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Enron Mail |
USA: Dynegy sees no more nasty surprises from Enron.
Reuters English News Service, 11/12/01 USA: UPDATE 2-Enron, Dynegy shares rise despite mixed reviews. Reuters English News Service, 11/12/01 Some Arb Traders View Enron Stock As Too Risky To Buy Dow Jones News Service, 11/12/01 Energy Companies Still Shy On Enron Despite Dynegy Deal Dow Jones Energy Service, 11/12/01 Dynegy, Enron officials confident merger will clear scrutiny Associated Press Newswires, 11/12/01 Dynegy Call -4: Held Talks With Ratings Agencies Dow Jones News Service, 11/12/01 Dynegy Conference Call Demand Jams Phone Lines, Internet Dow Jones Energy Service, 11/12/01 S&P Says Doesn't Fully Understand All Enron Partnerships Capital Markets Report, 11/12/01 INDIA: Utilities to value Enron's Indian assets - lender. Reuters English News Service, 11/12/01 Fitch Downgrades Marlin Water Trust II and Osprey Trust I Business Wire, 11/12/01 USA: Enron, Dynegy shares rise amid mixed investor view. Reuters English News Service, 11/12/01 USA: Dynegy sees 15-20 pct earnings growth with Enron. Reuters English News Service, 11/12/01 Markets Desk: Airline Stocks Rocked By Queens Crash; Dynegy & Enron Deal Up= date CNNfn: Market Coverage - Morning, 11/12/01 Innogy Resumes Trading With Enron After 14-Day Break Dow Jones Energy Service, 11/12/01 Dynegy Pres: Enron's Core Business Is Very, Very Strong Dow Jones News Service, 11/12/01 USA: Enron advisors seen mulling investment-WSJ. Reuters English News Service, 11/12/01 Duke Is Owed About $100 Mln By Enron, Executive Says (Update2) Bloomberg, 11/12/01 Dynegy Shares Surge After It Agrees to Buy Enron (Update3) Bloomberg, 11/12/01 Dynegy's Charles Watson (Transcript of Interview) Bloomberg, 11/12/01 Dynegy Sees Enron Rating Remaining Investment Grade (Update5) Bloomberg, 11/12/01 Dynegy Calls SEC's Probe of Enron `Financial Noise' (Update5) Bloomberg, 11/12/01 USA: Dynegy sees no more nasty surprises from Enron. By Andrew Kelly 11/12/2001 Reuters English News Service (C) Reuters Limited 2001. HOUSTON, Nov 12 (Reuters) - Dynegy Inc. said on Monday does not foresee any= damaging disclosures from Enron Corp., slammed by news of murky off-balanc= e sheet transactions, that could derail its planned takeover of the beleagu= ered energy trading giant.=20 However, Dynegy said it can drop its $9 billion offer if more bad news emer= ges, or if pending lawsuits against Enron lead to more than $3.5 billion in= costs. Dynegy also expressed confidence the takeover announced on Friday, will win= U.S. regulatory approval.=20 "I really have a good deal of confidence, but not an absolute guarantee, th= at we are going to be fine here," said Dynegy Chief Executive Officer Chuck= Watson, when pressed about the possibility of further troubling disclosure= s by Enron.=20 Watson said Dynegy had run the deal through worst-case scenarios and conclu= ded that it made good business sense.=20 Investors apparently agreed, bidding up Dynegy shares $5.55, or 14.3 percen= t, to close at $44.31 on the New York Stock Exchange. Enron shares gained 6= 1 cents, to 7.1 percent, to $9.24. The deal valued Enron stock at $10.41.= =20 Enron agreed to a Dynegy buyout after it was overwhelmed by a series of pro= blems, including a U.S. regulatory probe into the off-balance sheet dealing= s, a $1.2 billion cut in shareholder equity and damaging credit rating down= grades.=20 Watson has cause for concern about new disclosures from Enron, which last T= hursday said an internal probe showed its earnings had been overstated by s= ome $600 million since 1997.=20 In a conference call with analysts on Monday, Dynegy executives emphasized = their confidence in the future of the combined company, including annual pr= ojected earnings-per-share growth of 15 percent to 20 percent over the next= three years.=20 But they also fielded a barrage of questions about how well Dynegy has insu= lated itself against further surprises of the kind that had slashed Enron's= market value last week to barely one-tenth the almost $80 billion it was v= alued in August 2000.=20 DYNEGY DOUBTS HUGE LIABILITIES=20 To ensure against unpleasant disclosures, Dynegy wrote so-called material a= dverse change clauses into the deal, allowing it to walk away from Enron if= there is serious deterioration of its businesses or assets.=20 In particular, Dynegy can turn its back on the deal if pending litigation a= gainst Enron - including a stack of lawsuits filed by angry investors who h= ave lost a fortune - leads to costs of more than $3.5 billion.=20 Chief Financial Officer Rob Doty said it was highly unlikely that this thre= shold would be reached, even if a "very substantial" settlement was reached= in the stockholder suits.=20 Commerzbank Securities analyst Andre Meade said he was not yet convinced th= at the stream of bad news from Enron was over.=20 "I think Dynegy is making a big bet that they can successfully clean up the= problems that Enron has had," he said.=20 But UBS Warburg analyst Jay Yannello said after hearing management discuss = the deal, he was reassured it could address tough questions - a breath of f= resh air after Enron's tight-lipped response to investors.=20 Some analysts have said the deal could be thwarted by regulators because of= concerns that Dynegy would be too powerful after merging with Enron, curre= ntly North America's biggest buyer and seller of both natural gas and elect= ricity.=20 Watson said Dynegy would have to work hard to explain the deal to regulator= s, led by the Federal Energy Regulatory Commission, but does not doubt it w= ill eventually pass muster.=20 "We really are confident that up and down the line we are going to be able = to convince them that this is really in the best interest of the energy ind= ustry as well as these two respective companies," he said.=20 GAS PIPELINE OPTION, BREAK-UP FEES=20 Dynegy executives also said there would be no complicated financing arrange= ments of the kind that triggered Enron's downfall, and that the new Dynegy = will be able to keep top Enron executives and traders from defecting to riv= al firms.=20 Enron officials declined to comment on reports that its banks J.P. Morgan a= nd Citigroup were considering pumping an extra $500 million of capital in t= o Enron.=20 Oil company ChevronTexaco Inc., a major Dynegy stockholder, has already agr= eed to inject $1.5 billion into Enron immediately to keep it afloat while t= he merger is completed, which Dynegy expects to take six to nine months.=20 If Enron backs out of the deal to accept a higher offer, it would have to p= ay a $350 million breakup fee to Dyegy.=20 And if the deal breaks down for any reason, Dynegy would be allowed to exer= cise an option to acquire Enron's Northern Natural Gas pipeline subsidiary. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: UPDATE 2-Enron, Dynegy shares rise despite mixed reviews. 11/12/2001 Reuters English News Service (C) Reuters Limited 2001. (New third paragraph points out gap between Enron stock=20 price and value of Dynegy offer) By Janet McGurty=20 NEW YORK, Nov 12 (Reuters) - Shares of Enron Corp. climbed higher on Monday= on investor enthusiasm over last week's $9 billion bid by rival energy tra= der Dynegy Inc. to take over the beleaguered energy giant.=20 Dynegy gained $5.55, or 14.3 percent, to $44.31 in afternoon trade on the N= ew York Stock Exchange, while shares of Enron rose 69 cents, or 8 percent, = to $9.32. The takeover announced Friday halted a free-fall in Enron's stock= that lost about 75 percent of its market capitalization in the past month.= =20 However, Enron's stock was trading well below the value of Dynegy's offer o= f 0.2685 Dynegy shares for each Enron share, which translates into $11.94 p= er share. Analysts said this likely reflected doubts in some investors mind= s as to whether the deal, which includes "escape clauses" for Dynegy, will = go through.=20 Some industry analysts said they were impressed by the upfront details offe= red by Dynegy during a conference call with analysts, an about-face compare= d with calls with Enron. A lack of transparency from Enron about its off-ba= lance sheet transactions, along with a U.S. regulatory investigation, had s= parked widespread investor unease.=20 "I would say that after listening to the conference call, I am even more co= mfortable with my initial judgment that the projections are conservative," = said Jay Yannello, an analyst with UBS Warburg.=20 Earlier, Yannello reiterated a "strong buy" on Dynegy, saying while the bro= kerage does not underestimate the enormous challenge at hand, the takeover = should yield the biggest and most credible energy merchant in the world. Dy= negy is about one-fifth the size of Enron when measured by revenues.=20 Enron's woes came to light in mid-October after the biggest energy trader i= n North America disclosed that some of its off-balance sheet partners contr= ibuted to a $1 billion charge and a $1.2 billion reduction in shareholder e= quity.=20 The takeover is an attractive transaction because of Enron's trading operat= ions, which combined with Dynegy's above-board culture based on teamwork, s= trict values and honesty, should yield a formidable company, Yannello said.= =20 "As Dynegy continues to do due diligence, we continue to be comfortable wit= h the fact that, if there was another shoe to drop, they have more than ade= quate protection in this arrangement to either absorb the impact of that ev= ent or to get out of the deal, in the worst case scenario." he said.=20 "We view the both the near and long-term upside potential of this deal as s= taggering," he added.=20 LOW RISKS, HIGH REWARDS=20 However, last week some antitrust lawyers said the deal will be closely exa= mined by the Federal Trade Commission because of the combined company's mar= ket share in energy trading, said Steve Newborn, formerly in charge of FTC = merger enforcement.=20 On Monday, ratings agency Fitch downgraded the ratings of Marlin and Osprey= , two Enron's off-balance sheet partnerships, covering about $3.3 billion i= n senior secured notes, on a deterioration of Enron's credit profile.=20 "We lowered our ratings to be consistent with actions we have taken on Enro= n," said Fitch credit analyst Ralph Pellecchia, who added he is not aware o= f any material impact the moves could have on Enron. The downgrade was expe= cted.=20 Gordon Howald, an analyst at Credit Lyonnaise Securities, also said he is f= avorably disposed toward the takeover, which he called a "low risk-high rew= ard proposition."=20 The most critical component is the immediate $1.5 billion equity infusion b= y Dynegy shareholder ChevronTexaco into Enron will bolster Enron and help k= eep it viable.=20 "It appears ... that Dynegy has enough 'out' clauses to at least protect it= self if it decides not to pursue this transaction in the future," said Howa= ld.=20 However, Howald said he is not convinced this is an offensive move by Dyneg= y, but rather a defensive to move to protect itself and the industry from a= potential Enron bankruptcy.=20 But even if it is defensive, Dynegy walks away from the deal with the right= s to Enron's Northern Natural Gas pipeline, which produced about about half= of Enron's pipeline earnings, and $350 million in cash, he said.=20 DOUBTS PERSIST=20 Some analysts are less sanguine. They said Dynegy is making a big bet that = it can successfully clean up Enron's balance sheet problems as well as inte= grate its trading and marketing business without losing a lot of key trader= s and volumes.=20 "Enron's principal - and most valuable asset - is its traders. And those pe= ople are mobile," said Andre Mead, an analyst at Commerzbank who said that = he expects a six-to nine-month period of uncertainty in which both companie= s could lose their key trading personnel.=20 Meade also said that Enron's restatement of earnings has called into questi= on the quality and sources of its earnings.=20 "I am not convinced that all the bad news related to those off-balance shee= t vehicles are out and all disclosures concerning those entities have been = made," he said.=20 "Dynegy put some bearish assumptions in there when they decided to bid for = Enron. But the jury is out, Enron is a deeply troubled company," he said. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Some Arb Traders View Enron Stock As Too Risky To Buy By Janet Whitman Of DOW JONES NEWSWIRES 11/12/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- Enron Corp.'s (ENE) stock price surged Monday on new= s that the beleaguered energy concern will be acquired by Dynegy Inc. (DYN)= . But some takeover traders view the stock is too risky to buy because of m= ajor uncertainties surrounding the proposed deal.=20 "I don't know why you'd buy Enron," said Tom Burnett of Merger Insight, an = affiliate of Wall Street Access. "You might be better off buying the Enron = bonds because at least then you might have some value if the thing doesn't = go through, whereas the stock would be worthless if Enron ended up in Chapt= er 11." Takeover traders, also known as arbitrageurs, typically bet on pending merg= ers by selling short shares of the acquirer and buying shares of the target= , hoping to profit as the target's share price moves toward the buyer's off= er.=20 In the case of Dynegy and Enron, however, some takeover traders don't like = the deal's odds - and, particularly, the considerable downside risk for Enr= on if the deal fails.=20 Uncertainties - including possible opposition from regulators and the poten= tial for more woes at Enron that would allow Dynegy to back out of the deal= - are keeping some traders on the sidelines.=20 "Another shoe may drop," said one takeover trader. "I can't imagine Dynegy = got their head around all of this in just two weeks."=20 Just as some takeover traders view buying Enron too risky, going short Dyne= gy also is a dicey prospect because of the company's upside potential, whet= her the deal fails or not.=20 If the deal fails, for instance, Dynegy still has the right to buy certain = Enron assets. On the other hand, if the deal goes ahead, it is expected to = be accretive to earnings.=20 "We're taking a passive view," said Burnett. "I would not go out and buy ei= ther one in this kind of environment."=20 Although some takeover traders steered clear of the deal, some other invest= ors appeared to like it.=20 Enron's stock price swapped hands recently at $9.40 a share, up 9% on volum= e of 38.2 million shares, up from averaged daily volume of 16.1 million sha= res.=20 Dynegy rose 15% to $44.47 on volume of 14.6 million, compared to average da= ily volume of 2.5 million.=20 -By Janet Whitman, Dow Jones Newswires; 201-938-5248; janet.whitman@dowjone= s.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Energy Companies Still Shy On Enron Despite Dynegy Deal By Jon Kamp, John Edmiston and Andrew Dowell Of DOW JONES NEWSWIRES 11/12/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- Credit concerns led U.S. energy companies to continu= e to restrict their dealings with Enron Corp. (ENE) Monday, despite last we= ek's announcement that the company has agreed to be acquired by Dynegy Inc.= (DYN).=20 Trading counterparties in Enron's core North American electricity and natur= al gas markets said they were only doing necessary transactions and low-ris= k, short-term deals with the Houston-based giant as they monitored developm= ents with Enron's credit rating.=20 "As of last week, our value at risk to Enron was down considerably from whe= re it once was," said Al Butkus, spokesman for Aquila Corp. (ILA), a leadin= g trader of North American power and gas. "It's down even further today." In comments similar to those made by others in the market, Butkus said Aqui= la wants to see an improvement in Enron's credit rating and won't increase = its exposure on the strength of the Dynegy announcement alone.=20 The $8.85 billion Dynegy buyout announced Friday isn't a done deal, and Enr= on remains a serious credit risk if the deal doesn't go through, a power tr= ader working in the markets east of the Rockies said.=20 "There just seems to be some concern that Dynegy has quite a few opportunit= ies to get out of it," the trader said.=20 Added another, "This announcement hasn't changed anything."=20 Enron spokesman Eric Thode said, to the contrary, that the company has seen= a "dramatic" increase in trading business Monday from levels seen at the e= nd of last week.=20 "Today's figures are on line to be much larger than Thursday or Friday," Th= ode said. "The certainty now of the deal with Dynegy takes away those fears= , those question marks."=20 Volumes on EnronOnline, the company's Internet-based trading platform, are = expected to top 5,000 transactions Monday, up from around 4,000 Thursday an= d Friday and near the 30-day rolling average of 5,600 to 5,800, Thode said.= Volumes at the beginning of last week topped 6,000, he said.=20 To be sure, traders generally saw the Dynegy buyout announcement as a sign = Enron's prospects have improved, and traders in some regions said they were= seeing more normal activity on EnronOnline after last week's reduced volum= es.=20 Still, credit concerns are preventing many in the market from doing busines= s with Enron.=20 Standard & Poor's and Moody's Investors Service rate Enron's credit at the = lowest level of investment grade, and both have the company on negative cre= dit watch or review for a downgrade.=20 In the absence of a deal with Dynegy or one like it, Enron's ratings would = fall into junk-bond territory, S&P analysts said on a conference call Monda= y.=20 As reported, Dynegy's acquisition agreement allows the company to walk away= if Enron's additional legal and financial liabilities exceed $3.5 billion.= There also are other "material adverse change" provisions, officials said.= =20 The energy markets and ratings agencies are also waiting for Dynegy to make= good on its pledge to inject $1.5 billion immediately into Enron to shore = up its finances. An infusion of cash would be a "stabilizing event," Moody'= s said last week.=20 Charlie Sanchez, an energy marketing manager at Gilber & Associates in Hous= ton, said his customers think Enron's prospects look a little better but st= ill haven't received clearance from their credit-risk managers to trade wit= h the company.=20 Traders in the U.S. natural gas markets confirmed that assessment.=20 "We're keeping a close watch on the volume of gas that we're doing business= with them on," one trader of western gas said. "We're not doing anything s= ubstantial."=20 Gas traders said they were avoiding dealing with Enron if possible and doin= g only minor deals if transactions were inevitable.=20 Enron is the country's largest trader of natural gas and electricity, accou= nting for up to a quarter of both markets by some estimates.=20 Markets are liquid and stable, despite Enron's troubles, Butkus, of Aquila,= said.=20 Energy companies began shying away from Enron over the past month, as conce= rns about its finances precipitated a 75% drop in its stock price and left = its bonds trading at levels typically associated with distressed debt.=20 Enron's restatement of four and a half years' worth of earnings last Thursd= ay and ratings downgrades Friday led some companies to stop doing business = with Enron altogether, even if that meant paying higher prices or accepting= lower bids to do so.=20 Enron's value as a company depends on its ability to transact in its core N= orth American wholesale gas and power markets, Wall Street analysts and rat= ings agencies have said.=20 -By Andrew Dowell, Dow Jones Newswires; 201-938-4430; andrew.dowell@dowjone= s.com=20 (Jon Kamp in Chicago and John Edmiston in Houston contributed to this artic= le.) Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Dynegy, Enron officials confident merger will clear scrutiny By JUAN A. LOZANO Associated Press Writer 11/12/2001 Associated Press Newswires Copyright 2001. The Associated Press. All Rights Reserved. HOUSTON (AP) - Executives of Dynegy Inc. and Enron Corp. believe their plan= to merge the nation's two dominant energy marketing companies will overcom= e federal antitrust scrutiny, leading to a completed deal by next summer.= =20 "We really are confident that up and down the line we will be able to convi= nce (federal regulators) this is in the best interest of the energy industr= y and the two companies," said Chuck Watson, chairman and chief executive o= fficer of Dynegy. Investors pleased with the deal to bail out the once mighty but now trouble= d Enron sent the shares of both companies soaring Monday - in midday tradin= g Enron shares were up 10.5 percent, and Dynegy shares rose 12 percent.=20 Steve Bergstrom, Dynegy's president, said the closest regulatory scrutiny w= ould come from the Federal Energy Regulatory Commission, but that he expect= ed all antitrust hurdles would be cleared within the next six to nine month= s.=20 The deal, worth at least $9 billion, was announced Friday. Dynegy also will= assume $13 billion of Enron debt.=20 Enron became a takeover target after its stock plunged about 80 percent in = recent weeks because of concerns that the nation's top buyer and seller of = natural gas wasn't revealing serious financial problems to shareholders.=20 Dynegy officials pledged Monday that they won't tolerate the sort of financ= ial practices that prompted Enron to acknowledge last week that it overstat= ed earnings by about 20 percent since 1997 and kept more than half a billio= n dollars in debt off the company's books.=20 Those financial practices included business partnerships now under investig= ation by the Securities and Exchange Commission.=20 "Dynegy will manage the new company in the way we've managed the old compan= y. We will substantially simplify the balance sheet," said Rob Doty, Dynegy= 's chief financial officer.=20 After the merger is completed, the Enron name will disappear. Watson will s= erve as chairman and chief executive of the combined company. Dynegy's stoc= kholders will own about 64 percent of the new company and Enron's stockhold= ers will hold the rest.=20 Enron's stock price began to free fall after Enron announced a $618 million= third quarter loss on Oct. 16 and disclosed a $1.2 billion reduction in sh= areholder equity related to the partnerships. That was followed by news of = the SEC investigation.=20 Enron responded by firing its chief financial officer, Andrew Fastow, who r= an the partnerships, and scrambled to get cash and increase credit lines to= regain investor confidence. Investors didn't respond and dumped Enron shar= es, sending its stock plummeting.=20 The deal to merge the companies was announced after the stock markets close= d on Friday, and investors reacted positively to the news Monday.=20 In midday trading, Dynegy shares rose $4.63 to $43.39 on the New York Stock= Exchange. Enron shares were up 91 cents to $9.54 on the NYSE - but still m= uch lower than the 52-week high of $84.87. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Dynegy Call -4: Held Talks With Ratings Agencies 11/12/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) Dynegy's Bergstrom said he expects the acquisition of Enron will receive th= e needed regulatory approvals and close within the next six to nine months.= =20 In addition to approval by the Securities and Exchange Commission, the deal= must be approved by the Federal Energy Regulatory Commission. "We expect FERC to be the pacesetter," Bergstrom said.=20 Until the deal closes, Dynegy expects Enron will have "sufficient interim l= iquidity," Doty said. "(The cash infusion) should immediately put to rest t= he liquidity concerns."=20 Based on conversations Dynegy had with the leading credit rating agencies m= anagement expects Enron's ratings to remain investment grade, Doty said. Me= anwhile, Dynegy's ratings are expected to be affirmed at their current rati= ngs, but be placed on watch for a downgrade until the transaction is comple= ted, he said.=20 According to Doty, Dynegy expects its debt-to-capital ratio will be below 4= 0% after the acquisition closes.=20 Enron said it wouldn't comment on reports published in The Wall Street Jour= nal Monday that said its bankers, J.P. Morgan Chase & Co. (JPM) and Citigro= up Inc. (C) are considering making an additional $500 million investment in= Enron. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Dynegy Conference Call Demand Jams Phone Lines, Internet 11/12/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) HOUSTON -(Dow Jones)- A Monday morning conference call by Dynegy Inc. (DYN)= and Enron Corp. (ENE) to discuss their proposed merger had hundreds listen= ing over the phone and thousands via a Website.=20 But an unknown number were unable to access either the call or the Webcast. "We were able to accommodate 925 people on the phone," said Jennifer Rosser= , a Dynegy spokeswoman. The company had originally reserved 750 phone lines= for the conference call.=20 "Approximately 30,000 people logged onto the Webcast," Rosser said. "We had= to limit it to that number before it crashed the Webcast."=20 Those unable to hear the call waited 10 minutes or more before being told t= hat all the phone lines reserved for conference call were taken.=20 The Web site also took a potential user's information and then came back wi= th a message saying the Webcast was unavailable.=20 The merger agreement by which Dynegy would purchase Enron for $8 billion to= $9 billion plus debt was announced Friday.=20 "Monday morning was the first time for a lot of people to have the opportun= ity to hear the executives talk about (the merger)," Rosser said.=20 A replay of the conference call may be heard by calling (888) 568-0511. The= replay will be available from 1 p.m. EST today through 6 p.m. EST Friday.= =20 -By Erwin Seba, Dow Jones Newswires, 713-547-9214 erwin.seba@dowjones.com= =20 A replay of a Monday morning conference call by executives of Dynegy Inc. (= DYN) and Enron Corp. (ENE) is available at 1-888-568-0510.=20 (An item published at 12:24 p.m. EST (1724 GMT) misstated the phone number.= ) Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 S&P Says Doesn't Fully Understand All Enron Partnerships By Christine Richard and Michael Barr Of DOW JONES NEWSWIRES 11/12/2001 Capital Markets Report (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- Enron Corp. (ENE) has retained its investment grade = rating because Dynegy Inc.'s (DYN) bid to take over the beleaguered company= has restored some much needed investor confidence, Standard & Poor's analy= sts said Monday during a conference call.=20 In fact, in the absence of any deal, such as that put forward last week by = Dynegy, Enron would be rated low double-B or high single-B, S&P analysts sa= id. S&P recently lowered Enron's rating to triple-B minus from triple-B, le= aving it one notch above speculative grade status. That's important because Enron's substantial trading operations are heavily= reliant on a strong credit rating to alleviate counterparty credit concern= s.=20 S&P also said Monday that it was placing Dynegy's rating on review for poss= ible downgrade following the news that Dynegy was making a stock-for-stock = bid for Enron. S&P has assigned Dynegy a senior unsecured debt rating of tr= iple-B.=20 S&P officials stressed that what has weighed most heavily on Enron's rating= in the last few weeks has been declining investor confidence.=20 "The company is not in danger of imminent bankruptcy, or default," said Ron= Barone, an S&P analyst.=20 However, the S&P read on investor confidence is that "Enron is not all that= viable right now," said one analyst.=20 S&P analysts stated that they might not fully understand all the Enron part= nerships.=20 "There is a little uncertainty about all the partnerships that Enron has," = said Barone. But, S&P analysts added, they did understand the financial imp= act of the partnerships that have been disclosed.=20 Enron stock and bonds have been battered since the company revealed the ext= ent of its dealings with partnerships set up and run by its former chief fi= nancial officer, Andrew Fastow.=20 While S&P is assuming Enron has disclosed all the relevant information abou= t those partnerships, there may be more details forthcoming as a special co= mmittee established by Enron goes about its work, they added.=20 S&P's downgrade to of Enron to triple-B-minus was due to an erosion of inve= stor confidence, analysts stressed. And, the Enron Negative CreditWatch "wa= s a heads-up to Enron counterparties," said an analyst.=20 S&P analysts said that despite the decision to place Dynegy on Negative Cre= ditWatch, the ratings could remain at the same level, at triple-B.=20 For that to happen, it will be necessary for Dynegy to dispose of non-core = assets that "could impair the new Dynegy balance sheet," said an S&P analys= t. It will also be necessary for the company to successfully integrate Enro= n's trading business into its own, retaining key employees. -By Michael C. = Barr, Dow Jones Newswires; 201-938-2008;=20 michael.barr@dowjones.com=20 -By Christine Richard; Dow Jones Newswires, 201-938-2189;=20 christinerichard@dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 INDIA: Utilities to value Enron's Indian assets - lender. 11/12/2001 Reuters English News Service (C) Reuters Limited 2001. BOMBAY, Nov 12 (Reuters) - Two Indian private utilities will start valuing = Dabhol Power Co's assets in a few days as a prelude to possibly buying U.S.= energy major Enron Corp's majority stake, the Industrial Development Bank = of India (IDBI) said on Monday.=20 The Tata Power Co and BSES Ltd wish to start "due diligence" - inspect the = financial records and operations with a view to arriving at a offer price -= of Dabhol's $2.9 billion power plant on the west coast of India, the proje= ct's lead lender said in a statement. Enron has been seeking to exit the project since May, but its task of findi= ng a buyer has taken on more urgency after its desperate financial troubles= at home.=20 The largest U.S. energy trader has agreed to be bought out by a smaller riv= al, Dynegy Inc, as it tries to salvage its crumbling business empire.=20 IDBI's statement comes after three days of closed-door negotiations at the = weekend in Singapore between the Indian lenders' representatives and Enron.= =20 Officials from Tata Power, India's largest private power company, and anoth= er leading private utility, BSES Ltd, also attended the meeting.=20 The two companies have emerged as potential candidates for buying the entir= e 85 percent foreign holding in Dabhol, which was to build and run the 2,18= 4 MW plant, the country's largest foreign direct investment.=20 Enron owns 65 percent of Dabhol, General Electric Co and Bechtel Corp own 1= 0 percent each, and the Maharashtra State Electricity Board holds the remai= ning 15 percent.=20 "The sale price of the shareholding of Enron and its associates in DPC woul= d be decided by the concerned parties through mutual negotiations," the sta= tement from IDBI said.=20 Officials at the lending institutions said that given its troubles at home,= Enron could now be willing to sell its stake at a considerable discount.= =20 Indian banks and institutions have provided loans and guarantees of around = $1.4 billion to the plant.=20 OLD DISPUTE=20 The first phase of Enron's controversial Indian project has been completed,= but work on the second phase was abruptly stopped in June following a bitt= er dispute between Enron and a local utility, the Maharashtra State Electri= city Board, the plant's sole buyer.=20 The cash-strapped Indian utility had in 1995 contracted to buy all the powe= r from Dabhol but it later said it did not need all the power and that it w= as too costly.=20 While Dabhol has said it would prefer to resolve its dispute with the Board= amicably, it felt the discussions with the power plant's Indian lenders an= d the government were not progressing.=20 If the current round of negotiations do not bear fruit, Enron may terminate= the contract and file for damages in the International Court of Arbitratio= n in London.=20 The country's largest term lender, IDBI and other Indian lenders in the con= sortium like ICICI Ltd and State Bank of India have already moved an Indian= court to prevent DPC from issuing a final notice to terminate its contract= with the loss-making Board.=20 They fear that if Enron is unable to sell its stake and terminates its cont= ract with the utility, it could end up defaulting on its loans.=20 Dabhol served a preliminary notice in May to terminate the project and can = serve a final notice if a six-month cooling-off period fails to produce a s= olution.=20 That six month deadline ends on November 19. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Fitch Downgrades Marlin Water Trust II and Osprey Trust I 11/12/2001 Business Wire (Copyright © 2001, Business Wire) NEW YORK--(BUSINESS WIRE)--Nov. 12, 2001--Fitch has downgraded the ratings = of Marlin Water Trust II's (Marlin II's) approximately $915 million senior = secured notes due 2003, and Osprey Trust's (Osprey's) approximately $2.4 bi= llion senior secured notes due 2003 to `BB' from `BBB'.=20 The ratings are removed from Rating Watch Negative and placed on Rating Wat= ch Evolving. These rating actions are the result of deterioration in Enron's overall cre= dit profile since the securities were placed on Rating Watch Negative on Oc= t. 26, 2001. As noted in previous press releases, the ratings of both trans= actions rely on various forms of support from Enron Corp. A significant fac= tor in establishing the ratings for the two trusts was last Friday's announ= ced agreement to merge between Enron and Dynegy Inc. and the positive impli= cations the transaction has on Enron's credit profile.=20 The rating of the Marlin II notes is dependent on the overfund account (pre= -funded interest) and equity commitment from Enron in the form of mandatori= ly convertible preferred stock. The overfund account is invested in Enron s= enior debt securities (rated 'BBB-', Rating Watch Evolving), with payments = used to service interest to noteholders. Payment of principal ultimately re= lies on Enron's obligation to remarket mandatorily convertible preferred se= curities. Fitch currently rates Enron's preferred securities 'B+' Rating Wa= tch Evolving. In addition, the transaction also benefits from rights under = a $125 million loan to Azurix Europe Limited, rated `BBB+' by Fitch. Simila= rly, the rating of the Osprey I notes is based on the underlying ratings of= the assets in an overfund account and the share trust used to support inte= rest payments and an equity commitment from Enron to remarket mandatorily c= onvertible preferred stock to fund principal payments. The assets supportin= g interest payments include Enron unsecured obligations as well as quarterl= y interest payments on the mandatorily convertible preferred stock, which h= as been issued and is being held in the share trust.=20 While various sources of repayment exist, such as sale or liquidation of th= e underlying assets or an equity offering, in each case primary credit supp= ort is derived from Enron's obligation to remarket mandatorily convertible = preferred stock if an amount sufficient to repay the notes has not been dep= osited with the trustee on the 120th day prior to the maturity date, which = is one of the Note Trigger Events. In the event that the issuance of the pr= eferred stock yields less than the amount required to redeem the senior not= es, Enron is required to deliver additional shares. If Enron cannot or does= not deliver on this obligation, subject to certain standstill periods, the= n the amount of the deficiency becomes a payment obligation of Enron, repre= senting a general unsecured claim. Considered in the ratings is Fitch's vie= w that Enron's payment obligation is not equal to an Enron guarantee. Addit= ional Note Trigger Events include a downgrade of Enron's senior unsecured d= ebt below investment grade by any of the major rating agencies in conjuncti= on with specified declines in Enron's closing stock price over three consec= utive trading days, as well as customary events of default under the notes. CONTACT: Fitch Donna DiDonato, 1-212-908-0637 Ralph Pellecchia 1-212-908-05= 86 Hugh Welton 1-212-908-0746, New York=20 10:40 EST NOVEMBER 12, 2001=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Enron, Dynegy shares rise amid mixed investor view. 11/12/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Nov 12 (Reuters) - Shares of Enron Corp. rose early Monday after = rival energy trader Dynegy Inc. agreed to buy out the beleaguered energy gi= ant for about $9 billion, a deal on which analysts took a mixed view.=20 Shares of Dynegy gained $2.24, or 5.8 percent, to $41 in early trade on the= New York Stock Exchange, while shares of Enron rose 73 cents, or 8.9 perce= nt, to $9.40. Industry analysts were divided on the outlook for Dynegy, a Houston-based e= nergy trader that is about one-fifth the size in revenue terms to Enron, th= e biggest energy trader in North America.=20 Jay Yannello of UBS Warburg reiterated its "strong buy" on Dynegy, saying w= hile the brokerage does not underestimate the enormous challenge at hand, t= he takeover should yield the biggest and most credible energy merchant in t= he world.=20 Enron's trading operations combined with Dynegy's above-board culture based= on teamwork, strict values and honesty should yield a formidable company..= =20 "We view the both the near and long-term upside potential of this deal as s= taggering," he said.=20 Gordon Howald, an analyst at Credit Lyonnaise Securities, also said he is f= avorably disposed toward the takeover, which he called a "low risk/high rew= ard proposition." The most critical component is the immediate $1.5 billion= equity infusion by Dynegy shareholder ChevronTexaco into Enron will bolste= r Enron and help keep it viable.=20 "It appears ... that Dynegy has enough 'out' clauses to at least protect it= self if it decides not to pursue this transaction in the future," said Howa= ld.=20 However, Howald said he is not convinced this is indeed an offensive move o= n Dynegy's part, but rather a defensive to move to protect itself and the i= ndustry from a potential Enron bankruptcy.=20 But even if it is defensive, Dynegy walks away from the deal with the right= s to Enron's Northern Natural Gas pipeline, which produced about about half= of Enron's pipeline earnings, and $350 million in cash, he said.=20 Carol Coale, an analyst with Prudential Financial in Houston who maintained= a buy rating on Dynegy remains skeptical on the outcome of the merger, whi= ch looks good on paper but hinges on the certainty of Enron's future earnin= gs per share.=20 She said because Enron restated its net income over the past four years, "w= e believe the accounting basis for other complex financial transactions wil= l be called into question." Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Dynegy sees 15-20 pct earnings growth with Enron. 11/12/2001 Reuters English News Service (C) Reuters Limited 2001. HOUSTON, Nov 12 (Reuters) - Dynegy Inc. said on Monday it expects 15 to 20 = percent annual earnings growth over the next three years following its plan= ned acquisition of larger energy trading rival Enron Corp..=20 The earnings growth projection was made by Dynegy Chief Financial Officer R= ob Doty in a conference call with analysts. Dynegy said on Friday that it had agreed to buy Enron in a stock swap worth= about $9 billion. It is offering Enron stockholders 0.2685 shares of Dyneg= y stock in exchange for each Enron share.=20 Dynegy will also assume some $2 billion in preferred stock and $13 billion = in debt from Enron.=20 Dynegy launched its acquisition plan after Enron became engulfed in a serie= s of problems including an investigation by U.S. regulators of off-balance-= sheet financing deals and a series of damaging downgrades by credit rating = agencies. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business Markets Desk: Airline Stocks Rocked By Queens Crash; Dynegy & Enron Deal Up= date Rhonda Schaffler, Chris Huntington 11/12/2001 CNNfn: Market Coverage - Morning © Copyright Federal Document Clearing House. All Rights Reserved. RHONDA SCHAFFLER, CNNfn ANCHOR, MARKET CALL: We have to update you on the m= arkets as well; we have seen the stocks turn around. In fact futures closed= lower as this plane crashed in Queens and the markets that were poised to = open higher began selling off. They have recovered somewhat.=20 What we`re going to do now is go to the "Markets Desk". Chris is tracking s= ome things for us. Chris?=20 CHRIS HUNTINGTON, CNNfn CORRESPONDENT, MARKETS DESK: Rhonda, as we`ve been = telling you transportation issues hit very, very hard. The New York Transpo= rtation, that transportation index right now down more than 2.4 percent, do= wn 56 points.=20 Let`s look some of the big movers. Obviously, airline stocks are being puni= shed. We have Delta Air Lines (URL: http://www.delta-air.com/) down more th= an $3, Continental Airlines (URL: http://www.continental.com/) down more th= an $2. And UAL, (URL: http://www.ual.com) parent of United, down more than = $1.30. AMR (URL: http://www.amrcorp.com/) parent of American down more than= $2.60; USAirways (URL: http://www.usairways.com/) stock down nearly 10 per= cent.=20 Hotel stocks, again these are many of the same issues that were sold off sh= arply following the September 11th attacks, for obvious reasons. Hotel stoc= ks, Four Seasons (URL: http://www.fshr.com) down nearly $3. Marriott down a= bout $1.70; Starwood, (URL: http://www.starwoodlodging.com/) operator of bi= g casinos, $1.35. And Host Marriott, (URL: http://www.hostmarriott.com/) an= d Hilton Hotels (URL: http://www.hilton.com/) also down sharply about 5 per= cent and 10 percent, respectively.=20 Aircraft parts makers and aircraft makers, Boeing (URL: http://www.boeing.c= om/) shares down about 5 percent. Lockheed Martin, (URL: http://www.lockhee= dmartin.com) even though the big defense stock moved up sharply after Septe= mber 11th, a little bit of a sale now. You can see there, Lockheed Martin s= hares. General Electric (URL: http://www.ge.com/) shares down $1.11. There = was believed to be possibly some kind of engine failure involved in this. T= hat is preliminary, eyewitness reports. United Technologies (URL: http://ww= w.utc.com/) also, Pratt & Whitney, parent company, down $2.91.=20 On the upside security related stock, again these are the typical knee-jerk= reactions we`ve unfortunately become used to in this new market environmen= t. Visionics (URL: http://www.visionics.com/) which is a maker of identific= ation security systems, up $2 there; Envision technologies, (URL: http://ww= w.edvcorp.com/) which is the the leading maker of bomb detection hardware f= or airport use. Theoretically, to detect bombs in checked baggage, up about= a $1.58. Viisage Technology, (URL: http://www.viisage.com/) also an identi= fication technology company; Magal Security, which concentrates on so-calle= d perimeter security, motion detectors; and OSI Systems (URL: http://www.os= i-systems.com/) a cargo checking provide cargo checking, provides cargo che= cking security systems, optically oriented in that way.=20 Now, another big business deal nothing to do with the plane crash situation= . Dynegy (URL: http://www.dynegy.com/) and Enron (URL: http://.www.enron.co= m/) held a conference call this morning trying to explain to analysts and t= he media exactly how that deal transpired. As you may know, Dynegy agreeing= to buy Enron, a stock swap. Trading basically, .27 shares each of Dynegy f= or Enron. No fixed pricing date set, so far. Typically the way these work i= s there is an average period of pricing. But basically, right now, Dynegy s= hares are up sharply.=20 I just took a look, if Dynegy shares close at $43 a share, that would price= Enron at about $11.50, so a sharp premium where Enron closed on the weeken= d. And basically, nothing new coming out of the execs, the think it is a go= od deal. And the believe that all of the bad news about Enron`s books are o= n the table.=20 Rhonda?=20 SCHAFFLER: OK. Thank you, Chris. We are going to do is rejoin CNN`s coverag= e of crash of AMR flight 587. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Innogy Resumes Trading With Enron After 14-Day Break 11/12/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) LONDON -(Dow Jones)- Innogy PLC (IOG) resumed trading with Enron Corp (ENE)= Monday, after having ceased to trade with them for 14 days based on concer= ns about Enron's financial position, Innogy said in a statement Monday.=20 "We remain cautious, but we believe that Enron has turned the corner. The s= ituation with Enron has had little impact on Innogy as we provide liquidity= within the market and are not likely to be affected," said Brian Senior, d= irector of trading and asset management at Innogy. -By Sarah Spikes, Dow Jones Newswires; +44-(0)20-7842-9345; sarah.spikes@do= wjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Dynegy Pres: Enron's Core Business Is Very, Very Strong By Christina Cheddar Of DOW JONES NEWSWIRES 11/12/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- Dynegy Inc. (DYN) Chairman Chuck Watson said he sees= "nothing but upside" ahead from the company's planned acquisition of Enron= Corp. (ENE), which was announced late Friday.=20 In addition to being a sound strategic move, the deal "injects confidence i= nto the energy markets," said Watson, founder of the Houston energy trading= firm, in a conference call held Monday to discuss the $8.85 billion takeov= er of Enron. On Friday, Dynegy confirmed the widely speculated deal by announcing it wou= ld buy its cross-town rival in a stock swap that values each Enron share at= 0.2685 of a Dynegy share.=20 The sale of Enron for only a quarter of its share price a month ago, or jus= t a quarter of its all-time high of $90 a share reached just last year, fol= lows an abrupt turn in Enron's fortunes.=20 Last week, Enron, which is the nation's biggest trader of natural gas and e= lectricity, admitted its financial statements going back to 1997 couldn't b= e relied upon and would have to be restated. The company made accounting er= rors in recording transactions from some of its limited partnerships. The c= ompany also misstated its level of debt and its shareholder equity over thi= s period.=20 Enron's partnership dealings are being investigated by the Securities and E= xchange Commission, and have sparked a number of shareholder lawsuits.=20 Over the past month, new revelations about Enron's web of partnerships and = off-balance sheet financing vehicles have been uncovered almost daily.=20 During the conference call, Kenneth Lay, Enron's chairman and chief executi= ve, said it was a "very reflective time" for him.=20 When Lay transformed Enron from a natural gas pipeline company into a dynam= ic energy trading company that was a darling on Wall Street, this was clear= ly not what he had in mind.=20 Lay said, "I didn't expect to create the world's next leading energy tradin= g company by merging Enron into another company."=20 Enron officials said they were continuing their internal investigations of = its accounting practices.=20 "We have disclosed anything and everything we have found so far," Lay said.= =20 Enron President and Chief Operating Officer Greg Whalley, who will remain w= ith Dynegy after the merger as an executive vice president, said Enron will= host a conference call "later this week" to further discuss recent events = at the company. The call will likely be held on Wednesday, he said.=20 In light of the uncertainty surrounding Enron's financial dealings, it is n= ot surprising that quite a number of questions during the conference call f= ocused on the company's liquidity and the potential liabilities Dynegy woul= d assume in the transaction.=20 Dynegy's acquisition agreement allows the company to walk away if Enron's a= dditional legal and financial liabilities exceed $3.5 billion. There also a= re other "material adverse change," or MAC, provisions, officials said.=20 Upon the closing of the acquisition, Dynegy expects to post reserves to cov= er the cost of outstanding litigation, said Dynegy's Doty.=20 "We believe we have adequately bracketed the downside," said Dynegy's Watso= n. "There has to be a substantial, substantial material change in what we a= lready know ... I don't want to minimize the impact. That's why we have MAC= outs."=20 According to Dynegy's Bergstrom, the economics of the transaction assumed t= he potential risk from outstanding lawsuits.=20 "Even in that worst-case there is a substantial amount of economic value he= re," Watson said.=20 Dynegy expects to continue its due diligence in the months leading up to th= e deal's close, Bergstrom said.=20 Dynegy's examination of the business so far has turned up "no surprises" in= Enron's core energy trading business, Bergstrom said. However, the merger = agreement has provisions in case the company's examination does reveal any,= Bergstrom said.=20 "We don't expect to find anything material," he said, adding that Enron's c= ore energy business is "very, very strong."=20 Based on its current information, Dynegy expects the acquisition to increas= e earnings by 35%, or between 90 cents to 95 cents a share, before taking i= nto account expected merger cost savings. As a result, Dynegy now expects i= ts full year pro forma earnings for 2002 to be in the range of $3.40 to $3.= 50 a share.=20 According to Thomson Financial/First Call, analysts were expecting Dynegy t= o earn $2.57 a share next year. In 2000, the company earned $1.43 a share b= efore items.=20 Dynegy has estimated cost savings from the acquisition at between $400 mill= ion to $500 million.=20 The ratio of stock Enron shareholders will be paid is fixed and there is no= collar to limit its range, said a Dynegy spokeswoman.=20 There isn't a walkaway provision, but if the deal is terminated, Dynegy wil= l own rights to Enron's Northern Natural Gas pipeline because of the $1.5 b= illion cash infusion it will provide to the company immediately.=20 Dynegy able to give Enron the cash infusion immediately because ChevronTexa= co Corp. (CVX), which owns slightly more than a fourth of Dynegy, will inve= st $2.5 billion in Dynegy.=20 The deal has a $350 million "topping fee," a Dynegy spokeswoman said. She e= xplained that if either party decided to terminated the transaction, that p= arty would owe the other the "topping fee" if it were acquired by another p= arty.=20 Dynegy's Bergstrom said he expects the acquisition of Enron will receive th= e needed regulatory approvals and close within the next six to nine months.= =20 In addition to approval by the Securities and Exchange Commission, the deal= must be approved by the Federal Energy Regulatory Commission.=20 "We expect FERC to be the pacesetter," Bergstrom said.=20 Until the deal closes, Dynegy expects Enron will have "sufficient interim l= iquidity," Doty said. "(The cash infusion) should immediately put to rest t= he liquidity concerns."=20 Based on conversations Dynegy had with the leading credit rating agencies m= anagement expects Enron's ratings to remain investment grade, Doty said. Me= anwhile, Dynegy's ratings are expected to be affirmed at their current rati= ngs, but be placed on watch for a downgrade until the transaction is comple= ted, he said.=20 According to Doty, Dynegy expects its debt-to-capital ratio will be below 4= 0% after the acquisition closes.=20 Enron said it wouldn't comment on reports published in The Wall Street Jour= nal Monday that said its bankers, J.P. Morgan Chase & Co. (JPM) and Citigro= up Inc. (C) are considering making an additional $500 million investment in= Enron.=20 Dynegy officials said marketplace speculation that suggested Dynegy was acq= uiring Enron because it was afraid Enron would default on a liability it ow= ed Dynegy was incorrect.=20 "Dynegy currently owes Enron an immaterial amount, less than $50 million," = said Dynegy's Doty.=20 The chief financial officer also pledged to make the combined company's bal= ance sheet more easy to understand than that of Enron.=20 But integrating the two energy trading companies will be more than just com= bining their balance sheets.=20 According to Enron's Whalley, the integration of Enron's non-core assets tr= ading businesses will be rather simple, but combing the core trading busine= sses "will not be the easiest thing to do."=20 One prevalent concern is that Enron's trading talent will depart for other = jobs, and erode the true value of the business, which is rooted in intellec= tual capital.=20 The employees have seen their value of compensation, which was partially pa= id in stock options, erode with the value of Enron's shares.=20 "I believe we will retain the people we already have," Whalley said. "Most = traders want to be part of the winning team."=20 However, the officials didn't say whether they were making any specific eff= orts to retain staff.=20 Still, in the end, callers were most interested in learning more about Enro= n's past accounting practices and the potential effects it will have on the= future Dynegy.=20 Officials from both companies said they couldn't tell yet if there were any= additional details that needed to be revealed.=20 Enron's newly appointed chief financial officer, Jeff McMahon, said "Could = there be more? Possibly. Do we expect more? No."=20 Mahon replaced Andrew Fastow, who resigned after questions arose related to= a partnership he ran while chief financial officer of Enron. Fastow's acti= vities are at the center of the SEC probe of Enron's financial dealings.=20 -By Christina Cheddar, Dow Jones Newswires; 201-938-5166; christina.cheddar= @dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Enron advisors seen mulling investment-WSJ. 11/12/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Nov 12 (Reuters) - Enron Corp. advisors J.P. Morgan Chase & Co. a= nd Citigroup Inc. are considering investments of $250 million each in the t= roubled energy trading giant, The Wall Street Journal said on Monday.=20 Citing people familiar with the matter, the newspaper said word of the poss= ible investment helped bolster Enron's financial outlook while it negotiate= d the $9 billion merger with Dynegy Inc. announced late on Friday. Such a move would be unusual, as investment bankers traditionally don't put= money into takeover deals they help negotiate, the Journal said. But it qu= oted its sources as saying word of the possible investments may have helped= fend off a possible deal-breaking downgrade of Enron's debt by Moody's Inv= estor Services.=20 On potential stumbling block to the Dynegy deal is the concern of credit-ra= ting agencies, particularly Moody's, about the worsening financial conditio= n of Enron, the Journal said. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Duke Is Owed About $100 Mln By Enron, Executive Says (Update2) 2001-11-12 17:07 (New York) Duke Is Owed About $100 Mln By Enron, Executive Says (Update2) (Adds Duke's off-balance sheet debt in sixth paragraph.) Charlotte, Nov. 12 (Bloomberg) -- Duke Energy Corp., the largest U.S. utility owner, said it is owed about $100 million from energy trading with Enron Corp. ``Exposure that Duke has to Enron is not material,'' Jim Donnell, chief executive of Duke's U.S. trading unit, Duke Energy North America, said on a conference call. ``The vast majority of our transactions'' are backed by cash or a bank, he said. ``For those that aren't, our maximum exposure is no more than $100 million. We continue to trade with Enron today as we have in the past.'' Duke said last month third-quarter earnings before interest and tax from trading and power generation more than doubled to $618 million from the same time a year earlier. Shares of Charlotte-based Duke rose 39 cents to $40.05. They've fallen 6 percent this year. Rivals including Mirant Corp. and Aquila Inc. have said they've shifted transactions away from Enron, the biggest energy trader. Enron agreed Friday to be purchased by Dynegy for $23 billion in stock and assumed debt after concerns about losses in affiliated partnerships helped drive Enron's shares down 75 percent since Oct. 16. Duke has about $621 million of debt in three joint ventures that isn't on its balance sheet, Chief Financial Officer Robert Brace said. It hasn't created partnerships to take debt off its books, he said. Duke expects ``minimal'' affect on its trading business from Dynegy's acquisition of Enron, which the companies expect to complete in the third quarter of next year, Donnell said on the call. ``There are other trading platforms out there,'' he said, ``It doesn't concern us them getting together.'' Shares of Dynegy surged $5.55, or 14 percent, to $44.31. Enron rose 61 cents to $9.24. Both companies are based in Houston. Dynegy Shares Surge After It Agrees to Buy Enron (Update3) 2001-11-12 17:05 (New York) Dynegy Shares Surge After It Agrees to Buy Enron (Update3) (Adds Watson comment on importance of ChevronTexaco in 10th paragraph.) Houston, Nov. 12 (Bloomberg) -- Dynegy Inc. shares rose 14 percent as Chief Executive Officer Chuck Watson told investors the company's planned $23 billion purchase of Enron Corp. will boost earnings by 35 percent next year. Shares of Dynegy rose $5.55 to $44.35. Enron rose 61 cents, or 7.1 percent, to $9.24. The companies announced after the stock market closed Friday that Enron, the largest energy trader, had agreed to be acquired by smaller rival Dynegy for $8 billion in stock and $15 billion in assumed debt. ``If this deal is consummated, 2003 could be a banner earnings year for Dynegy,'' said Gordon Howald, a Credit Lyonnais Securities analyst who raised his rating on Dynegy to ``buy'' from ``add'' and doesn't own the shares. ``It could significantly set it apart from its peers and solidify its position as the energy merchant market leader.'' The purchase will add 90 to 95 cents a share to earnings in 2002, Dynegy predicted Friday. Dynegy, which had been expected to earn $2.57 next year, now expects 2002 earnings of $3.40 to $3.50. Dynegy will have net income of more than $2 billion in 2003 if the merger closes, Chris Ellinghaus, an energy analyst at Williams Capital Group, said in a report. Dynegy's 2000 net income was $501 million. ChevronTexaco Backing Robert Doty, Dynegy's chief financial officer, today predicted Enron will keep its investment-grade rating until the acquisition is completed. Doty said he expects a mid-`BBB' credit rating for the combined company, near the lowest investment grade. If the rating falls below investment grade, Enron could be forced to buy back bonds early from partnerships for as much as $3.3 billion. A key element to Moody's maintaining its rating and backing the buyout was ChevronTexaco Corp.'s support, Watson said. ChevronTexaco will provide $1.5 billion to Enron immediately and $1 billion to Dynegy after the merger closes. ChevronTexaco, the second-biggest U.S. oil company, owns 26 percent of Dynegy. By stepping in, it reassured investors that Dynegy would have enough money to operate after the merger, even if all the problems with Enron's partnerships have not been disclosed, analysts and company officials said. ``I can't emphasize enough how important our relationship with Chevron is to this company,'' Watson said. Enron has been battling a cash crunch and a loss of investor confidence because of questions about partnerships it started and put under the control of its senior executives. Investors feared the company was using the partnerships to hide losses and debt. Before today, its stock had plunged 90 percent this year. `Financial Noise' Last week, Enron restated earnings for four years to include losses from affiliated partnerships, reducing earnings by $586 million. In an interview after the merger was announced, Watson said he's convinced Enron's trading operations are sound and described disclosures about affiliated partnerships as ``financial noise.'' Enron's trading provides 97 percent of its revenue. ``All the financial noise about the partnerships, maybe it has damaged the Enron brand a bit,'' Watson said. ``But I'll tell you what it hasn't impacted, and that's the high regard that the industry places on'' Enron's trading business, he said. If the acquisition is completed, Dynegy will get Enron's energy-advising business, which helps other companies find ways to cut electricity and natural-gas costs. Dynegy has been trying to develop that business on its own, said Jim Walline, a fund manager with Lutheran Brotherhood, which owned about 306,000 Dynegy shares and 93,000 Enron shares on Sept. 30. The rise in Dynegy's share price increased the offer's value to $11.85, one-fourth Enron's average stock price over the last 12 months. ``For Dynegy it looks like a steal,'' Walline said. Dynegy can cancel the acquisition if Enron's legal liabilities exceed $3.5 billion, Doty said. That amount includes possible awards against Enron because of shareholder lawsuits. Shareholders have accused Enron executives of improperly profiting from the partnerships, and of not disclosing the effects on the company's earnings. Protecting Shareholders ``I fully believe management has thought of every downside scenario to protect Dynegy shareholders,'' said James Yannello, an analyst at UBS Warburg. He rates Dynegy ``strong buy'' and doesn't own its shares. ``I think the odds of exhausting that $3.5 billion cushion are very low.'' Dynegy officials said they don't plan to form limited partnerships similar to those formed by Enron. ``We will run this company much more conservatively from a financial point of view and wouldn't expect anything like this to happen in the future,'' Doty said. Enron doesn't expect to find more losses from the partnerships or affiliated companies it already has in place, Enron Chief Financial Officer Jeffrey McMahon said. ``Could there be more? Possibly,'' McMahon said. ``Do we expect more? No. We've done an awful lot of work, but it's fair to say the investigation remains ongoing.'' Moody's Investors Service on Friday lowered its rating on Enron's long-term debt to ``Baa3,'' one notch above junk. The credit-ratings company today placed Dynegy and its Illinova utility units under review for a possible downgrade because of the Enron buyout. Energy traders began limiting trade with Enron last month because its plunging stock price prompted concerns about creditworthiness. Some said today that they haven't resumed normal dealings. ``We're continuing to trade with them on a very limited basis, and we'll continue to do so until the proposed Dynegy buyout develops further,'' said James Peters, a spokesman for Atlanta-based energy trader Mirant Corp., an Enron and Dynegy competitor. Asset Sales Dynegy offi
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