= ions in Europe as it looks to underpin an energy trading business boosted b= eyond recognition by its audacious takeover of stricken American rival Enro= n .=20 Dynegy Europe's president and chief executive officer Gary Cardone said his= company would retain its strategy of backing wholesale energy trading with= physical assets, rather than adopting Enron's "pure trading" approach to E= uropean energy markets. "This will be an asset-backed trading business coupled with (Enron's) marke= t-making capabilities," he told Reuters in an interview on Tuesday.=20 "Our approach has been different (to Enron's)," he added. "They have believ= ed in pure trading. We have believed in a very disciplined approach to asse= ts," he added.=20 Dynegy has agreed to buy its bigger rival Enron in a $9 billion rescue deal= .=20 The deal, announced last week, came after Enron suffered a share-price coll= apse and damaging credit downgrades triggered by a regulatory probe into of= f-balance sheet dealings.=20 Cardone said he considered Spain, Italy, the Netherlands and Belgium as att= ractive hunting grounds for assets, though he said Dynegy would remain a ca= utious buyer.=20 Some new entrants to Europe's liberalising energy markets had overpaid for = assets in recent deals, he said.=20 Cardone declined to comment on speculation that Dynegy was a bidder for two= power stations in Britain, bought last month for $960 million by U.S. grou= p American Electric Power Co. .=20 Earlier this year Dynegy agreed to buy the gas storage business of Britain'= s BG Group for 421 million pounds ($608 million).=20 NO RUSH TO SELL ENRON ASSETS=20 Cardone said Dynegy would not rush to dispose of Enron assets in Europe, wh= ich include some power generation.=20 "Our back is not up against the wall to do a fire sale. We will look at eac= h (Enron) asset individually," he said.=20 Enron has interests in around 4,500 megawatts of electricity generating cap= acity in Italy, Spain, Poland, Turkey and the UK.=20 On a trading level, Cardone said the takeover of Enron would lead to consol= idation but he declined give details.=20 Both companies have set up offices across Europe in recent years as market = liberalisation has triggered an increase in energy trading.=20 Including BG's storage operation, Dynegy has a European staff of about 400.= =20 Enron, which has piled into European energy trading in recent years and has= been a major driver of liquidity, has a European staff of around 5,000. Th= e company is among the top gas and power traders in the UK and Germany.=20 Cardone said Dynegy would operate with only one online trading platform. En= ron does much of its trading via its EnronOnline Internet platform while Dy= negy is trying to build liquidity on its own DynegyDirect system.=20 "Our initial thoughts are that EnronOnline is an outstanding platform," sai= d Cardone, adding Dynegy might consider selling or renting out its DynegyDi= rect. "We will only work with one portal," he said. "EnronOnline was a grea= t concept, although we are not convinced that we are so far behind it with = DynegyDirect."=20 He said Dynegy would rebrand EnronOnline and all Enron products. "There wil= l be nothing called Enron, all trade marks will be Dynegy." Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Help Wanted: Enron Trader Resumes Hit The Streets By Kristen McNamara and Jennifer Morrow 11/13/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- "Noah's Ark" should be the name of the company that = emerges from the planned combination of Enron Corp. (ENE) and Dynegy Inc. (= DYN), according to energy markets lore these days.=20 After all, the logic goes, there will be two of everyone. Enron gas and electricity traders aren't so sure of that, as job recruiting= firms can attest.=20 "In the past 60 days, the number of resumes from Enron personnel has increa= sed substantially," said William Begley, head of the energy and utilities p= ractice at Heidrick & Struggles (HSII), an executive recruiting firm in Hou= ston.=20 Resumes are coming from all units at Enron, but the number of those from tr= aders has grown significantly during the period, he added. Other recruiting= firms said that Enron traders have become more receptive to unsolicitied h= eadhunting calls lately.=20 No one knows for sure how jobs will shake out at Enron, as the company goes= through hard times and faces a merger with Dynegy. Recruiters and Enron em= ployees are mixed over how much actual fallout there will be.=20 One thing they agree on, though, is that if Enron traders do leave, they ar= en't guaranteed to find new jobs quickly despite their credentials -- which= are regarded as sterling in the energy industry. If energy markets contrac= t as a result of Enron's troubles, the job market for traders could flood.= =20 Dynegy plans to acquire Enron in a stock swap currently valued at $10.12 bi= llion. The companies confirmed the deal late last week. Shares in both comp= anies rose in heavy trading Monday as investors weighed the planned deal. S= ome uncertainty remains around the fate of the merger, partly because of th= e numerous regulatory hurdles it faces.=20 Enron, still the largest energy trading company in the world, has suffered = a massive setback in the past month. Four weeks ago, a $1.2 billion reducti= on of shareholder equity kicked off a slide in the company's share price, a= nd prompted a U.S. Securities and Exchange Commission investigation.=20 Recruiters started seeing more resumes from Enron before the company's trou= bles came to a head. As early as this summer when former Enron executive Je= ffrey Skilling left the company, employees at the company's non-core units = have been looking for jobs, recruiters said.=20 Electricity and natural gas traders at Enron have long been considered some= of the smartest participants in U.S. energy markets. The company is a mark= et maker in both gas and electricity, meaning that its prices for both comm= odities are benchmarks for traders throughout the markets.=20 Enron led the effort to deregulate U.S. power markets, and has been one of = the most vocal lobbyists for deregulation at the state and federal levels o= ver the years.=20 "Because Enron is such a large counterparty in the energy trading sector, a= ll of its trading partners, everyone, is hoping the thing gets resolved," s= aid Bruce Peterson, managing director at Korn/Ferry Intl (KFY) in Houston, = an executive search company. "The whole industry is definitely affected by = what has happened at Enron. Until it's sorted out, you have a tremendous am= ount of uneasiness. It needs to get resolved."=20 It will be essential for Dynegy to keep some of the core leadership from En= ron, analysts say. By retaining the best, Dynegy should be able to secure o= ther strong Enron employees.=20 "In our view, Enron's energy trading and marketing personnel are arguably t= he most talented and definitely the most profitable group in the industry,"= Prudential Securities analyst M. Carol Coale said in a research note Monda= y. "We believe that Dynegy must focus on retaining these valuable traders a= nd marketers if the new company is to realize its full potential in the who= lesale segment."=20 Enron President and Chief Operating Officer Greg Whalley, who will be at Dy= negy after the merger as an executive vice president, said in a conference = call on Monday that he believes the new company will retain its traders. "M= ost traders want to be part of the winning team," he said.=20 Some recruiters believe that although many Enron employees are floating res= umes, there won't be much actual fallout. Enron's trading operation employs= between 1,000 and 1,500 people in North America; Dynegy's operation is sta= ffed by 300.=20 "But with a few trimmings here and there you won't see a lot of Enron trade= rs on the street, unless they don't like what they hear from Dynegy," said = Jack Carr managing director of Prime Energy Partnership, a search and recru= iting company based in the UK, with an office in Greenwich, Connecticut.=20 An experienced energy trader with four years of experience can earn $125,00= 0-$150,000 plus a bonus, according to Carr.=20 Right now, Enron traders are feeling disappointed and confused, according t= o one trader at another company who wouldn't allow his name to be used.=20 "I think they're very nervous," the trader said. "The Enron people think th= ey're better than the Dynegy people, and the Dynegy people think 'we're buy= ing them, so we can just pick through their stuff.'"=20 - By Kristen McNamara; Dow Jones Newswires; 201-938-2061; kristen.mcnamara@= dowjones.com; Jennifer Morrow; 201-938-4377; jennifer.morrow@dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: ICE sets record energy, metals trade volume. 11/13/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Nov 13 (Reuters) - The InterContinental Exchange (ICE), an Atlant= a-based electronic marketplace, said on Tuesday it set several new trading = records last week and recorded its strongest weekly performance since it be= gan operation 13 months ago.=20 "There has been a clear shift of energy and metal trading activity during O= ctober into ICE markets," CEO Jeffrey Sprecher said in a statement. Sources said recent concerns over Enron Corp's crumbling credit rating help= ed divert on-line business to ICE.=20 Trading volumes in oil and refined products set a new weekly record of 55 m= illion barrels, or 11 million barrels per day, a 45 percent increase over t= he October daily average.=20 North American power volumes totaled a record 54 million megawatt hours (MW= h) for the week, or almost 11 million MWh per day, a 34 percent gain over O= ctober activity.=20 North American natural gas traded 950 billion cubic feet, a 13 percent rise= from October.=20 ICE said the number of natural gas transactions was up more than 30 percent= , indicating smaller average trade sizes.=20 Precious metals trading for the week rose 66 percent from October levels, w= ith almost 3 million gold-equivalent ounces trading.=20 As an open-access marketplace, ICE has seen steady gains in liquidity over = the last year, with more than 400 of the world's largest commodity trading = firms now participating.=20 The ICE electronic trading system is installed on over 7,000 desktops world= wide and offers traders more than 600 listed commodity and derivative contr= act types.=20 Products traded on ICE include natural gas, power, crude oil and refined pr= oducts, precious metals and emissions allowances.=20 Contracts include physical delivery as well as financially settled swaps, s= preads, differentials and options based on a variety of fixed and floating = price indices.=20 ICE was founded last year by BP, Deutsche Bank, Goldman Sachs, Morgan Stanl= ey Dean Witter, Royal Dutch/Shell, Societe Generale and TotalFinaElf.=20 Additional partners that helped launch the gas trading operation include Re= liant Energy, Aquila Energy, American Electric Power, Duke Energy, El Paso = Energy and Mirant.=20 ICE also has offices in New York, Houston, Chicago, London and Singapore. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 UK: Dynegy sees no problem for BG Storage deal. 11/13/2001 Reuters English News Service (C) Reuters Limited 2001. LONDON, Nov 13 (Reuters) - U.S. energy group Dynegy said on Tuesday it does= not expect its planned takeover of rival American group Enron to jeopardiz= e its purchase of the natural gas storage business of Britain's BG Group .= =20 "We haven't heard from the (UK) regulators but I can't imagine why the acqu= isition of Enron would change anything for (BG) Storage," Dynegy Europe's p= resident and chief executive Gary Cardone told Reuters. Dynegy, which is taking over troubled Enron in a $9 billion rescue deal, ag= reed in July to buy BG Storage for 421 million pounds ($608 million) in cas= h.=20 But the British government in September said Dynegy would have to provide a= ssurances to address potential competition worries about the deal.=20 A spokesman for UK energy regulator Ofgem said it was too early to say whet= her Dynegy's takeover of Enron would influence the regulator's view of the = BG Storage deal.=20 Dynegy and Enron are both significant traders on the UK spot gas market.=20 BG storage owns 30 wells with five offshore platforms, nine salt caverns, a= bout 19 miles (30 km) of pipelines and an onshore natural gas processing te= rminal.=20 Cardone said he wanted to boost BG Storage's industrial customer base to ar= ound 60 by the end of next year, from 26-30 currently.=20 "(BG Storage) will give us the ability to aggregate new volume and the pote= ntial for a hub to bring in new gas from Norway," he said.=20 He said Dynegy would look to expand its storage operations on the back of t= he BG deal. "We will look at all opportunities in storage," he said.=20 The ability to store natural gas is becoming more of an issue as the UK's a= geing gas fields lose swing - the capacity to rapidly change output and thu= s smooth out demand/supply blips. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Direct and the Alberta Urban Municipalities Association ("AUMA") Seal= a Natural Gas Supply Deal 11/13/2001 Canada NewsWire (Copyright Canada NewsWire 2001) CALGARY, Nov. 13 /CNW/ - Enron Direct Canada Corp. (Enron Direct), a subsid= iary of Enron Corp. (NYSE:ENE) is pleased to announce that it has entered i= nto a long-term natural gas supply and services contract with the Alberta U= rban Municipalities Association ("AUMA").=20 AUMA regular and associate members have looked to Enron Direct's innovative= and flexible energy solutions to answer AUMA's requirements of excellent c= ustomer service, competitive pricing and contract flexibility. "Enron Direc= t is providing AUMA's regular and associate members with a natural gas supp= ly and energy services plan to help them better manage their energy costs. = Enron Direct is pleased to be assisting the AUMA and its members by providi= ng energy solutions that will deliver significant financial security." said= Darren Cross, Chief Operating Officer of Enron Direct Canada Corp. "In this time of uncertainty, municipalities were very interested in attain= ing a stable price for their utility needs. Predictable gas price will ensu= re stability, so crucial to municipal budgets." said Lorne Olsvik, Presiden= t of Alberta Urban Municipalities Association. "The AUMA was looking for a = supplier who understood the need for competitive pricing as well as members= hip flexibility and independence. Alberta municipalities, both small and la= rge, understand how a volatile energy market can affect their bottom line a= nd needed to find a solution to help them manage their gas costs. Enron Dir= ect's innovative products and services meet AUMA's goals and provide the va= lue we are looking for," said John McGowan, Executive Director of the Alber= ta Urban Municipalities Association.=20 Regular and associate members of the AUMA include over 200 cities, towns, v= illages and summer villages as well as municipally related non-profit organ= izations, boards and commissions. The Alberta Urban Municipalities Associat= ion provides leadership in advocating local government interests to the pro= vincial government and other organizations in addition to providing service= s that address the needs of its membership.=20 Enron is one of the world's leading energy, commodities and services compan= ies. The company markets electricity and natural gas, delivers energy and o= ther physical commodities, and provides financial and risk management servi= ces to customers around the world. Enron's Internet address is www.enron.co= m. The stock is traded under the ticker symbol "ENE."=20 Visit Enron Direct's website at www.enrondirect.com. /For further information: Laura Renouf, Public Relations Coordinator of Enr= on Direct, (403) 663-2823/ 09:30 ET=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron CEO May Get at Least $60.6 Million After Buyout (Update6) 2001-11-13 17:14 (New York) Enron CEO May Get at Least $60.6 Million After Buyout (Update6) (Adds in sixth graph that Lay has proposed taking pay in ``non-cash form,'' probably Dynegy stock, and will use some of it to set up a fund for former Enron employees.) Houston, Nov. 13 (Bloomberg) -- Enron Corp. Chairman and Chief Executive Officer Kenneth Lay may get $60.6 million or more in severance if he leaves after Enron's sale to Dynegy Inc., according to a regulatory filing. Lay is entitled to receive a lump sum payment equal to $20.2 million, multiplied by the number of full calendar years remaining on his contract, if he terminates his employment under certain circumstances, such as the acquisition by Dynegy, Enron said in a filing with the Securities and Exchange Commission. ``That's a ridiculous amount of money for a man who's already made himself probably tens of millions of dollars,'' said Andrew Whalley, manager of the Legg Mason International Utilities Trust, which sold a $5 million stake in Enron in April because of concern about its bookkeeping. Dynegy says its buyout of Enron, the biggest energy trader, is expected to close in 2002's third quarter. Lay's contract runs through the end of 2005. His contract provides that he also receives an amount to cover tax penalties if the payment he gets is deemed to be an ``excess parachute payment'' under tax rules, the filing said. If the Enron buyout were to close this year, or if there were another form of ``change of control'' at Enron, Lay may receive $80.8 million, the Enron filing indicates. Lay had gains of $123.4 million from the exercise of options in 2000, in addition to his regular salary. Financial Crisis Lay will propose to Dynegy that he take two-thirds of his severance pay in ``non-cash form,'' presumably Dynegy stock, Enron spokesman Mark Palmer said. Lay plans to use half of the stock to set up a fund to provide ``need-based assistance'' to former Enron employees, Palmer said. The remaining third would be in cash so Lay could use it to pay taxes on the severance package, Palmer said. Enron agreed on Friday to be acquired by rival Dynegy for at least $23 billion in stock and assumed debt, ending a financial crisis that threatened to bankrupt Enron and disrupt U.S. power and natural-gas markets. Lay, 59 years old, has said he won't be an active manager in the new company, which will be led by Dynegy Chairman and CEO Charles Watson. No decision has been made about whether he might serve on Dynegy's board, the companies said. ``They need Ken Lay to close the deal because of his skill with regulators,'' said Mark Maloney, who helps manage $1.1 billion in the John Hancock Patriot Funds, who attended a presentation to investors by the two companies in Boston today. ``Lay is close to the Bush administration, and that couldn't hurt.'' The Patriot Funds don't own shares of Enron or Dynegy. Robert Doty, Dynegy's chief financial officer, refused to discuss severance packages for departing Enron executives at the Boston meeting. Enron officials declined to elaborate on the filing on Lay's compensation. Pay Package Lay has been chairman since February 1986. His contract was extended by two years, to the end of 2005, when he resumed the CEO's job following the departure of Jeffrey Skilling in August. Skilling didn't get a severance package because he quit, Enron has said. The company more than tripled Lay's pay package last year to $18.3 million following its best share-price performance in 20 years, according to a proxy filed in March with the SEC. Enron shares have plunged 90 percent this year. Lay made $5.97 million in 1999, according to Enron's proxy. Lay also received options to buy 782,830 shares over seven years, most at $47.31 each, the March filing said. Those options are now worthless because Enron's stock price is below the price at which they could be exercised. Members of Enron's board of directors each made $50,000 last year, as well as $1,250 for each meeting attended, according to the proxy statement. The chairman of the compensation committee, Charles LeMaistre, received an additional $10,000. LeMaistre, a medical doctor, is president emeritus of the University of Texas M.D. Anderson Cancer Center. The other members of the compensation committee were Norman Blake Jr., chairman and chief executive of Comdisco Inc.; John Duncan, the former president of Gulf & Western Industries; Robert Jaedicke, emeritus professor of accounting at Stanford University; and Frank Savage, former chairman of Alliance Capital International. Savage also sits on the board of Bloomberg L.P., owner of Bloomberg News. Cash Crunch Enron has been battling a cash crunch and a loss of investor confidence this year because of questions about partnerships it started and put under the control of its senior executives. ``I suppose it's important for Dynegy to keep (Lay) on because of loyalty among the staff,'' Legg Mason's Whalley said. ``But after a textbook financial collapse where he obviously had some knowledge of what was going on, this (severance package) is pretty poor.'' After the Enron acquisition, Watson and Dynegy President and Chief Operating Officer Stephen Bergstrom will retain the top two positions. The other two members of the office of the chairman, which plots company strategy, will be Dynegy's Doty, who will continue as CFO; and Enron's Greg Whalley, as executive vice president. Greg Whalley is Enron's president and chief operating officer. Shares of Enron rose 74 cents to $9.98. Dynegy rose $2.63 to $46.94. Both companies are based in Houston. Dynegy Saved Enron Merger With Last Minute Pact (Update1) 2001-11-13 15:02 (New York) Dynegy Saved Enron Merger With Last Minute Pact (Update1) (Adds Lehman's Izatt previously worked at Moody's.) Houston, Nov. 13 (Bloomberg) -- Dynegy Inc. Chief Executive Officer Charles Watson got word at about 7:00 a.m. Thursday that his plan to take over Enron Corp., the largest energy trader, was in danger because Moody's Investors Service planned to lower Enron's credit rating to junk. With barely an hour before Moody's was to announce the downgrade, Watson enlisted his bankers, including Lehman Brothers Holding Inc. Chief Executive Richard Fuld, to lobby the credit rating agency to hold off. One argument: with the U.S. economy contracting after the Sept. 11 terrorist attacks, the country didn't need another bankruptcy. The lobbying succeeded -- at a price. The executives persuaded Moody's to lower its rating one level so Enron remained an investment grade credit in exchange for six concessions, including one which made it harder for Dynegy to walk away from the $23 billion acquisition. Twenty-four hours later, an agreement was reached. ``The Moody's decision was critical,'' Watson said in an interview. ``I don't even want to think about what would have happened to Enron had it been downgraded to junk.'' Frances Laserson, Moody's vice president of corporate communications, declined to comment. ``Our discussions with clients are highly confidential,'' she said. Critical Role Moody's played a critical role in part because Enron was already having trouble raising money. The company had had its rating lowered in October and a slowdown in the economy had prompted some banks to restrict credit. A downgrade to junk by Moody's, which rates more than $85 trillion in securities, would have created a cash crisis by forcing Enron to repay early $3.3 billion of bonds and limiting its ability to sell short-term debt. A junk rating would have prompted Dynegy to abandon the acquisition, said Watson, and cost Lehman, J.P. Morgan Chase & Co. and Salomon Smith Barney Inc. a collective $105 million in fees for advising the two companies. In seeking to salvage the rating, the executives argued a downgrade to junk would lead Enron to file for bankruptcy protection. They said Moody's would shoulder the blame, according to people involved in the conversations. On Thursday morning, Moody's was willing to take that risk. Executives at the ratings company, led by Chief Administration Officer Debra Perry, told Watson and his bankers at Lehman that it was about to issue a press release cutting Enron to junk. Moody's officials said Enron couldn't keep an investment grade rating because the company had no access to the commercial paper market. A probe by the Securities and Exchange Commission into its accounting practices and a 90 percent plunge in its shares had eroded investor confidence. Calling on Friends With little time to respond, Watson and senior Wall Street bankers swung into action. Watson called his friend David O'Reilly, chief executive officer of ChevronTexaco Inc., Dynegy's largest shareholder. O'Reilly didn't have time at such short notice to push Enron's case, Watson said. Next he enlisted John Watson, ChevronTexaco's chief financial officer, and Darald Callahan, a member of the boards of Dynegy and ChevronTexaco, to call Moody's. Lehman's CEO Fuld and chief fixed-income analyst Ted Izatt also pitched in, as did J.P. Morgan CEO Harrison and Michael Carpenter, who runs Salomon, a Citigroup Inc. unit. Izatt, the No. 1 ranked analyst for investment grade energy companies according to Institutional Investor magazine, previously worked as a managing director at Moody's. J.P. Morgan Chase and Salomon were advising Enron. Officials at Lehman, J.P. Morgan Chase and Salomon declined to comment through spokespeople. Fees Watson said he and other bankers argued a combined Dynegy and Enron would be a much stronger company given a $1.5 billion cash injection from ChevronTexaco, which owns 26 percent of Dynegy. ``To be honest, I didn't understand why Moody's was having difficulties making this happen,'' Watson said. Later that day, Moody's executives told Dynegy they were prepared to keep Enron at investment grade as long as six changes were made to the proposed acquisition, according to Watson. Most of the changes focused around the ``material adverse change'' clause, which allowed Dynegy to cancel the deal under certain conditions. One of those changes would have required Dynegy to eliminate a clause that allowed the company to walk away if Enron's debt ratings were cut to junk. Watson said he agreed to the changes. ``If things got bad enough at Enron that it had to be taken to junk, there would probably be a material change in its business that would allow us to walk away,'' he said. ChevronTexaco Watson and Kenneth Lay, Enron's ceo, signed off on the revised terms on Thursday. ChevronTexaco, however, had yet to agree. O'Reilly first heard of the changes from Lehman bankers at a dinner on Thursday night celebrating Chevron Corp.'s $45.8 billion acquisition of Texaco Inc., that was being held at the Victor Stewart steakhouse in Walnut Creek, San Francisco, according to people at the dinner. Lehman's bankers, including Steve Wolitzer, co-head of mergers and acquisitions, and two colleagues, Carlos Fierro and Grant Porter, flew to San Francisco that day to participate because they had advised Chevron on the deal. During the flight they received emails on their Blackberry pagers from colleagues in Houston detailing the concessions that Moody's had sought. Tuna Steaks After discussing the new terms with O'Reilly over tuna steaks and filet mignon, the group agreed to reconvene at Chevron's offices in San Ramon, California at 6:45 a.m. local time Friday morning. While the officials were deliberating, Moody's cut its rating on Enron to ``Baa3,'' one level above junk. John Diaz, a managing director who follows the company for Moody's, said at the time that Enron now needs to ``shore up confidence in the company so that counter-parties continue to trade with it.'' Moody's maintained its negative outlook. Chevron still needed more time to consider the terms. At 5:50 p.m. New York time O'Reilly called Dynegy's Watson to tell him Chevron's board had agreed. About 15 minutes later, Enron and Dynegy announced the purchase. ``It's amazing how this deal came together,'' Watson said. Enron Corp. Raised to `Maintain Position' at Edward Jones 2001-11-13 10:44 (New York) Princeton, New Jersey, Nov. 13 (Bloomberg Data) -- Enron Corp. (ENE US= ) was raised to ``maintain position'' from ``reduce'' by analyst Brian Youngberg at Edward Jones. Lemon Laws Won't Save Dynegy By Peter Eavis <<mailto:peavis@thestreet.com<< Senior Columnist RealMoney.com 11/13/2001 07:21 AM EST If you believe Dynegy's (DYN:NYSE - news - commentary) account of its plann= ed purchase of energy-trading rival Enron (ENE:NYSE - news - commentary) , = it's getting a slightly damaged Mercedes for the price of a Pinto.=20 At face value, it appears to be a fabulous deal. Dynegy is acquiring a weak= ened-but-repairable competitor on the cheap. So what's not to like?=20 The problem is, Dynegy seems to be taking a rather sunny view of Enron's fu= ture. Recent earnings restatements and other revelations suggest Enron may = actually be a junker when it comes to profitability, though Enron's disclos= ure practices make it impossible to know for sure. Then there are indicatio= ns that Dynegy doesn't expect to write down the value of Enron assets by la= rge amounts, which, if true, will certainly raise eyebrows, given the poor = performance of many Enron businesses.=20 If Dynegy proves to have been optimistic in its merger math, investors may = start betting against this deal. Such an outcome would increase suspicions = that Dynegy rushed into this merger because an Enron collapse would've crat= ered its business.=20 Echoing statements from Dynegy executives on a Monday conference call, comp= any spokesman Steve Stengel denied his company is doing the merger because = it feared being damaged by an Enron collapse. Dynegy actually owes Enron mo= ney, rather than the other way 'round, he said. "Enron's core business is s= trong, and that was a key reason Dynegy undertook merger discussions with E= nron," Stengel remarks.=20 Both stocks rose sharply Monday, Enron adding 61 cents to $9.24 and Dynegy = rising $5.55, or 14%, to $44.31. Still, Enron remains 22% below Dynegy's im= plied acquisition price. The stock action suggests the market is deeply div= ided over the deal. The deep discount on Enron is a sign that the deal won'= t get done. Yet Dynegy's leap implies solid investor backing for the transa= ction and its economics. Until we know more about Enron's numbers, we won't= be able to judge whether Dynegy investors are right to be bullish, however= .=20 Strong Indeed Among the deal's avid supporters were a number of sell-side analysts who ar= e longtime Enron bulls. They particularly liked Dynegy's prediction that th= e combined entity, to be called Dynegy, would post earnings 35% above curre= nt 2002 estimates for stand-alone Dynegy. And these bulls point out that th= is accretion number doesn't include any merger synergies and it assumes Enr= on's 2002 earnings are $1.50, which is 25% lower than analysts currently ex= pect.=20 Dynegy executives repeatedly stated Monday that they wanted to get rid of E= nron's noncore operations and keep the trading business, which has contribu= ted the lion's share of Enron earnings, as well as pipeline assets. Clearly= , Dynegy believes that Enron's core trading business made real profits. How= much of a leap of faith is that? A considerable one. As this column has no= ted, Enron doesn't make it possible to break out profit margins for trading= , which is included in the wholesale line in Enron's income statements.=20 In fact, the wholesale line includes substantial asset gains, many of which= are probably one-time in nature. Enron's deals with obscure partnerships g= ave a huge boost to profits, according to earnings restatements made last w= eek. Don't forget that it's these partnership dealings that are under inves= tigation by the Securities and Exchange Commission. Without them, and exclu= ding one-time sales, Enron's traders may actually make very little.=20 Marky Mark One fear was that Dynegy would have to mark down Enron's underperforming as= sets by billions of dollars. Charges erode equity. Lower equity would possi= bly mean a higher debt-to-capital ratio (calculated by taking debt as a per= centage of total capital, or debt plus equity). If this ratio gets above 50= % to 55%, rating agencies might consider downgrading Dynegy, which could de= ter counterparties from trading with it. But Dynegy expects the debt-to-cap= ital ratio to be about 40% in the merged institution.=20 Somewhat implausibly, Dynegy's forecasts don't appear to factor in big mark= downs in Enron equity. In the third quarter of next year, Enron's equity is= expected to be $9.5 billion. That's only slightly below what it probably w= as at the end of this year's third quarter (Enron still hasn't released a t= hird-quarter balance sheet). How can it not decrease over the next 12 month= s?=20 A person familiar with the matter says that Dynegy also expects to mark up = Enron assets at the time of the deal's closing. These markups are expected = to at least partially offset any markdowns, this person adds. But it's toug= h to identify any Enron assets that could qualify for hefty positive adjust= ments, while it's easier to point out assets that deserve negative ones. Dy= negy needs to break out markups and markdowns and reveal which assets are b= eing subject to the adjustments.=20 Dynegy's Stengel didn't comment on the question of equity writedowns.=20 By stretching too far in its assumptions, Dynegy may be trying to dress up = a risky merger as a safe one. But a risky merger may, in Dynegy's view, hav= e been preferable to having Enron go down. Again and again Monday, Dynegy e= xecs said they've done their due diligence and they believe that there aren= 't any huge skeletons in Enron's closet that could upset the merger.=20 But contrast this stance with that of Standard & Poor's analysts, who said = Friday that they would've downgraded Enron's debt to junk status if Dynegy = hadn't agreed to buy Enron. One of the S&P analysts said Friday that they d= idn't have a full understanding of all the partnerships that Enron has been= dealing with. If S&P, which, like other rating agencies, has been locked i= n deep and detailed discussions with Enron for weeks, doesn't know the effe= ct of all the partnerships, how can Dynegy?=20 "Dynegy has been doing business with Enron for 16 years. We know them and t= hey know us," Stengel replies. "We are comfortable with the due diligence w= e have conducted thus far and will continue to look at Enron and their oper= ations in the coming weeks and months."=20 Until Dynegy comes up with more details, assume Enron is a Pinto.=20 Dynegy asked FERC to revise regs=20 CBSMarketWatch.com, 11/13/01 Lisa Sanders HOUSTON (CBS.MW) -- Long before Enron and its Northern Natural Gas Pipeline= entered the picture, Dynegy complained to the Federal Energy Regulatory Co= mmission about companies with pipeline systems crowding out competitors fro= m the natural gas transmission market. In a filing dated Jan. 5, 2001, Dynegy (DYN ) asked to speak in front of th= e FERC about what it characterized as "affiliate abuse and structural prefe= rences," which are "alive and growing in the gas industry." Now, even if Dynegy's $9 billion takeover of Enron fails, the power generat= or can keep the energy trader's Northern Natural Gas Pipeline, according to= the merger agreement. "They're kind of complaining about themselves now," said Raymond Plank, cha= irman and chief executive of natural gas and oil producer Houston-based Apa= che Corp. (APA ), in an interview.=20 Northern Natural is Enron's (ENE ) largest transmission system with 17,000 = miles of pipeline. "Our position has not changed," Dynegy spokesman Steve Stengel said in an e= -m
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