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Enron Mail |
USA: Enron shares hit lowest level since July 1992.
Reuters English News Service- 10/30/01 Wolf Haldenstein Law Firm Announces Class Action Suit on Behalf of Purchase= rs of ONLY Enron Non-Common-Equity Stock, Including Preferred and Preferred= -related Stock, Against Enron Corp. Business Wire- 10/30/01 UK: UK power prices lower as mild weather hits demand Reuters English News Service- 10/30/01 Stocks Close Lower as Investors React to Economic Data Dow Jones Business News- 10/30/01 Enron Shares Fall a Day After Moody's Lowers Rating (Correct) Bloomberg- 10/30/01 EPDC to Spend $500 Mln Abroad as Japan Deregulates Power Market Bloomberg- 10/30/01 Enron Default Insurance Signals Eroding Confidence (Update5) Bloomberg- 10/30/01 U.S. Equity Movers: Anthem, CVS, Enron, Hispanic Broadcasting Bloomberg- 10/30/01 Enron chairman weathers a storm: Many in Houston believe Lay can get firm back on track (BUSINESS) The Dallas Morning News- 10/30/01 USA: Enron shares hit lowest level since July 1992. 10/30/2001 Reuters English News Service (C) Reuters Limited 2001. HOUSTON, Oct 30 (Reuters) - Shares of Enron Corp. on Tuesday dropped to the= ir lowest level in more than nine years on Tuesday, a day after the embattl= ed energy giant said it was seeking fresh credit and a rating agency cut so= me of the company's debt to two notches above junk status.=20 Enron's stock was down $2.86, or 20.7 percent, at $10.95 in late trading on= the New York Stock Exchange, extending the company's losing streak to a 10= th straight day. The last time the shares traded below $11 was in July 1992= . After cutting Enron's rating on Monday, Moody's Investors Service warned th= at it could lower the rating on the company's senior unsecured debt even fu= rther, as well as cut Enron's short-term debt status.=20 Houston-based Enron has lost more than $15 billion in market capitalization= in the past two weeks amid a series of disclosures about off-balance-sheet= deals with partnerships run by its former chief financial officer who was = replaced last week.=20 The Wall Street Journal said in its Tuesday edition that the U.S. Securitie= s and Exchange Commission (SEC) had moved an inquiry about the deals from i= ts regional office in Fort Worth, Texas, to its Washington D.C. headquarter= s, indicating that the probe is being treated as a high priority. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Wolf Haldenstein Law Firm Announces Class Action Suit on Behalf of Purchase= rs of ONLY Enron Non-Common-Equity Stock, Including Preferred and Preferred= -related Stock, Against Enron Corp. 10/30/2001 Business Wire (Copyright © 2001, Business Wire) NEW YORK--(BUSINESS WIRE)--Oct. 30, 2001--The following is an announcement = from the law firm of Wolf Haldenstein Adler Freeman & Herz LLP:=20 Wolf Haldenstein Adler Freeman & Herz LLP has commenced a class action laws= uit in the United States District Court for the Southern District of Texas,= on behalf of purchasers of all Preferred Stock (collectively "Preferred Se= curities"), of Enron Corp. ("Enron" or the "Company") (NYSE: ENE) between on or about June 1, 1999, an= d October 26, 2001, inclusive (the "Class Period") against defendants Enron= , Kenneth L. Lay (Chairman of the Board and Chief Executive Officer), Jeffr= ey K. Skilling (former President, CEO and Chief Operating Officer), and And= rew S. Fastow (former Chief Financial Officer and Executive Vice President)= . The Class Definition does not include purchasers of Enron convertible sto= ck.=20 The case name and index number are Steiner v. Enron Corp., et al., H 01-CV-= 3717, pending in Houston, Texas. The case is before Judge David Hittner.=20 The complaint alleges that defendants violated Sections 10(b) and 20(a) of = the Securities Exchange Act of 1934 and Rule 10b-5, promulgated thereunder,= by issuing materially false and misleading statements during the Class Per= iod that had the effect of artificially inflating the market price of the C= ompany's Preferred Securities. Specifically, the complaint alleges that Enr= on issued a series of statements concerning its business, financial results= and operations which failed to disclose among other things that: (1) on or= about June 1, 1999, the Company began entering into a series of extraordin= arily leveraged investment and hedging transactions with a group of limited= partnerships which were controlled by the then-Chief Financial Officer And= rew S. Fastow. Enron did not publicly disclose the details of these transac= tions, the material change in its investment and hedging strategy as repres= ented by these transactions, the material increase in the degree of leverag= e and the business and investment risk with respect to these transactions, = and generally, or that these transactions could lead to billions of dollars= in borrowings and writedowns of shareholders' equity, which would jeopardi= ze the value of Enron's Preferred Securities; (2) Enron was failure to writ= e-down impaired assets on a timely basis in accordance with GAAP; and (3) t= he Company's operating results were materially overstated as a result of th= e Company's failing to timely write-down the value of its investments with = certain limited partnerships, including those described above. On October 1= 6, 2001, Enron surprised the market by announcing that in the third quarter= of 2001, the Company was taking non-recurring charges of $1.01 billion aft= er tax ($1.11 per diluted share). Enron failed to clearly disclose until Oc= tober 18 that it also was taking a $1.2 billion writedown in shareholders' = equity as a result of unwinding the investments with the limited partnershi= ps controlled by Mr. Fastow. Since the announcement of the $1.2 billion wri= tedown in shareholders' equity, the market price of Enron Preferred Securit= ies has dropped significantly.=20 This lawsuit is brought on behalf of only the Preferred Shareholders of Enr= on, which include among others the following classes of stock:=20 1. Enron Capital LLC, 8.00%, 11/30/43 series, 8 million shares=20 outstanding, traded on the New York Stock Exchange.=20 2. Enron Capital Trust I, 8.3% Series, 8 million shares=20 outstanding, traded on the New York Stock Exchange.=20 3. Enron Capital Trust II, 8.1250% series (preferred R), 6=20 million shares outstanding, traded on the New York Stock=20 Exchange.=20 4. Enron Capital Trust III, 200,000 shares outstanding.=20 5. Enron Capital Resources LP, 9.0%, 8/31/24 Series A, 3 million=20 shares outstanding, traded on the New York Stock Exchange.=20 6. Portland General Electric, 7.75%, 6/15/07 series, 300,000=20 shares outstanding, traded on the NASDAQ.=20 7. Portland General Electric, 8.25%, 12/31/35 Series A, 3 million=20 shares outstanding, traded on the New York Stock Exchange.=20 Purchasers of Convertible Preferred Stock are not included in the Class.=20 Plaintiff seeks to recover damages on behalf of all those who purchased or = otherwise acquired Enron Preferred Securities. If you purchased or otherwis= e acquired Enron Preferred Securities during the Class Period, and either l= ost money on the transaction or still hold the securities, you may wish to = join in the action to serve as lead plaintiff. If you purchased Enron Prefe= rred Securities during the Class Period, you may, no later than December 21= , 2001, request that the Court appoint you as lead plaintiff. A lead plaint= iff is a representative party that acts on behalf of other class members in= directing the litigation. In order to be appointed lead plaintiff, the Cou= rt must determine the class member's claim is typical of the claims of othe= r class members, and that the class member will adequately represent the cl= ass. Under certain circumstances, one or more class members may together se= rve as "lead plaintiffs." Your ability to share in any recovery is not, how= ever, affected by the decision whether or not to serve as a lead plaintiff.= You may retain Wolf Haldenstein, or other counsel of your choice, to serve= as your counsel in this action. Although you may contact and retain as you= r counsel one of the law firms which are representing common stock sharehol= ders in related litigations, we recommend that anyone who owns Preferred Se= curities should contact attorneys who will only represent preferred shareho= lders.=20 Wolf Haldenstein has extensive experience in the prosecution of securities = class actions and derivative litigation in state and federal trial and appe= llate courts across the country. The firm has approximately 60 attorneys in= various practice areas; and offices in Chicago, New Jersey, New York City,= San Diego, and West Palm Beach. The reputation and expertise of this firm = in shareholder and other class litigation has been repeatedly recognized by= the courts, which have appointed it to major positions in complex securiti= es, multi-district and consolidated litigation.=20 If you interested in being included in our action or serving as one of the = lead plaintiffs, please contact Wolf Haldenstein Adler Freeman & Herz LLP a= t 270 Madison Avenue, New York, New York 10016, by telephone at (800) 575-0= 735 (George Peters, Derek Behnke, Robert B. Weintraub, Esq., Jeffrey G. Smi= th, Esq., Daniel W. Krasner, Esq.), via e-mail at classmember@whafh.com or = visit our website at http://www.whafh.com. Your e-mail should refer to Enro= n Preferred Securities. CONTACT: Wolf Haldenstein Adler Freeman & Herz LLP, New York George Peters,= Derek Behnke, Robert B. Weintraub Jeffrey G. Smith, Daniel W. Krasner 800/= 575-0735=20 15:43 EST OCTOBER 30, 2001=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 UK: UK power prices lower as mild weather hits demand. 10/30/2001 Reuters English News Service (C) Reuters Limited 2001. LONDON, Oct 30 (Reuters) - UK electricity prices dipped on Tuesday, pressur= ed by a sagging prompt market as mild weather dented demand.=20 Liquidity fell as around 10 companies kept on hold their dealings with U.S.= group Enron as they reviewed their credit arrangements with the troubled c= ompany. "There have been a few problems with liquidity, there aren't as many prices= out there, but it's not serious," said one trader.=20 Enron, mainly via its EnronOnline Internet platform is one of the UK market= 's biggest traders.=20 Day ahead baseload last traded around 15.20 pounds a megawatt hour, down fi= ve pounds from the previous close. It was offered at 15.45 pounds at the cl= ose.=20 Traders blamed lower-than-expected demand due to warm weather for prompt ma= rket weakness.=20 National Grid said demand through to the middle of last week was about two = percent down on the same period last year.=20 December baseload also fell sharply, assessed around 19.05 pounds, down 70 = pence.=20 Forward curve prices also dropped as a bearish tone took hold across the ma= rket.=20 Summer 02 baseload was down about 10 pence at 17.32 pounds and winter 02 ba= seload shed 20 pence to 19.70 pounds. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Stocks Close Lower as Investors React to Economic Data By Erin Schulte 10/30/2001 Dow Jones Business News (Copyright © 2001, Dow Jones & Company, Inc.) The Wall Street Journal Interactive=20 Stocks declined Tuesday after a consumer-confidence report fell far short o= f economists' expectations, though losses narrowed slightly throughout the = day. The Dow Jones Industrial Average ended down 147.52, or 1.6%, at 9121.98 aft= er skidding 275.67 in the previous session; at one point, the average had b= een down more than 200 points. The Nasdaq Composite Index dropped 32.11, or= 1.9%, to 1667.41 after tumbling 69.44 on Monday.=20 Other indexes also lost ground. The S&P 500 Index gave back 18.51 to 1059.7= 9, the New York Stock Exchange Composite Index sank 9.11 to 546.74, and the= Russell 2000 Index declined 6.58 to 422.83.=20 Bonds gained and the dollar was mixed.=20 The Conference Board, a New York research group, said U.S. consumer confide= nce slid in October to a much weaker-than-expected reading and the lowest l= evel since 1994.=20 The main index fell to 85.5 in October from a revised 97 in September; econ= omists surveyed by Thomson Global Markets had expected an October reading o= f 96.=20 This month's report was previously cited by bond-market strategists as an i= ndicator of particular importance to gauge the response of consumers in the= weeks following the Sept. 11 terrorist attacks on New York and Washington,= but also the level of confidence as the U.S. continues to face the threat = of anthrax.=20 Ian Shepherdson, chief U.S. economist for High Frequency Economics, said th= e number was "in short, awful." However, he added, much of the decline coul= d be blamed on the present-situation number, which tumbled to 107.6 from 12= 5.4.=20 "If there is any saving grace in these numbers it is that the present-situa= tion index, which tells us little about future spending, fell by much more = than the expectations number, which does have real forward-looking value," = he said. The expectations number dropped to 70.8 from 78.1=20 The consumer-confidence report is one of several key indicators due out thi= s week.=20 On Wednesday, the Bureau of Economic Analysis will report on third-quarter = gross domestic product. On Thursday, the National Association of Purchasing= Management will report on how the manufacturing sector fared in October, a= nd the Labor Department's closely watched monthly unemployment data will be= released Friday.=20 Selling in key international markets also pressured Wall Street. Frankfurt'= s DAX was down 2.5%, while London's Financial Times-Stock Exchange 100-Shar= e Index was down 1.6%. Earlier, Japan's Nikkei 225 Average closed with a lo= ss of 0.94%, and Hong Kong's Hang Seng Index fell 1%.=20 Among stocks to watch, CVS was one of the Big Board's biggest losers, tumbl= ing 23% after the drugstore chain posted a 23% decline in third-quarter net= income and unveiled a restructuring plan that includes the shutdown of abo= ut 200 stores in the first quarter of next year.=20 Also, Merrill Lynch cut the company's long-term rating to "accumulate" from= "buy."=20 "Shrinkage, poor general merchandise sales and supermarket-type discounting= are all robbing the company of a vital year-end gross-margin flourish," sa= id Merrill Lynch analyst Mark Husson. "While these problems are fixable, we= believe there is not much for investors to get excited about in the interm= ediate-term."=20 Rite Aid and Walgreen's followed CVS's path lower, declining 9.5% and 2.7% = respectively after Merrill Lynch cut their long-term ratings to "accumulate= " from "buy."=20 Dow component Eastman Kodak was the biggest loser of the industrial average= , sinking 6.9% after Lehman Brothers said Wal-Mart Stores was ready to unve= il a private-label film offering, which could hurt sales for Kodak's film.= =20 McDonald's also was a big loser among Dow industrial components, giving up = 4.7% after the fast-food chain cut its earnings guidance for 2002 to an imp= rovement of between 5% to 10%, well below traditional double-digit guidance= . The company also said it will take a charge in the current quarter to cov= er restructuring.=20 And Dow component Philip Morris lost 4% after Goldman Sachs analyst Marc Co= hen removed the tobacco giant from his "recommended for purchase" list and = lowered the 2002 earnings estimate to $4.45 a share from $4.53, which repre= sents 10% profit growth instead of previously expected growth of 12%.=20 Enron shares tumbled 19% as credit concerns persisted about the Houston ene= rgy-trading company. Moody's Investors Service lowered its ratings by one n= otch on the company's senior unsecured debt and kept the company under revi= ew for a possible further downgrade. And the Securities and Exchange Commis= sion has moved its inquiry into Enron's finances to the agency's Washington= headquarters from a regional office.=20 In major U.S. market action:=20 Stocks fell. On the Big Board, where 1.30 billion shares traded, 2,159 stoc= ks fell and 943 rose. On the Nasdaq, 1.79 billion shares traded hands.=20 Bonds gained. The 10-year Treasury note rose more than 1/2 point, or $5 for= each $1,000 invested. The yield, which moves inversely to price, fell to 4= .416%. The 30-year bond was up 3/4 point to yield 5.215%.=20 The dollar was mixed. It traded at 121.94 yen, down from 122.97 late Monday= , while the euro fell against the dollar to 90.46 U.S. cents from 90.48.=20 Copyright © 2001 Dow Jones & Company, Inc.=20 All Rights Reserved. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Shares Fall a Day After Moody's Lowers Rating (Correct) 2001-10-30 16:48 (New York) Enron Shares Fall a Day After Moody's Lowers Rating (Correct) (Corrects today's low price in second paragraph.) Houston, Oct. 30 (Bloomberg) -- Enron Corp. shares fell 19 percent after touching the lowest level in more than nine years, a day after Moody's Investors Service placed the largest energy trader's rating for commercial paper on review for downgrade and lowered its long-term debt to two notches above junk status. Shares of Enron dropped $2.65 to $11.16. Earlier, the stock fell to $10.90, the lowest since July 1992. The stock, down for the 10th day in a row, has tumbled 87 percent this year. Moody's lowered Enron's long-term credit rating to ``Baa2'' from ``Baa1'' yesterday. It also placed the company's ``P-2'' rating for commercial paper on review for possible downgrade. ``I think investors would have loved to have no downgrade or a more stable outlook for the company,'' Commerzbank Securities analyst Andre Meade said. ``Moody's left some uncertainty.'' Meade doesn't own Enron shares and rates the company ``accumulate.'' Executives from Exelon Corp., American Electric Power Co. and Northeast Utilities said they still are trading with Enron. `Watching Closely' ``Nervous is probably not the right word, but we are watching very closely,'' AEP Chief Executive Officer Linn Draper said at an energy conference in New Orleans. ``We are focusing our new deals with them in the short term, November and December,'' Columbus, Ohio-based AEP is the biggest U.S. electricity generator. Traders often buy and sell power for delivery the next day or for over a week, month, quarter or calendar year. The Bloomberg Energy Service is quoting power prices for as far ahead as September 2003. ``We are keeping a close eye on our exposure,'' Exelon Corp. Co-Chief Executive Officer John Rowe said at the conference. ``We are keeping a tight dollar limit on trades.'' He declined to provide specifics. Chicago-based Exelon is the biggest U.S. nuclear-power producer. ``Three weeks ago, we started monitoring our position with Enron,'' Northeast Chief Financial Officer John Forsgren said at the conference. ``Right now, we have a net payable to them, so there's no exposure on our side, and we'll probably keep it that way.'' Northeast, based in Berlin, Connecticut, will continue to trade with Enron as long as its debt ratings remain investment grade, Forsgren said. Northeast is New England's biggest utility owner. SEC Inquiry The Wall Street Journal reported that a U.S. Securities and Exchange Commission inquiry into Enron's financial dealings with affiliates, run by the company's former chief financial officer Andrew Fastow, has moved to Washington, signaling the investigation has become more serious. Investors say they are worried about $3.3 billion in liabilities from the affiliates, which were formed to buy and sell Enron assets. Houston-based Enron ousted Fastow on Wednesday amid the SEC inquiry into the partnerships he ran that cost the company at least $35 million. Other energy stocks also fell today as the price of natural gas on the New York Mercantile Exchange dropped as much as 3.7 percent. The Standard & Poor's 500 Index as much as 2.3 percent as consumer confidence in the U.S. economy dropped in October to the lowest level in more than 7 1/2 years. Shares of Duke Energy Corp. fell $1.43 to $37.71. Dynegy Inc. dropped $2.63, or 6.8 percent, to $36.30. El Paso Corp. fell $1.54, or 3 percent, to $49.20. Exxon Mobil Corp. fell $1.22, or 3 percent, to $39.46. EPDC to Spend $500 Mln Abroad as Japan Deregulates Power Market 2001-10-30 16:46 (New York) EPDC to Spend $500 Mln Abroad as Japan Deregulates Power Market Tokyo, Oct. 31 (Bloomberg) -- Electric Power Development Co., set up 49 years ago by Japan to power industrial growth, plans to spend $500 million on utility stakes from Thailand to the U.S. to help its first share sale as competition increases at home. EPDC, two-thirds owned by the finance ministry and the rest by Japan's nine regional power companies, wants to add almost 2,000 megawatts capacity with stakes in power plants in the Philippines, Korea, Taiwan, China and the U.S., to supplement investments in Thailand and India, said Masahide Takaraya, deputy director general of the company's international division. With Japan facing its worst recession in a decade, and the government ending regional power monopolies in the country's $122 billion electricity market, EPDC, Tokyo Electric Power Co. and rivals are looking overseas to expand. ``So far, their foreign investments are not big enough to offset the domestic downturn. If they want to improve their profit, (overseas acquisitions) have to get a lot bigger,'' said Yoshihiko Ito. He has no power stocks among the $1.5 billion he helps manage for Asahi Life Investment Co. because ``they're constantly under the threat of deregulation and have no pricing power.'' In March 2000, Japan began deregulation by allowing 30 percent of the biggest power users to buy electricity from any supplier, ending decades of monopoly by ten regional generators. Enron Corp., the largest energy trader, said it may generate and supply electricity in Japan in one or two years if the market opens. Meanwhile, Japan's economy will probably shrink this fiscal year and next, the Bank of Japan said. Asian Influx ``All Japanese power companies are looking abroad because the Japanese economy is worsening,'' said Masahiro Oonishi, head of EPDC's planning and administration department. ``Nowadays the international department is trying to find big businesses in Asia.'' Tokyo Electric, or Tepco, in 1999 bought a tenth of Baltimore, Maryland-based Orion Power Holdings Inc. for $80 million, a stake it has since sold to Reliant Energy Inc. Japan's largest power company now has investments in Taiwan and Vietnam. ``We're seeking alternative profit sources outside of Japan following deregulation in the local electricity industry,'' said Takashi Nakayama, a Tepco spokesman. EDPC began its overseas campaign even earlier, in 1997, with a 50 megawatt geothermal project in the Philippines. Last year, it bought 11 percent of BPL Group's 520 megawatt power project at Ramagundam in south India. It now owns minority stakes in power projects in the Philippines, China and Thailand. Still, the expansion in Asia may have more to do with troubles in Japan than the attractiveness of overseas investment, said Hiroyuki Sakaida, an analyst at BNP Paribas Securities Japan Ltd. No Confidence ``They have no confidence they can get higher returns abroad,'' said Sakaida. ``They're forced to seek business because of sharper competition at home.'' Japanese utilities make an average 5 percent return on their domestic assets. Even if Asian acquisitions give a higher return, that may be offset by political and currency risks, Sakaida said. Rivals' failed investments underline the point. Enron Corp. is trying to sell its 65 percent stake in Indian generator Dabhol Power Co., which is mired in a nine-month-old payment dispute with its sole customer, Maharashtra State. Malaysia's Tenaga Nasional Bhd., has labeled its Pakistan investment `Liability Power' because the unit, Liberty Power Ltd., has lost $132 million. Japanese power companies ``need to avoid country risks abroad where they have little experience,'' Sakaida said. ``Thailand is a good choice because it has a relatively small country risk.'' Almost half of EPDC's $100 million overseas investments to date are in Thailand, including a half share of Gulf Electric Pcl, 60 percent-owner of a 734-megawatt coal-fired power project; and 19 percent of a 700 megawatt plant run by Thai Oil Power Co. EPDC is also building in Thailand its first biomass plant outside Japan, which uses agricultural waste as fuel. Favorite Destination ``Thailand is our favorite destination because we believe political risk there is almost zero,'' said EPDC's Takaraya. ``Still, it's a little bit dangerous to concentrate our portfolio in one country.'' The next acquisition may be a stake in a gas-fired power plant in the Philippines, he said. EPDC's overseas campaign demonstrates Japan's change in policy. The company was set up in 1952 to build hydro and coal- fired power stations to reduce dependence on oil-fired power and help meet increasing demand from industrial growth. Its 58 hydropower plants and eight thermal stations are able to generate as much as 16,015 megawatts, or 6.4 percent of the country's capacity. EPDC's sales for the year ended March rose 10 percent to $4.1 billion, while gross profit rose 7 percent to $292 million. In June 1997, Japan's cabinet decided to privatize the company within five years as part of the proposed deregulation. The sale, now expected in 2003, would help cut the company's debt, which totaled 2.1 trillion yen ($17 billion), or 30 times its capital, in March. Japan's power producers, able to sell bonds paying as little as 0.5 percent, are some of Asia's biggest borrowers. Tepco owed 7.76 trillion yen in long term debt in March. EPDC says it's aware of the political risks in investing in Asia and chooses markets carefully. ``It's not the time to go to Indonesia,'' Takaraya said. Enron Default Insurance Signals Eroding Confidence (Update5) 2001-10-30 16:32 (New York) Enron Default Insurance Signals Eroding Confidence (Update5) (Adds background in 10th paragraph.) New York, Oct. 30 (Bloomberg) -- The price that investors pay to protect against a bond default by Enron Corp. doubled this week, reflecting on erosion of confidence in the biggest energy trader. The shares plunged for a 10th day. To hedge against losses for the next 18 months, investors now have to pay as much as 16.5 percent of the face value of bonds they own. A week ago, such insurance cost 7.5 percent, according to CreditSights Inc. Enron ``made a lot of people nervous and the concern is the nervousness will seep into Enron's operating business,'' said Austin Ramzy, director of fixed income research at Principal Capital Income Investors in Des Moines, Iowa, which owns about $190 million in Enron bonds. ``The question of the day is whether the crisis of confidence can be stopped.'' The increase in the price of so-called default swaps is another reflection, along with a 65 percent decline in Enron shares in the past two weeks, that investors are losing confidence in the company, analysts said. Enron shares, down 19 percent today to $11.16, have fallen every day since the company surprised investors by writing off $1.2 billion of assets on Oct. 17. Enron's 6.4 percent coupon bonds due in 2006 were bid at 73 cents on the dollar, traders said, down as much as 7 cents from yesterday's price of 80 cents. The debt now yields 14.5 percent, up from 12.1percent yesterday and 10.8 percent on Friday. Exposure ``Banks wanting to hedge risk are pushing the price higher,'' said Andy Palmer, who doesn't own Enron bonds in the $1.25 billion he helps manage at ASB Capital Management Inc. Enron default protection has risen from less than 3 percent per year, a price that is common for similarly rated companies. Other energy traders' such as Williams Cos. Inc. and Dynegy Inc. both have default insurance premiums below 2 percent per year, traders said. The increase in Enron's credit default swaps ``may be overstating the default risk,'' said Palmer. The purchasers of the default swaps are mainly banks that have loan exposure to Enron and ``banks are not as price-sensitive as institutional investors,'' said Palmer. ``They just want to get the exposure off their books.'' Principal Capital, which is an institutional investor, said did not buy protection for its $190 million of Enron bonds. John Tompkins, a trader at CreditTrade, a credit derivatives brokerage, said there's interest among buyers, though not sellers of Enron default swaps. He said there are bids for Enron credit default swaps at 7 to 8 percent annually for five years' protection and 12 percent annually on the three years' contract -- with no offers. Enron Credit was one of the world's biggest non-bank traders of default insurance. Undisclosed The largest energy trader's troubles began two weeks ago when it reported $1.01 billion in losses, including more than $544 million written off on a competitive energy supplier business and a bandwidth trading business. Enron formed at least 18 affiliated companies to buy and sell company assets, according to records from the Texas secretary of state. Some of those affiliates profited after Enron used $1.2 billion of company stock to buy back assets from the partnership. The Houston-based company losses included $35 million from partnerships set up by Chief Financial Officer Andrew Fastow. Fastow was later fired as chief financial officer and the U.S. Securities and Exchange Commission has asked for information about the transactions. The disclosure has set off concern among investors about how little is known about Enron's balance sheet and caused ratings companies to examine the company. ``Investors are nervous about this name,'' said Freda Lam, a fixed-income analyst at J.P. Morgan Chase & Co. in New York. Investor Relations Enron's long-term debt rating was cut yesterday to ``Baa2,'' two levels above junk, from ``Baa1.'' Moody's also placed the Houston-based company's ``P-2'' rating for commercial paper -- borrowing for nine-months or less -- on review for downgrade. Enron has been shut off from the commercial paper market since the ratings agencies began the review. The lack of access to money markets makes it more difficult for Enron to borrow the short-term cash needed to run its trading businesses. Ahead of a potential cut, Enron took out bank lines to repay $2 billion in commercial paper last week. Still, many on Wall Street expects Enron's bonds to be paid and its stock price to bounce back. ``We suspect that Enron's share price will not likely recover in the near term,'' Lam said. ``We ultimately expect this company to be successful. But it needs to improve its investor relations and its disclosure.'' U.S. Equity Movers: Anthem, CVS, Enron, Hispanic Broadcasting 2001-10-30 13:24 (New York) U.S. Equity Movers: Anthem, CVS, Enron, Hispanic Broadcasting New York, Oct. 30 (Bloomberg) -- The following is a list of companies whose shares are moving in U.S. markets Monday, Oct. 29. The stock symbol is in parentheses after the company name. Major Moving Stocks: Anthem Inc. (ATH) rose $4.57, or 13 percent, to $40.57 and traded as high as $40.80. The health-benefits company raised $1.78 billion in its initial public offering. CVS Corp. (CVS) fell $8.01, or 25 percent, to $23.61 and traded as low as $23. The drugstore chain said profit this year will unexpectedly decline and it will close 200 stores and cut jobs early next year. Other Moving Stocks: CrossWorlds Software Inc. (CWLD) rose $1.02, or 29 percent, to $4.56 and traded as high as $4.58. International Business Machines Corp. (IBM) agreed to buy the maker of electronic- commerce software for $129 million in cash. CSG Systems International Inc. (CSGS) fell $6.94, or 18 percent, to $32.26 and traded as low as $30.40. The provider of billing services for cable- and satellite-television companies expects 2002 earnings of $2 to $2.15 a share, which is lower than the $2.48 average estimate of analysts polled by Thomson Financial/First Call. CTC Communications Group Inc. (CPTL) fell 90 cents, or 13 percent, to $6 and traded as low as $5.26. The provider of telecommunications services doesn't expect to have positive earnings before interest, taxes, depreciation and amortization until the fourth quarter ending in March. That is one quarter later than its previous estimate. Dycom Industries Inc. (DY) fell $1.40, or 11 percent, to $10.99 and traded as low as $10.75. The provider of engineering and construction services to telecommunications companies said profit, excluding certain costs, in the first quarter ended Saturday was 13 cents to 15 cents a share. On that basis, which isn't in accordance with generally accepted accounting principles, profit was 5 cents to 7 cents below expectations, the company said in a statement distributed by PR Newswire. Enron Corp. (ENE) fell $2.51, or 18 percent, to $11.30 and traded as low as $11.07. The Securities and Exchange Commission will move its investigation of the energy trader to Washington from Fort Worth, Texas, a sign the agency wants to make a quick decision above whether to allege securities-law violations, the Wall Street Journal reported. Ensco International Inc. (ESV) fell $2.25, or 10 percent, to $20.32 and traded as low as $20. The offshore oil driller was downgraded to ``hold'' from ``add'' by ABN Amro Securities LLC analyst Matthew Conlan. Hispanic Broadcasting Co. (HSP) fell $2.76, or 15 percent, to $15.25 and traded as low as $15.05. The Spanish-language broadcaster said third-quarter profit fell to 8 cents a share from 12 cents a year earlier because it sold less advertising. Homestore.com Inc. (HOMS) fell 74 cents, or 13 percent, to $5.15 and traded as low as $4.86. The Internet real-estate listing service was downgraded to ``market outperform'' from ``recommend list'' by Goldman, Sachs & Co. analyst Anthony Noto. Macrovision Corp. (MVSN) fell $8.75, or 26 percent, to $24.72 and traded as low as $23.80. The maker of copyright-protection software expects fourth-quarter revenue to be unchanged from the $23 million it had in the third quarter. It was expected to have sales of $31.5 million, the average estimate of four analysts surveyed by First Call. McDonald's Corp. (MCD) fell for a second day, dropping $1.61, or 5.9 percent, to $25.67. The stock traded as low as $25.55. The fast-food chain yesterday said it will open 200 fewer restaurants and buy back as much as $5 billion in stock, as the company tries to turn around four quarters of falling profit. Odwalla Inc. (ODWA) rose $3.29, or 28 percent, to $15.12 and traded as high as $15.21. Coca-Cola Co. (KO) agreed to buy the natural fruit-drink maker for $181 million in cash. Coca-Cola will pay $15.25 a share for Odwalla's common stock. Openwave Systems Inc. (OPWV) fell $1.91, or 21 percent, to $7.08 and traded as low as $6.69. The maker of software for accessing the Internet over mobile phones said sales in the second quarter ending in December will be about $100 million, which is less than the $123.4 million average estimate of analysts polled by First Call. RehabCare Group Inc. (RHB) fell $13.48, or 35 percent, to $25.22 and traded as low as $23. The manager of hospital rehabilitation services said it will have fourth-quarter earnings of 41 cents to 42 cents a share. The company had been expected to earn 46 cents, the average estimate of six analysts polled by First Call. Royal Caribbean Cruises Ltd. (RCL) rose $1.66, or 18 percent, to $10.81 and traded as high as $10.95. The cruise-line company had third-quarter net income of 82 cents a share, compared with the 72-cent average estimate of analysts polled by First Call. Sulzer Medica AG (SM) American depositary shares, 10 of which represent one share, fell $1.49, or 35 percent, to $2.80 and traded as low as $2.30. The maker of orthopedic products said a court will allow individual lawsuits over faulty hip and knee implants, casting doubt on a plan for a group settlement. Enron chairman weathers a storm: Many in Houston believe Lay can get firm back on track (BUSINESS) Bruce Nichols 10/28/2001 The Dallas Morning News 1H Copyright 2001 Gale Group Inc. All rights reserved. COPYRIGHT 2001 The Dallas Morning News, L.P. HOUSTON - Over the last 15 years, Enron Corp. has transformed itself from a sleepy gas pipeline company into an energy trading giant. Chairman Ken Lay has changed along with it, from mere titan of business to Houston's leading citizen. So when business reversals hit Enron and Mr. Lay, the ripples are felt throughout civic life in a city where he has held virtually every leadership position and the corporate name graces the baseball stadium. Two months after his heir apparent resigned, Mr. Lay has seen his company buffeted by investors and has had to oust his chief financial officer. The Securities and Exchange Commission is looking into deals in which the former CFO played dual roles with Enron and a hedge group. "My sense is it's probably a little too soon to tell what the impact is with Ken himself," said Bob Eury, president of Central Houston Inc., a downtown development group. A loss of his and Enron's leadership "would be profound," Mr. Eury added, but most Houstonians expect Mr. Lay to weather the company's difficulties and continue his "marvelous leadership out in the community." Still, no one is going to be surprised if Mr. Lay is preoccupied for a while. "If the ship's on fire, you address that first," said oilman George Strake, who has worked with Mr. Lay on civic projects. Mr. Lay, 58, returned to the chief executive's role in August when his protege, Jeffrey K. Skilling, quit as CEO and president after only six months on the job. And Mr. Lay cited those burdens last week when he resigned as a director for i2 Technologies, the software developer based in Farmers Branch. "This is a very painful decision," Mr. Lay said in a prepared statement. "But now that I am again taking on the CEO responsibilities at Enron, I must reduce my outside activities." Enron's fall has been hard. From a 52-week peak of $84.62 on Dec. 28, the stock has been tumbling for months. It skidded all the way to $15.40 as of Friday's close, about half its value just two weeks earlier. Profits remain strong, but the company has announced write-downs of key assets - totaling $1.01 billion in after-tax nonrecurring expenses - and Wall Street analysts have turned coldly skeptical, if not hostile. Mounting troubles Enron confirmed the Securities and Exchange Commission inquiry into deals involving the just-departed CFO, Andrew Fastow. Under pressure, Enron replaced him Wednesday. There have been other troubles, too. As lead advocate for electricity market restructuring, Enron found itself under furious attack during California's energy crisis last spring. Investments in communications and water businesses soured. A huge power plant project in India has become a problem. Mr. Lay has said all the concern is misplaced. "To say the least, we are ... disappointed with our stock price," he told investors last week. But "our businesses are performing very well, and we're continuing to conduct business as usual." As for the SEC's interest, "We welcome ... the opportunity it provides us to put these matters to rest," he said. Skepticism that Mr. Lay can pull Enron back into the middle of the road exists in Houston. But the doubters don't want to be quoted by name and are not necessarily betting against him, considering his past successes. In Houston, "nobody's dancing on his grave," said lawyer David Berg, who's active in civic and political affairs. "There's a lot of residual respect for Ken Lay, and it's not going to go away even if he goes bankrupt, but that isn't going to happen." Wall Street reaction Financier Charles Miller, a Wall Street veteran, said analysts appear to be ganging up on Enron, with a few making "indefensible" comments that might be criminal if made about a bank. "Wall Street may be envious of the fact that, from the trading standpoint, he may have made one of the most profitable trading operations in the history of the world and, from all I can tell, very soundly," Mr. Miller said. From Wall Street comes a different interpretation: After the exit of two top executives in two months, the company's other problems, and the SEC's inquiry, it's time for more information from the company. "They've breached the confidence level with one thing after another," said John Parry, analyst with John S. Herold Inc. The 1980s oil, banking, and real estate busts have colored Houston's attitude toward business reversals, some say. Having seen fortunes rise, fall, and rise again in the '90s, Houston is less likely to lose leaders to temporary setbacks, energy banker Matthew Simmons said. "Most cities, if you're new or if you're struggling, you're shut out," Mr. Simmons said. Not Houston, and "I think that's its genius." Real estate investor Ned Holmes recalled that when Exxon Corp. suffered through the 1989 Alaska oil spill, the Chamber of Commerce threw a reception to express support and appreciation for the company's civic contributions. "We all turned out and told them that ... we know this is a difficult deal, but they're an important part of this community and we're not turning our back on them," Mr. Holmes said. "People feel every bit as strongly, if not more so, about Ken." It's hard to overstate the importance of Mr. Lay and Enron in Houston. He chaired or co-chaired committees leading Houston in playing host to the G-7 Summit in 1990 and the Republican National Convention in 1992. He chaired the University of Houston board of regents. When plans for a new baseball stadium hit a snag in the mid-1990s, he assembled a group of investors to buy the land and facilitate a deal that led to voter approval. Enron then bought the naming rights to the Astros' new home, Enron Field. Mr. Lay helped lead efforts to win voter approval of a new basketball arena, now under construction. He has backed rail transit and other measures to clean Houston's air. He and his wife, Linda, have been active in charities and have supported political candidates. New model In reinventing itself into a $100 billion-a-year energy trader, Enron created a business model that other energy companies have followed, making Houston a leader in a new kind of commodities market. Enron, whose influence extends into the White House of President Bush, is in the midst of adding to Houston's skyline, building a 40-story building next door to the 50-story building it already occupies. Losing Mr. Lay's and Enron's leadership "would be a sizable blow," said Jim Kollaer, president of the Greater Houston Partnership, a business-boosting group that includes the Chamber of Commerce. But "he hasn't pulled back." "He has to be there to answer these questions. He's going to take time to do that," Mr. Kollaer said. "But he's still functioning in a civic regard."
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