Articles

The message

A full list of articles will be sent on Monday, but here is some initial co=
verage from yesterday and today...

IN THE MONEY: Enron - From Energy Trader To Spinmeister
By Carol S. Remond

11/23/2001
Dow Jones News Service=20
(Copyright (c) 2001, Dow Jones & Company, Inc.)=20

A Dow Jones Newswires Column=20

(This column was originally published Wednesday.)=20

NEW YORK -(Dow Jones)- With the value of its stock continuing to plummet, E=
nron Corp. (ENE) tried to put on a good face Wednesday by issuing a press r=
elease touting, among other things, increased liquidity.
The problem is that most of the so-called news was three days old, recycled=
from the company's latest quarterly filing.=20
And investors weren't fooled by the release. Although the stock of the emba=
ttled Houston energy trader regained some ground immediately after the rele=
ase, climbing to $5.35 a share from $4.60, it quickly gave up most of its g=
ains. One hour after the release, Enron stock was back trading at $4.98 a s=
hare, down more than 28% on the day.=20
"They had to say something, but really didn't have any new news. It's quite=
incredible," said a Wall Street analyst covering Enron.=20
Amid mounting fears that Enron's credit woes could thwart its plan to merge=
with rival Dynegy Inc. (DYN), a merger that many see as the only way for E=
nron to avoid possible bankruptcy, Enron began its press release by announc=
ing that "it has closed on the remaining $450 million of a previously annou=
nced $1 billion in secured credit lines..."=20
Great news, given the way Enron has been burning through cash. Except that =
investors who took time to read Enron's filing with the Securities and Exch=
ange Commission on Monday already knew that "on November 19, 2001, Enron cl=
osed a $450 million new secured line of credit, which will mature in the fo=
urth quarter of 2002." Readers of the company's 10-Q also knew that the $45=
0 million credit was secured by the assets of Enron's Northern Natural Gas =
Co.=20
Meanwhile, the real news everyone was waiting for, an announcement about wh=
ether a $690 million loan due next Tuesday had been extended, has yet to be=
finalized.=20
Enron said in its release that it expected that an extension to mid-Decembe=
r would be formalized soon.=20
Separately, people familiar with the matter said J.P. Morgan Chase & Co. an=
d Citigroup Inc. continue to work with Enron to extend the maturity of the =
syndicated loan, which contains a clause that, unbeknownst to many, was tri=
ggered by Enron's ratings downgrade to "BBB-" by Standard & Poor's Corp. ea=
rlier this month. The clause stipulated that Enron would have to repay the =
$690 million note on November 27 if it didn't post collateral.=20
Those people said that the syndicated loan, which is built inside a structu=
red vehicle used to finance minority interests in power and energy sectors =
around the world, would likely be extended to the middle of 2002 when other=
bank loans to Enron come due. About $1.75 billion of Enron's $3.5 billion =
in syndicated bank loans come due in May 2002 and will likely need to be re=
structured.=20
About $250 million of the assets securing the $690 million loan are in the =
process of being sold and will be used to pay down the loan, reducing the o=
utstanding portion of the loan that will need to be restructured, according=
to the people familiar with the terms.=20
Meanwhile, Dynegy also tried to rally, although somewhat halfheartedly, inv=
estors around its plan to acquire Enron's stock. Dynegy said it was encoura=
ged by reports that Enron closed on its remaining $450 million credit facil=
ity and news of the extension of the $690 million loan. Under the terms of =
the acquisition, Enron holders would receive 0.2685 Dynegy share for each E=
nron share.=20
Investors, however, remain more circumspect, unmoved by the whopping 104% r=
isk premium currently attached to the merger. (That's how much investors bu=
ying Enron shares would make if the deal was closing Wednesday.)=20
Aside from continued worries about how much bad news may still come, analys=
ts and traders appear particularly concerned with Enron's liquidity, or lac=
k thereof, going forward.=20
"We're having a hard time believing that this new credit infusion (from the=
banks), even with the $1.5 billion from Dynegy, will provide enough liquid=
ity for Enron," one risk arbitrageur at a New York hedge fund said.=20
As part of the merger agreement between Dynegy and Enron, Chevron Texaco, w=
hich owns 26% of Dynegy, already injected $1.5 billion into Enron. Another =
$1 billion is expected upon closing of the deal.=20

Carol S. Remond, Dow Jones Newswires; 201-938-2074; carol.remond@dowjones.c=
om

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USA: Houston economy seen weathering major layoffs.
By Ellen Chang

11/23/2001
Reuters English News Service=20
(C) Reuters Limited 2001.=20

HOUSTON, Nov 23 (Reuters) - Houston's economy, buffered by a broad and dive=
rse tax base, should be able to weather thousands of layoffs from some of t=
he city's major corporations, including energy powerhouse Enron Corp., econ=
omists and analysts said.=20
Financially ailing Enron Corp. , which has 21,000 employees worldwide and i=
s in talks to be bought by Houston-based rival Dynegy Inc. , is the third m=
ajor employer in the city to announce severe financial problems in recent m=
onths. Analysts expect layoffs if the merger occurs.
Continental announced a layoff of 3,000 employees after the Sept. 11 attack=
s and Hewlett-Packard Co.'s plan to buy Compaq Computer Corp. will, if fina=
lized, result in 15,000 layoffs at the two companies. Compaq also announced=
8,000 layoffs worldwide in July.=20
"It's fair to say that the potential layoffs at Enron and the layoffs at Co=
ntinental, taken alone, are negative factors, although probably small in th=
e grand scope of the Houston economy," said Phil Scheps, director of Housto=
n's finance and administration department.=20
Since last month when Enron became a target of a Securities and Exchange Co=
mmission investigation into financial dealings with partnerships, the energ=
y giant's market share has steadily eroded.=20
While neither Enron nor Dynegy have given any indication of the number of l=
ayoffs that could hit Houston, Barton Smith, director of the Institute for =
Regional Forecasting at the University of Houston, said the layoffs "will b=
e spread out over a long period of time and will not be excessive."=20
Robin Kapiloff, an analyst at Moody's Investors Service, said the city's ef=
forts to diversify its economy over the past decade will protect its revenu=
e collections, even as some of the city's biggest employers suffer. "We're =
watching to see where things go now," she said.=20
Alex Fraser, a director at Standard & Poor's, said the ratings agency isn't=
concerned about Houston's credit position at this point. "While Enron is c=
ertainly a large player and prominent corporation, we're unclear on what th=
e impact would be."=20
While the fourth largest city in the country experienced a bit of a slowdow=
n since the Sept. 11 attacks, Houston has outperformed the rest of the nati=
on.=20
With a tax base of $87.3 billion in 2001, Houston is also buffered by the T=
exas Medical Center, the city's largest employer. Next year the city's tax =
base is estimated to grow to $95 billion.=20
Still, the national recession, energy price weakness in general, and the in=
itial loss of consumer confidence related to the attacks has caused the cit=
y to reduce its estimate of sales tax growth to 1.5 percent from 5 percent.=
That revised estimate equals a $13 million reduction in the city's $1.4 bi=
llion budget.=20
But the city's property tax revenue has not been affected. Only a small cha=
nge in property tax collections is expected in 2002 because valuations are =
based on Jan. 1 data and for most of 2001, real estate growth was very larg=
e, Scheps said.=20
While recent economic indicators appear positive, and consumer confidence h=
as quickly rebounded, a better read on the strength of Houston's tax revenu=
e collections will be available in February when the city receives data for=
the December holiday season, Scheps said.

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Meeting in Singapore to discuss Enron's arbitration proceedings against Ind=
ian state

11/23/2001
Associated Press Newswires=20
Copyright 2001. The Associated Press. All Rights Reserved.=20

NEW DELHI, India (AP) - A panel of arbitrators will meet in Singapore on Sa=
turday to discuss legal action by Enron Corp. against the western Indian st=
ate of Maharashtra, an Enron official said.=20
The Houston-based company has a 65 percent stake in the Dabhol Power Projec=
t in western India, and is locked in a dispute with the Maharashtra State E=
lectricity Board over unpaid electricity charges.
The Singapore meeting is likely to be followed by arbitration in a London c=
ourt, Dow Jones Newswires reported, quoting an unidentified Enron official =
on Friday.=20
The company suspended operation of the power plant in May and now plans to =
withdraw from India.=20
Enron has invested about dlrs 1 billion in equity of the 2,184 megawatt of =
power project, the largest ever foreign investment in India.=20
Enron sold electricity produced from naphtha to its sole customer, the gove=
rnment-owned power utility in Maharashtra, which found the costs too high.=
=20
The company also served notice to the federal government for not honoring a=
contract that required the government it to cover the Maharashtra state po=
wer utility's unpaid dues.=20
Earlier this year, Enron's chairman Kenneth Lay wrote to Indian Prime Minis=
ter Atal Bihari Vajpayee threatening to sue the government for up to dlrs 5=
billion if it did not resolve the dispute.=20
Dabhol Power Co. initiated arbitration against the state government for not=
honoring guarantees on power bills due for December 2000 and January, this=
year.=20
The panel, which has been appointed by the Dabhol Power Company and the Mah=
arashtra state government, includes an independent observer.=20
(dj-rkm, ng-kh)

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Enron SEC filing contained information Dynegy was unaware of - report

11/23/2001
AFX News=20
(c) 2001 by AFP-Extel News Ltd=20

NEW YORK (AFX) - Monday's SEC filing by Enron's Corp contained information =
that proposed buyer Dynegy Inc had not known about, the Wall Street Journal=
quoted a person familiar with the merger plans as saying.=20
Dynegy representatives plan to work through the weekend evaluating the impo=
rtance of this new information as part of the company's due diligence on En=
ron, the source said, without specifying what the new information was.=20
In the filing, Enron disclosed hundreds of millions of dollars of potential=
additional write-offs as well as the possibility that its weakening financ=
ial condition could force it to repay more than 2 bln usd in loans by the e=
nd of the year.
Dynegy announced Wednesday that it is working to accelerate regulatory appr=
ovals required to complete the acquisition in accordance with the previousl=
y announced agreement.=20
The Journal quoted analysts as saying Dynegy is coming under increasing pre=
ssure to renegotiate or walk away from the deal.=20
It also cited Fitch director Ralph Pellecchia as saying that, without the D=
ynegy acquisition and continued support from its bankers and customers, an =
Enron bankruptcy-court filing "is highly possible".=20
jms For more information and to contact AFX: www.afxnews.com and www.afxpre=
ss.com

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Dynegy's Decision to Buy Enron Hits Crossroads Amid Rising Financial Woes

11/23/2001
Dow Jones Business News=20
(Copyright (c) 2001, Dow Jones & Company, Inc.)=20

Even as it reiterated its intention to purchase Enron Corp., Dynegy Inc. is=
coming under increasing pressure to renegotiate or walk away from the mult=
ibillion-dollar deal, Friday's Wall Street Journal reported.=20
The pressure is stemming from the continuing slide in the price of Enron (E=
NE) shares and the mounting financial problems at the Houston energy-tradin=
g company, the nation's biggest marketer of electricity and natural gas. Du=
ring the past month, Enron has taken a $1 billion write-off of assets, revi=
sed downward the earnings of the past several years and taken a $1.2 billio=
n reduction in shareholder equity.
The problems have been due largely to dealings Enron had with private partn=
erships, run by some of its own executives, under investigation by the Secu=
rities and Exchange Commission. In an SEC filing Monday, Enron disclosed hu=
ndreds of millions of potential additional write-offs as well as the possib=
ility that its weakening financial condition could force it to repay more t=
han $2 billion in loans by the end of the year.=20
As of 4 p.m. Wednesday in New York Stock Exchange composite trading, Enron =
shares fell $1.98, or 28%, to $5.01 each after having dropped 23% Tuesday. =
In excess of 115 million shares traded Wednesday, more than four times the =
volume of any other Big Board stock. Enron's bonds also again traded sharpl=
y lower, market observers said.=20
The turmoil spilled over to Dynegy's stock, which also was among the most a=
ctively traded on the New York Stock Exchange. As of 4 p.m. Wednesday, Dyne=
gy (DYN) shares fell $1.94 to $39.76 each.=20
On Wednesday, Dynegy issued a statement in which Chairman and Chief Executi=
ve Chuck Watson said his company was working "to accelerate the regulatory =
approvals required to complete the merger in accordance with the previously=
announced agreement" though it continued to perform "due diligence" on Enr=
on.=20
Under the merger agreement, Dynegy has opportunities to renegotiate or walk=
away from the deal if Enron's financial and legal problems become severe e=
nough. However, some observers said it can be difficult to invoke these so-=
called material adverse change clauses. They point to a decision earlier th=
is year by a Delaware Chancery Court judge who forced Tyson Foods Inc. to c=
omplete a planned purchase of IBP Inc. even though Tyson, a Springdale, Ark=
., food-products company, had wanted to cancel the transaction because of a=
drop in IBP's earnings and accounting problems at an IBP unit.=20
Dynegy officials didn't return calls seeking comment. To complete the deal,=
two-thirds of Dynegy shareholders and a majority of Enron shareholders wou=
ld have to give their approval. No dates for those votes have been set.=20
One person familiar with the merger plans said the SEC filing Monday by Enr=
on contained information Dynegy hadn't known about. Dynegy representatives =
planned to work through the weekend evaluating the importance of this new i=
nformation as part of the company's due diligence, this person said. It cou=
ldn't be determined what the new information was.=20
The merger agreement, announced Nov. 9, calls for Dynegy to exchange 0.2685=
share for each of Enron's roughly 850 million fully diluted shares, giving=
the purchase a value of about $9 billion at Dynegy's current stock price. =
However, from a price standpoint, the deal is appearing less attractive to =
Dynegy.=20
On the day of the merger announcement, Enron shares were trading at about $=
8.63 each, or about 83% of the purchase price under the exchange ratio. As =
of Wednesday, Enron's market price was only about 47% of the merger-formula=
price. Such a sharp deterioration is unusual following a merger announceme=
nt, when the stock price of the company being acquired generally begins tra=
ding relatively close to the offering price.=20
Sentiment among Wall Street analysts also is turning against the merger. In=
itially, many analysts lauded the merger as a move that would rescue Enron =
and provide a major boost to Houston-based Dynegy. Dynegy and Enron officia=
ls have predicted that the merger, supposed to be completed late next year,=
would significantly and immediately increase Dynegy's earnings.=20
Now analysts are challenging that assumption. Ron Barone, managing director=
at UBS Warburg LLC, said he believes that because of Enron's financial pro=
blems, a combined company would actually have lower earnings next year than=
Dynegy would have by itself. Mr. Barone said he thinks a "likely scenario"=
is that the merger formula will be renegotiated sharply down to about 0.15=
Dynegy share for each Enron share.=20
Copyright (c) 2001 Dow Jones & Company, Inc.=20
All Rights Reserved.

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..........................................................=20

Financial Post Investing
Enron casts pall on analysts: 'Everyone had a buy on the stock' all the way=
down
Steve Maich
Financial Post, with files from news services

11/23/2001
National Post=20
National
IN1 / Front
(c) National Post 2001. All Rights Reserved.=20

For thousands of people burned by Enron Corp.'s spectacular implosion, it m=
ust have been tough to feel thankful yesterday.=20
Over the past month, the Houston-based company has admitted its earnings re=
ports going back four years are useless, written down billions in worthless=
investments, and fired its chief financial officer in a failed bid to shor=
e up its plunging stock.
The slide in Enron's stock (ENE/NYSE) has already wiped out US$67-billion i=
n shareholder wealth. Now it may lose its last lifeline, a US$7.93-billion =
takeover offer from Dynegy Inc.=20
Enron's fall is proving to be more than just a cautionary tale about sketch=
y accounting. The case is raising serious questions about the responsibilit=
y of analysts who strongly recommended a stock that many now admit they nev=
er really understood.=20
"The public isn't going to trust stock analysts for awhile," said Scott Pre=
ston, a San Francisco-based analyst with Research Capital Corp. who does no=
t cover Enron. "Every analyst had a buy on the stock. And it's not like the=
re was only one little issue there. It's a mess and big brokerages were com=
ing out as it was on the way down saying put this thing in your Grandmother=
's [RRSP]."=20
But Wall Street's embarrassment pales next to the pain of shareholders, inc=
luding Enron employees whose pensions were loaded with the stock.=20
"I have lost my savings, my plans for the future, everything," Roy Rinard, =
a long-time Enron staffer, said this week as he announced that employees ha=
ve banded together for a class-action lawsuit against the company.=20
Several analysts have acknowledged that Enron's financial statements were r=
outinely incomprehensible. But with brokerages vying for the millions of do=
llars in equity and bond underwriting business Enron provided every year, m=
any analysts chose to focus on the company's growth, and failed to ask toug=
h questions about its books.=20
Critics say the red flags were waving long ago.=20
The first clear sign of trouble came Aug. 14, when Jeffrey Skilling quit th=
e CEO job he took over just seven months earlier, citing personal reasons. =
Former chief executive Kenneth Lay reclaimed the job. "Our business is stro=
ng and our growth prospects have never been better," Mr. Lay said at the ti=
me.=20
In fact, cracks were already appearing in the business. Enron's plan to sta=
rt trading capacity on fibre optic networks was a costly failure, and the c=
ompany was locked in a prolonged dispute with the Indian government over en=
ergy purchases in the region.=20
In October, Enron surprised investors by reporting its first quarterly loss=
in more than four years, due in large part to the writedown of US$1-billio=
n in bad investments. Within a week, the U.S. Securities and Exchange Commi=
ssion started investigating Enron's finances.=20
The company soon admitted major accounting errors dating back to 1997. Its =
profits had been overstated by US$586-million, or 20%. The company revealed=
that some of the investments it had written off were limited partnerships =
headed by CFO Andrew Fastow -- a serious breach of good corporate governanc=
e. Mr. Fastow was fired, but it didn't stop Enron's descent.=20
The pain may be far from over.=20
Facing a year of regulatory hearings to approve the merger, and a rapidly d=
evaluing asset in Enron, many fear Dynegy will walk away from the deal. If =
that happens, Enron may be doomed.=20
The stock closed Wednesday at US$5.01, down 93% this year. Dynegy closed at=
US$39.76, valuing the Enron offer at US$10.67 a share. The fact that Enron=
's stock is trading so far below the offer price is a sure sign that invest=
ors doubt it will proceed, at least not at the current offer price.=20
All this has left investors wondering how so many could have been so wrong,=
about so much. And how can so many continue to endorse the stock?=20
Of the 18 analysts that cover the stock, 10 still rate it a "buy." Goldman =
Sachs analyst David Fleisher removed Enron from his recommended list this w=
eek, but only after his firm was excluded from the banking syndicate arrang=
ing the Dynegy deal.=20
Carol Coale, an analyst at Prudential Securities, dropped Enron from "buy" =
to "sell" this week, citing its long history of spotty disclosure, and ofte=
n evasive answers to questions. She acknowledged to clients that her downgr=
ade is "too little, too late" for many.

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Financial Post: World
Enron looking for US$1.5B boost to balance sheet: Expects cash from buyout =
firms, private equity investors
Robert Clow
Financial Times

11/23/2001
National Post=20
National
FP12
(c) National Post 2001. All Rights Reserved.=20

NEW YORK - Officials working to shore up Enron Corp.'s balance sheet said y=
esterday the struggling energy trader hoped to receive capital injections o=
f more than US$1.5-billion as early as next week.=20
Enron is in talks about investments of US$250-million with JP Morgan Chase =
and Citigroup and is also hoping to raise at least US$1-billion from privat=
e equity investors.
People close to Enron declined to comment on which buyout firms might wish =
to invest in Enron, but the Blackstone Group, which was reported to be talk=
ing to the company before Dynegy Inc. made its US$9-billion rescue bid, is =
understood not to be talking to Enron any longer.=20
Members of the 20-strong bank lending group, led by JP Morgan Chase and Cit=
igroup, are being asked to defer the maturities of their upcoming debt unti=
l after completion of the merger.=20
The move comes as reports from Goldman Sachs & Co. and Fitch, the credit ra=
ting agency, raised questions about the company's cash flow and its medium-=
term viability.=20
David Fleischer, a Goldman Sachs analyst, argued that cash balances were in=
adequate to meet US$2.8-billion of debt obligations falling due before the =
end of the year. People close to Enron say that nearly US$1-billion of that=
debt has already been restructured.=20
The Fitch report said that if the Dynegy deal was not completed Enron would=
struggle to meet US$9-billion of obligations, due before the end of next y=
ear.=20
People close to Enron insisted Dynegy remained committed to the merger and =
played down talk of renegotiation.=20
Dynegy would shortly issue a statement reasserting its commitment to the de=
al, they predicted.=20
But bankers acknowledged the fate of the Dynegy deal was largely irrelevant=
in terms of the company's immediate liquidity problems.=20
The company has raised about US$7-billion in cash, enough to cover its oper=
ating costs since a US$1.2-billion writedown of shareholder equity plunged =
it into crisis on Oct. 16.=20
However, the company's cash flow is being squeezed. The computer screens in=
front of energy traders at Enron's London headquarters still glow, even if=
they are doing much less business following the U.S. group's financial woe=
s.=20
The Belgravia offices house Europe's biggest electricity trader, which acco=
unts for about a fifth of all European power contracts, worth roughly (ps)7=
0-billion ($158-billion) last year in British, Nordic and other European ma=
rkets.=20
Fears over Enron's credit rating have prompted a sharp fall in its European=
electricity trading. Nonetheless, some companies that had previously withd=
rawn from buying and selling power with Enron have resumed trading with it =
in the short-term market.=20
Few want to risk trading further than a week or two ahead, however, given c=
ontinuing doubts over the company's finances.

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Report on Business: The Wall Street Journal
WHAT'S NEWS
United States
Wall Street Journal

11/23/2001
The Globe and Mail=20
Metro
B9
"All material Copyright (c) Bell Globemedia Publishing Inc. and its licenso=
rs. All rights reserved."=20

Two Enron Corp. workers are suing the company, claiming it endangered their=
retirement funds. The lawsuit, filed in Houston under the Employee Retirem=
ent Income Security Act, alleges that Enron encouraged the employees to inv=
est more heavily in company stock just before the stock tanked. The lawsuit=
was filed by Portland, Ore., utility lineman Roy Rinard and co-worker, Ste=
ve Lacey. Enron shares have plunged more than 90 per cent over the past sev=
eral months after an accounting controversy that eventually caused it to re=
state its earnings since 1997, eliminating more than $580-million (U.S.) of=
reported income.

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COMPANIES & FINANCE THE AMERICAS - Enron 'awaiting' capital injections, say=
officials.
By ROBERT CLOW.

11/23/2001
Financial Times=20
(c) 2001 Financial Times Limited . All Rights Reserved=20

Officials working to shore up Enron's balance sheet yesterday said the stru=
ggling energy trader hoped to receive capital injections of more than $1.5b=
n as early as next week.=20
Enron is in talks about $250m investments with JP Morgan Chase and Citigrou=
p and is also hoping to raise at least $1bn from private equity investors.
People close to Enron declined to comment on which buyout firms might wish =
to invest in Enron. However, the Blackstone Group, which was reported to be=
talking to the company before Dynegy made its $9bn rescue bid, is understo=
od no longer to be doing so.=20
Members of the 20-strong bank lending group, led by JP Morgan Chase and Cit=
igroup, are being asked to defer the maturities of their upcoming debt unti=
l after the completion of the merger.=20
The moves comes as reports from Goldman Sachs and Fitch, the credit rating =
agency, raised questions about the company's cash flow and its medium-term =
viability.=20
David Fleischer, a Goldman Sachs analyst, argued that cash balances were in=
adequate to meet $2.8bn of debt obligations falling due before the end of t=
he year.=20
People close to Enron say that nearly $1bn of that debt has already been re=
structured.=20
The Fitch report said that if the Dynegy deal was not completed, Enron woul=
d struggle to meet $9bn of obligations due before the end of next year.=20
People close to Enron insisted that Dynegy remained committed to the merger=
and played down talk of renegotiation.=20
Dynegy would shortly issue a statement reasserting its commitment to the de=
al, they predicted.=20
(c) Copyright Financial Times Ltd. All rights reserved.=20
http://www.ft.com.

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..........................................................=20

Dynegy's Bid for Enron Appears Less Appealing --- Merger Deal Loses Luster =
as Shares Tumble --- Acquisition Target Faces Numerous Earnings Problems
By Rebecca Smith and John R. Emshwiller
Staff Reporters

11/23/2001
The Wall Street Journal Europe=20
4 (Copyright (c) 2001, Dow Jones & Company, Inc.)=20

Even as it reiterated its intention to purchase Enron Corp., Dynegy Inc. is=
coming under increasing pressure to renegotiate or walk away from the mult=
i-billion-dollar deal.=20
The pressure is coming from the continuing slide in the price of Enron shar=
es and the mounting financial problems at the Houston energy-trading compan=
y, the biggest marketer of electricity and natural gas in the U.S. In the p=
ast month, Enron has taken a $1 billion (1.1 billion euros) write-off of as=
sets, restated downward the past several years of earnings and taken a $1.2=
billion reduction in shareholder equity. The problems owe largely to deali=
ngs Enron had with private partnerships run by some of its own executives n=
ow under investigation by the U.S. Securities and Exchange Commission. In d=
ocuments filed with the SEC on Monday, Enron disclosed hundreds of millions=
of potential additional write-offs as well as the possibility that its wea=
kening financial condition could force it to repay more than $2 billion in =
loans by the end of the year.
On the New York Stock Exchange Wednesday, Enron shares were down 28% at $5.=
01 each, after having dropped some 23% on Tuesday. There was no trading Thu=
rsday. More than 115 million shares changed hands Wednesday, more than four=
times the volume of any other Big Board stock. Enron's bonds also fell, tr=
aders said.=20
The turmoil spilled over to Dynegy's shares, which were also among the most=
actively traded on the New York Stock Exchange. Dynegy shares were at $39.=
76 each on Wednesday, down $1.94.=20
Dynegy Chairman and Chief Executive Chuck Watson said his company was worki=
ng "to accelerate the regulatory approvals required to complete the merger =
in accordance with the previously announced agreement" though it continued =
doing due diligence review on Enron. Under the merger agreement, Dynegy has=
opportunities to renegotiate or walk away from the deal if Enron's financi=
al and legal problems become severe enough.=20
Dynegy officials didn't return calls seeking comment. To consummate the dea=
l, two-thirds of Dynegy shareholders and a majority of Enron shareholders w=
ould have to give their approval. No dates for those votes have been set.=
=20
The merger agreement, announced Nov. 9, calls for Dynegy to exchange 0.2685=
of its shares for each of Enron's roughly 850 million fully diluted shares=
, giving the purchase a value of about $9 billion at Dynegy's current stock=
price.=20
However, from a price point of view, the deal is looking ever less attracti=
ve to Dynegy.=20
On the day of the merger announcement, Enron shares were trading at about $=
8.63 a share, or about 83% of the purchase price under the exchange ratio. =
As of Wednesday, Enron's market price was only about 47% of the merger-form=
ula price.=20
Such a sharp deterioration is unusual following a merger announcement, when=
the stock price of the company being acquired generally begins trading rel=
atively close to the offering price.=20
Sentiment among Wall Street analysts is also turning against the merger. In=
itially, many analysts lauded the merger as a move that would rescue Enron =
and provide a major boost to Dynegy. Dynegy and Enron executives have predi=
cted that the merger, which is supposed to be completed late next year, wou=
ld significantly and immediately increase Dynegy's earnings.=20
Now analysts are challenging that assumption. Ron Barone, managing director=
at UBS Warburg LLC, said that because of Enron's financial problems a comb=
ined company would actually have lower earnings next year than Dynegy would=
have by itself. Mr. Barone said a "likely scenario" is that the merger for=
mula will be renegotiated sharply lower to about 0.15 Dynegy shares for eac=
h Enron share.=20
Such a move wouldn't be without precedent. According to a person familiar w=
ith the merger negotiations, Dynegy reduced the exchange formula at least o=
nce prior to the Nov. 9 announcement because of Enron's rapidly sinking sto=
ck price, which at the beginning of this year was above $80 a share.=20
In perhaps the most significant sign of the turning tide on Wall Street, Go=
ldman Sachs analyst David Fleischer lowered his ratings on Enron and Dynegy=
. A longtime Enron fan, Mr. Fleischer issued a report expressing doubts tha=
t the merger would help Dynegy's earnings and whether Enron could "recover =
the significant business that has been lost" in its energy trading operatio=
ns. "The Enron machine continues to sputter," wrote Mr. Fleischer.=20
Some observers say that if Dynegy walked away from the deal or tried to sig=
nificantly renegotiate the terms, Enron might be pushed into bankruptcy. Wi=
thout the Dynegy acquisition and continued support from its bankers and cus=
tomers, an Enron request for bankruptcy protection from creditors "is highl=
y possible," said Ralph Pellecchia, a senior director at Fitch, a credit-ra=
tings agency. On Wednesday, Fitch maintained its credit rating on Enron at =
just one notch above noninvestment grade, or "junk" status. But Fitch also =
said that Enron's trading partners had made "significant cash collateral ca=
lls" in recent days that are "well in excess of previous expectations," con=
tributing to liquidity pressures.=20
Among the advisers Enron has hired during its current crisis is the law fir=
m of Weil, Gotshal & Manges, which has a specialty in bankruptcy and corpor=
ate restructuring. One energy trader said Wednesday that some colleagues ha=
d even started a betting pool about the timing of a possible Enron bankrupt=
cy filing. But he quickly added that he had no knowledge that the company h=
as contemplated such a step.=20
Asked about a possible bankruptcy filing, an Enron spokeswoman said the com=
pany expects the Dynegy deal to go through and therefore doesn't expect to =
have to look at alternatives to the merger. Since the merger announcement, =
Enron Chairman Kenneth Lay has said that his company had alternatives to th=
e Dynegy deal, but he has declined to identify them.=20
---=20
Thaddeus Herrick in Houston contributed to this article.

...........................................................................=
..........................................................=20
Enron Europe carries on trading.
By ANDREW TAYLOR, UTILITIES CORRESPONDENT.

11/23/2001
Financial Times - FT.com=20
(c) 2001 Financial Times Limited . All Rights Reserved=20

The screens in front of energy traders at Enron's London headquarters are s=
till glowing, even if they are doing much less business following the US gr=
oup's financial woes.=20
The Belgravia offices house Europe's biggest electricity trader, which acco=
unts for about a fifth of all European power contracts, worth roughly GBP70=
bn ($99bn) last year in UK, Nordic and other European markets.
Fears over Enron's credit rating have prompted a sharp fall in its European=
electricity trading. Nonetheless, some companies which had previously with=
drawn from buying and selling power with Enron have resumed trading with it=
in the short-term market.=20
Few want to risk trading further than a week or two ahead, however, given c=
ontinuing doubts over the company's finances. Whether Enron can survive dep=
ends on the commitment of Dynegy, the rival US energy group, to its $9bn re=
scue takeover announced two weeks ago.=20
John Sherriff, president and chief executive of Enron Europe, was anxious o=
n Thursday to show that it was still "business as usual" for his energy tra=
ders.=20
He estimates they are transacting about 70 per cent of the number of contra=
cts they would normally expect, but only about 40 per cent by volume. Rival=
traders believe volumes may have fallen much further.=20
Contracts ranging from a day ahead to many years hence are used as a hedge =
to protect generators and retailers from risks of sudden price changes.=20
As financial instruments they are traded many times over. As a result, the =
total value of the transactions is much higher than the cost of the actual =
electricity delivered. However, the transactions play an increasingly impor=
tant role in oiling competitive electricity markets.=20
Rival European power companies and traders are anxious that Enron should no=
t fail.=20
Brian Senior, director of trading and asset management at Innogy, the UK ar=
m of the demerged National Power, said recent transactions had shown there =
was sufficient liquidity in European markets to cope if Enron disappeared.=
=20
Traders were more concerned that Enron might not be able to honour existing=
long-term contracts. "This could have a domino effect, putting pressure on=
other companies," said Mr Senior.=20
US power companies failed in similar circumstances after the Ohio-based Fed=
eral Energy defaulted on power contracts in 1998, he said.=20
Martin Stanley, president of European energy trading for TXU, another large=
US energy group, said: "We are watching the situation carefully and would =
want to do nothing to add to Enron's problems by making unhelpful comments =
about their current position."=20
Mr Sherriff said: "Counter-parties are generally being very supportive."=20
Innogy said it had resumed limited trading with the US group but was "watch=
ing the situation carefully". TXU said: "We are still trading with Enron in=
the short-term market but less than we were."=20
The Nordic market is one of the most active for power trading. US groups su=
ch as Enron, TXU and Dynegy have helped to expand the UK market, while Enro=
n has a strong base in Germany.=20
(c) Copyright Financial Times Group.=20
http://www.ft.com.

...........................................................................=
..........................................................=20

What's News
Business and Finance
Business and Finance

11/23/2001
The Wall Street Journal=20
A1
(Copyright (c) 2001, Dow Jones & Company, Inc.)=20

DYNEGY IS COMING under increasing pressure to renegotiate or walk away from=
its deal to acquire Enron, due to the slide in the price of Enron shares a=
nd the mounting financial problems at the energy-trading company. Separatel=
y, Enron has been sued by members of its employee-retirement plan, which ha=
s suffered losses because of Enron's plunging stock price. In trading Wedne=
sday, Enron shares tumbled 28% to $5.01.=20
---
The economy could be declared officially in recession as early as today. Th=
e move comes amid signs that the recession already may be bottoming out, wi=
th initial jobless claims declining.=20
---=20
Norway offered to cut its oil production, becoming the latest independent e=
xporter to succumb to OPEC's wishes in an effort to prop up world oil price=
s.=20
---=20
WMC rejected a $6 billion takeover bid from Alcoa. The Australian mining co=
mpany said it plans to spin off part of the firm in hopes of fetching a hig=
her price.=20
---=20
Retail Brand is set to buy Brooks Brothers from Marks & Spencer for about $=
225 million, less than a third of what the U.K. firm paid in 1988 for the m=
en's retailer.=20
---=20
The FDA approved Lilly's drug Xigris to treat septic infections, a medicine=
Wall Street believes could produce sales of more than $1 billion annually.=
=20
---=20
Argentina extended by one week a deadline for institutional investors to te=
nder their holdings in a giant debt swap.=20
---=20
UFJ and Sumitomo Mitsui announced a combined $24 billion in write-offs, as =
investors pressure Japanese banks to purge their balance sheets of bad loan=
s.=20
---=20
Archer-Daniels, Cargill and Riceland agreed to sell about $25 million of fa=
rm goods to Cuba, the first commercial food deal by the U.S. and Havana in =
40 years.=20
---=20
Microsoft's general counsel said he plans to retire at the end of the fisca=
l year. William Neukom will be succeeded by Brad Smith, deputy general coun=
sel.=20
---=20
Goldman Sachs could slash as many as 1,000 jobs due to the Wall Street slum=
p, a Merrill Lynch analyst said.=20
---=20
CIBC agreed to pay at least $297.8 million to acquire Merrill's Canadian br=
okerage and asset-management operations.=20
---=20
NTT reported a $2.13 billion loss for its fiscal first half, due to the Jap=
anese company's losses on overseas investments and domestic restructuring c=
osts.=20
---=20
South Korea's economy grew by 1.8% in the third quarter, showing a surprisi=
ng resilience during the global slump.=20
---=20
CSX tentatively settled litigation from a 1987 chemical-car fire that had l=
ed to an initial $2.5 billion judgment against the firm.=20
---=20
Markets --=20
Stocks: NYSE vol. 1,021,074,890 shares, Nasdaq vol. 1,556,321,162. Dow Jone=
s industrials 9834.68, off 66.70; Nasdaq 1875.05, off 5.46; S&P 500 index 1=
137.03, off 5.63.=20
Bonds:(2pm) 10-yr Treas off 25/32, yld 4.954%; 30-yr Treas off 21/32, yld 5=
.351%.=20
Commodities: Oil futures $18.96 a barrel, off $0.19; Dow Jones-AIG futures =
index 89.862, off 0.069; DJ spot index 96.62, up 0.42.=20
Dollar: 123.08 yen, up 0.56; 2.2246 marks, up 0.0092; euro 87.92 cents, off=
0.37.

...........................................................................=
..........................................................=20

Enron Faces Suits by 401(k) Plan Participants
By Theo Francis and Ellen Schultz
Staff Reporters of The Wall Street Journal

11/23/2001
The Wall Street Journal=20
C1
(Copyright (c) 2001, Dow Jones & Company, Inc.)=20

Enron Corp., the embattled Houston energy and trading company, has been sue=
d by members of its employee-retirement plan, which has suffered losses bec=
ause of Enron's plummeting stock price.=20
Two separate lawsuits, filed in federal court in Houston, allege Enron misl=
ed participants in its 401(k) retirement plan about the risks of investing =
in the company's shares and note that the company forced the employees to r=
emain invested in its stock even as the shares fell. Amid growing disclosur=
es of financial problems in recent weeks, the company "locked down" the ret=
irement plan from Oct. 17 to Nov. 19 to make administrative changes, which =
prevented employees from selling Enron shares as the share price collapsed.
Enron, which recently agreed to be acquired by Dynegy Inc., Houston, becaus=
e of mounting financial problems, has seen its stock price fall to $5.01 on=
Wednesday from a peak of nearly $90 a share last year. The decline has bee=
n costly to participants in Enron's retirement plan because more than 60% o=
f the 401(k) assets were invested in Enron shares at the end of last year, =
according to one of the suits.=20
The first suit was filed Nov. 13 on behalf of plan participants by Campbell=
Harrison & Wright LLP, a Houston law firm, and the second was filed Tuesda=
y by Seattle-based Hagens Berman LLP. Both seek class-action certification.=
=20
Enron said its corporate policy is not to comment on pending lawsuits. A sp=
okeswoman also said the company's 401(k) plan offers participants 18 invest=
ment choices, one of which is company stock.=20
The company's stock has fallen amid mounting losses and disclosures that it=
had extensive off-balance-sheet dealings with a web of partnerships headed=
by former company officials. The Securities and Exchange Commission has la=
unched a formal investigation into the company's accounting, and Enron has =
said it will restate years of financial information.=20
The suits against Enron are the latest of a series of suits filed against c=
ompanies over losses in the company-stock portion of their 401(k) plans. Th=
e suits allege the plan trustees breached their fiduciary duties by continu=
ing to offer company stock, even after they became aware of serious busines=
s problems that would hurt the stock price. All the suits are pending.=20
As with most of these companies, Enron matches employee contributions to th=
e 401(k) with shares of Enron stock, and also offers Enron stock as an inve=
stment choice, in addition to a variety of mutual funds. About $1.3 billion=
of the plan's $2.1 billion in assets was invested in Enron shares at the e=
nd of 2000, according to the suit filed by Campbell Harrison.=20
Pamela Tittle, a participant in the 401(k) plan who worked in the finance d=
epartment and a named plaintiff in the Enron suit filed by Campbell Harriso=
n & Wright, had roughly 2,000 shares of Enron stock in her retirement accou=
nt and has suffered losses of about $140,000 as a result of the stock's dec=
line. The suit alleges that the trustees of the Enron 401(k) plan violated =
their fiduciary duties by not informing plan participants that the company =
stock was in peril.=20
The suit filed by Hagens Berman, also alleges that the company failed to wa=
rn participants about risks of remaining invested in Enron stock. In additi=
on, it accuses Enron of systematically misrepresenting its financial result=
s since 1998 in connection with the partnerships under investigation by the=
SEC.=20
Roy E. Rinard, a lineman for Enron in Oregon who is a named plaintiff in th=
e suit filed by Hagens Berman, has seen the value of his retirement plan fa=
ll to $70,000 from $470,000, largely as a result of the decline in Enron's =
stock. "I feel like I have been betrayed," Mr. Rinard said in press release=
issued by his lawyers. "I lost my savings, my plans for the future, everyt=
hing."=20
Under federal pension law, companies are allowed to offer their own stock i=
n retirement plans, and are allowed to force employees to hold onto the sto=
ck. Enron doesn't let employees diversify out of shares they receive as mat=
ching contributions to the 401(k) plan until age 50.=20
However, plan trustees are supposed to operate the plan in the best interes=
ts of the participants, which includes choosing prudent investments. Genera=
lly, to prove that the plan's administrators breached their fiduciary dutie=
s, employees must show that the trustees knew the stock was a bad investmen=
t. This presents a high hurdle, so it is not surprising that prior lawsuits=
over losses in company stock in 401(k) plans have generally come in the wa=
ke of allegations of accounting irregularities.=20
Lynn Sarko, one of Ms. Tittle's attorneys with Seattle's Keller Rohrback LL=
P, is also co-lead counsel in a similar lawsuit against Lucent Technologies=
Inc., Murray Hill, N.J. Another firm representing Ms. Tittle is Dalton Got=
to Samson & Kilgard PLC, which is lead counsel in a similar suit against Ik=
on Office Solutions Inc., Malvern, Pa. The two law firms are representing M=
s. Tittle with Campbell Harrison & Wright.=20
The suits against Lucent and Ikon, like the suit against Enron, allege that=
then-current plan trustees kept offering company stock in the plan despite=
knowing of serious business problems that would hurt the stock price. Repr=
esentatives for Ikon and Lucent say their companies didn't require employee=
s to invest in the company stock, and educated employees about the need for=
diversification.=20
The suit in which Mr. Rinard is plaintiff notes that on Oct. 17, a day afte=
r Enron announced the company was taking a nonrecurring charge totaling $1.=
01 billion in the third quarter, Enron "locked down" the 401(k) plan's asse=
ts, preventing participants from selling Enron shares. (A "lock-down" occur=
s when a retirement plan is transferred from one administrator to another, =
and generally lasts several weeks, during which time participants can't mak=
e changes in their investment choices).=20
The lock-down was lifted on Nov. 19. In the interim, on Nov. 8, Enron annou=
nced it would be forced to restate downward its reported financial results =
from 1997 through 2000. By the time the lock-down was lifted, as a result o=
f all the negative news the shares had fallen to below $9 a share from $32.=
20 on Oct. 17, when the lockup started, Hagens Berman attorney Karl Barth s=
aid.=20
"They were locked into it right when Enron knew it was going to be announci=
ng some really bad news," Mr. Barth said. "Mr. Rinard's looking at having n=
o retirement savings now. It's a horrible thing to have to start over in yo=
ur 50s."

...........................................................................=
..........................................................=20

Enron says sorry as shares keep falling.

11/23/2001
Energy Compass=20
(c) 2001 Energy Intelligence Group. All rights reserved=20

Investors in Enron must be wondering when their luck will change. The compa=
ny's shares were sent tumbling again this week after the company revealed t=
hat its credit crunch was worse than many investors thought. The news spurr=
ed talk that rival energy trader Dynegy may have to inject more cash under =
its plan to buy Enron - or could even walk away from the deal.=20
In a quarterly filing with the Securities and Exchange Commission, Enron sa=
id it must pay down a $690 million note by Nov. 27 because of the recent do=
wngrade of its credit rating. Unless Enron repays the note or posts a lette=
r of credit, the unidentified creditor can start liquidating Enron assets. =
These include CEG Rio, a gas distribution company in Brazil that Enron is a=
lready in the process of selling to pay down other debt.
At the market close on Tuesday, Enron shares stood at $6.99/share, about 39=
% below Dynegy's bid price of $11.60/share, and a fraction of the $90.75 pe=
ak reached in August 2000 when the company was in its asset-light pomp.=20
At least Enron is trying to say sorry - sort of. In a conference call with =
analysts and investors last week, chairman and chief executive Kenneth Lay =
indicated regret for the series of bad investments in non-core businesses t=
hat has nearly bankrupted the big energy trading company. "In hindsight, we=
made some very bad investments in some non-core businesses," Lay acknowled=
ged. "I could not have ever contemplated the events we as a company and you=
as a stakeholder have faced over the last several weeks. This has resulted=
in a complete loss of investor confidence."=20
And, via the Dynegy deal, a complete loss of Enron independence, although e=
ven that is not cut and dried. If Enron fails to settle the $690 million de=
bt repayment next week, its credit rating would likely be reduced to sub-in=
vestment or "junk" status. And if that happened, it would qualify as a "mat=
erial adverse change," allowing Dynegy to pull out of the merger if it want=
ed to. Analysts doubt things will get this bad, still giving the deal a 70-=
90% chance of going through.

...........................................................................=
..........................................................=20

Business/Financial Desk; Section C
From Sunbeam to Enron, Andersen's Reputation Suffers
By FLOYD NORRIS

11/23/2001
The New York Times=20
Page 1, Column 2
c. 2001 New York Times Company=20

THIS has been the worst year ever for Arthur Andersen, the accounting firm =
that once deserved the title of conscience of the industry. The Securities =
and Exchange Commission filed civil fraud complaints against the Andersen p=
artner who audited Sunbeam and against the firm itself in the Waste Managem=
ent case.=20
Now Enron has repudiated the financial statements that were certified by Ar=
thur Andersen, in the process shaving more than half a billion dollars from=
the company's reported profits in recent years.
All of which raises the question: Has Arthur Andersen become the black shee=
p of the accounting industry?=20
It is not an easy question to answer, and not everyone is willing to rush t=
o judgment. ''If you want to attack Andersen for Enron, you need to know mo=
re than we know,'' Arthur Levitt, the former chairman of the Securities and=
Exchange Commission, said this week.=20
But if there is a thread connecting what is known about the three cases, it=
is materiality. In all three cases, Andersen auditors spotted bad accounti=
ng but were persuaded it was immaterial and therefore allowed it to go ahea=
d.=20
Materiality is one of those flexible concepts that can get accountants into=
trouble. The idea is that it doesn't much matter if a few little things we=
re gotten wrong. But they can add up.=20
At Enron, however, they did not add up to that much -- a total of $93 milli=
on over four years. The biggest restatement of Enron profits concerns a rel=
ated party that Enron now says should have been consolidated. It is not cle=
ar if Andersen had the facts needed to make that decision at the time.=20
To those who treasure the role of auditors, the humiliation of Andersen is =
painful. Back in the 1950's, it was Leonard Spacek, Andersen's managing par=
tner, who warned that ''the profession's existence is in peril'' because it=
was not showing enough independence. His public prodding was crucial in ma=
king the industry do a better job. Two decades ago, when the issue on the t=
able was pension accounting, Andersen was the only major accounting firm to=
break with clients and push for good rules.=20
Now Andersen's backbone is open to question. It was evidence that senior pe=
ople at Andersen repeatedly gave in to pressure from Waste Management that =
led the S.E.C. to bring that suit, which the firm chose to settle without a=
dmitting it had done anything wrong. The partner that the S.E.C. says looke=
d the other way at Sunbeam is fighting the accusations, and Andersen says h=
e acted properly.=20
Lynn Turner, who was chief accountant of the S.E.C. at the time and is now =
director of the Center for Quality Financial Reporting at Colorado State Un=
iversity, says what is happening to Andersen now is reminiscent of what hap=
pened to Coopers & Lybrand when he was a partner there and the firm had a s=
eries of highly publicized blown audits.=20
''We got bludgeoned to death in the press,'' he said. ''People did not even=
want to see us at their doorsteps. It was brutal, but we deserved it. We h=
ad gotten into this mentality in the firm of making business judgment calls=
.'' By that he meant that the firm paid too much attention to not offending=
clients and not enough to good accounting.=20
For Andersen to avoid that fate, its relatively new chief executive, Joseph=
Berardino, who declined to be interviewed for this column, will need to se=
t a tone inside the firm making clear that he expects auditors to show the =
backbone that Mr. Spacek epitomized. And then he will have to convince the =
public of that.

...........................................................................=
..........................................................=20

Dynegy Deal To Buy Enron Hits Crossroads
By Rebecca Smith and John R. Emshwiller
Staff Reporters of The Wall Street Journal

11/23/2001
The Wall Street Journal=20
A3
(Copyright (c) 2001, Dow Jones & Company, Inc.)=20

Even as it reiterated its intention to purchase Enron Corp., Dynegy Inc. is=
coming under increasing pressure to renegotiate or walk away from the mult=
ibillion-dollar deal.=20
The pressure is stemming from the continuing slide in the price of Enron sh=
ares and the mounting financial problems at the Houston energy-trading comp=
any, the nation's biggest marketer of electricity and natural gas. During t=
he past month, Enron has taken a $1 billion write-off of assets, revised do=
wnward the earnings of the past several years and taken a $1.2 billion redu=
ction in shareholder equity.
The problems have been due largely to dealings Enron had with private partn=
erships, run by some of its own executives, under investigation by the Secu=
rities and Exchange Commission. In an SEC filing Monday, Enron disclosed hu=
ndreds of millions of potential additional write-offs as well as the possib=
ility that its weakening financial condition could force it to repay more t=
han $2 billion in loans by the end of the year.=20
As of 4 p.m. Wednesday in New York Stock Exchange composite trading, Enron =
shares fell $1.98, or 28%, to $5.01 each after having dropped 23% Tuesday. =
In excess of 115 million shares traded Wednesday, more than four times the =
volume of any other Big Board stock. Enron's bonds also again traded sharpl=
y lower, market observers said.=20
The turmoil spilled over to Dynegy's stock, which also was among the most a=
ctively traded on the New York Stock Exchange. As of 4 p.m. Wednesday, Dyne=
gy shares fell $1.94 to $39.76 each.=20
On Wednesday, Dynegy issued a statement in which Chairman and Chief Executi=
ve Chuck Watson said his company was working "to accelerate the regulatory =
approvals required to complete the merger in accordance with the previously=
announced agreement" though it continued to perform "due diligence" on Enr=
on.=20
Under the merger agreement, Dynegy has opportunities to renegotiate or walk=
away from the deal if Enron's financial and legal problems become severe e=
nough. However, some observers said it can be difficult to invoke these so-=
called material adverse change clauses. They point to a decision earlier th=
is year by a Delaware Chancery Court judge who forced Tyson Foods Inc. to c=
omplete a planned purchase of IBP Inc. even though Tyson, a Springdale, Ark=
., food-products company, had wanted to cancel the transaction because of a=
drop in IBP's earnings and accounting problems at an IBP unit.=20
Dynegy officials didn't return calls seeking comment. To complete the deal,=
two-thirds of Dynegy shareholders and a majority of Enron shareholders wou=
ld have to give their approval. No dates for those votes have been set.=20
One person familiar with the merger plans said the SEC filing Monday by Enr=
on contained information Dynegy hadn't known about. Dynegy representatives =
planned to work through the weekend evaluating the importance of this new i=
nformation as part of the company's due diligence, this person said. It cou=
ldn't be determined what the new information was.=20
The merger agreement, announced Nov. 9, calls for Dynegy to exchange 0.2685=
share for each of Enron's roughly 850 million fully diluted shares, giving=
the purchase a value of about $9 billion at Dynegy's current stock price. =
However, from a price standpoint, the deal is appearing less attractive to =
Dynegy.=20
On the day of the merger announcement, Enron shares were trading at about $=
8.63 each, or about 83% of the purchase price under the exchange ratio. As =
of Wednesday, Enron's market price was only about 47% of the merger-formula=
price. Such a sharp deterioration is unusual following a merger announceme=
nt, when the stock price of the company being acquired generally begins tra=
ding relatively close to the offering price.=20
Sentiment among Wall Street analysts also is turning against the merger. In=
itially, many analysts lauded the merger as a move that would rescue Enron =
and provide a major boost to Houston-based Dynegy. Dynegy and Enron officia=
ls have predicted that the merger, supposed to be completed late next year,=
would significantly and immediately increase Dynegy's earnings.=20
Now analysts are challenging that assumption. Ron Barone, managing director=
at UBS Warburg LLC, said he believes that because of Enron's financial pro=
blems, a combined company would actually have lower earnings next year than=
Dynegy would have by itself. Mr. Barone said he thinks a "likely scenario"=
is that the merger formula will be renegotiated sharply down to about 0.15=
Dynegy share for each Enron share.=20
Such a ratcheting down wouldn't be without precedent in the deal. According=
to one person familiar with the merger negotiations, Dynegy reduced the ex=
change formula at least once prior to the Nov. 9 announcement because of En=
ron's rapidly sinking stock price, which at the beginning of this year was =
above $80 a share.=20
In perhaps the most significant sign of the turning tide on Wall Street, Go=
ldman Sachs analyst David Fleischer lowered his ratings on Enron and Dynegy=
. A longtime Enron fan, Mr. Fleischer issued a report expressing doubts tha=
t the merger would help Dynegy's earnings and whether Enron could "recover =
the significant business that has been lost" in its giant energy-trading op=
erations. "The Enron machine continues to sputter," Mr. Fleischer wrote.=20
Some observers say that if Dynegy walked away from the deal or tried to ren=
egotiate the terms significantly, Enron might be pushed into a bankruptcy-l=
aw filing. Without the Dynegy acquisition and continued support from its ba=
nkers and customers, an Enron bankruptcy-court filing "is highly possible,"=
said Ralph Pellecchia, a senior director at Fitch, a credit-ratings agency=
. On Wednesday, Fitch maintained its credit rating on Enron at just one not=
ch above noninvestment-grade, or "junk," status. But Fitch also said it bel=
ieved Enron's trading partners had made "significant cash collateral calls"=
in recent days that are "well in excess of previous expectations," contrib=
uting to "liquidity pressures."=20
Among the advisers Enron has hired during its current crisis is the law fir=
m of Weil, Gotshal & Manges, which specializes in bankruptcy and corporate-=
workout situations. Asked about a possible bankruptcy filing, an Enron spok=
eswoman said the company expects the Dynegy deal to go through and therefor=
e doesn't expect to have to look at alternatives to the merger. Since the m=
erger announcement, Enron Chairman Kenneth Lay has said his company had alt=
ernatives to the Dynegy deal but he has declined to identify them. Enron sa=
id it made some progress improving its financial position. The company said=
it reached a final agreement with units of J.P. Morgan Chase & Co. and Cit=
igroup Inc. on the remaining $450 million of a previously announced $1 bill=
ion in secured credit lines. Enron said lenders had agreed to extend repaym=
ent of an existing $690 million note to mid-December from next week. The sp=
okeswoman said a restructuring of that obligation is expected to be complet=
ed next month so that repayment wouldn't be required this year.=20
---=20
Thaddeus Herrick and Robin Sidel contributed to this article.

...........................................................................=
..........................................................=20

Options Report
Premiums Stay High on Enron's Near Options, And `Doubling Up' Date Looms fo=
r Tax Losses
By Kopin Tan
Dow Jones Newswires

11/23/2001
The Wall Street Journal=20
C11
(Copyright (c) 2001, Dow Jones & Company, Inc.)=20

NEW YORK -- Volatility and premiums on Enron's near-month options remain ex=
tremely high. It is a sign that investors are willing to pay a rich price f=
or option protection and expect the stock to be unsettled as the Houston co=
mpany sorts through its credit and debt problems and seeks to calm frazzled=
investors.=20
Enron near-month defensive puts traded heavily in an otherwise quiet sessio=
n Wednesday, as investors bought them to hedge. The December 5 puts traded =
more than 10,000 contracts and jumped 45 cents to $1.10 at the Chicago Boar=
d Options Exchange. The stock closed down $1.98, or 28%, to $5.01, as of 4 =
p.m. in New York Stock Exchange composite trading.
Enron's calls traded actively as some investors sold them to generate incom=
e. Traders noted some call buying -- especially after Enron procured a thre=
e-week extension on a $690 million note -- as some hopeful investors bet on=
Enron pulling through its troubles and proceeding with its merger with Dyn=
egy Inc. Enron's December 5 calls traded more than 14,500 contracts, compar=
ed with open interest of 710, as they fell $1.45 to $1.15 at the CBOE.=20
For investors who want to book a tax loss on beaten-down stocks, the "wash =
sale" rule can be a hurdle, because it essentially prevents taxpayers from =
selling stock or securities at a loss and then reacquiring "substantially i=
dentical" securities within a 30-day period before or after that loss. This=
poses a problem for those who want to book a loss yet own stocks whose pri=
ces now make them attractive "buy" candidates.=20
In addition, the Internal Revenue Service has taken the position that the w=
ash-sale rule will disallow a loss if the investor sells an in-the-money pu=
t, because there is a strong likelihood that stock will be put to or acquir=
ed by the investor.=20
So investors typically get around the wash-sale rule by "doubling up": buyi=
ng additional stock or options, waiting at least 31 days, and then selling =
the original stock to book the loss. Investors double up by buying calls, w=
hich locks a price to buy stock and achieves the same effect as buying addi=
tional stock.

...........................................................................=
..........................................................=20

INDIA PRESS: Enron May Sell Dabhol Stake For $500 Mln

11/22/2001
Dow Jones International News=20
(Copyright (c) 2001, Dow Jones & Company, Inc.)=20

NEW DELHI -(Dow Jones)- Enron Corp. (ENE) may be forced to sell its stake i=
n Dabhol Power Co. for around $500 million, half of the asking price of $1 =
billion, reports the Business Standard, quoting the New York Times.=20
According to the report, Tata Power Co. (P.TPW) and BSES Ltd. (P.BSX) - the=
Indian bidders for Enron's 65% stake in the 2,184 megawatt Dhabol plant - =
were reportedly willing to pay only half of the asking price. If the lender=
s and prospective buyers adopt a take it-or-leave it posture, Enron may hav=
e little choice but to accept their offer and take a huge loss, the newspap=
er said.
Dabhol, located in the western Indian state of Maharashtra, is India's larg=
est single foreign investment at $2.9 billion.=20
Newspaper Web site: www.business-standard.com=20

-By Himendra Kumar; 91-11-461-9426; himendra.kumar@dowjones.com

...........................................................................=
..........................................................=20

Lawsuit claims Enron led workers astray, hurt retirement funds%)

11/22/2001
Associated Press Newswires=20
Copyright 2001. The Associated Press. All Rights Reserved.=20

HOUSTON (AP) - Two Enron Corp. workers are suing the company, claiming it e=
ndangered their retirement funds.=20
The lawsuit, filed in federal court in Houston under the Employee Retiremen=
t Income Security Act, asserts that Enron encouraged the employees to inves=
t more heavily in company stock just before the stock tanked. The lawsuit w=
as filed by Portland, Ore., utility lineman Roy Rinard and co-worker, Steve=
Lacey.
Enron shares have plunged more than 90 percent over the past several months=
after the departure of the company's chief executive and an accounting con=
troversy that eventually caused it to restate its earnings since 1997, elim=
inating more than $580 million of reported income.=20
Steve Berman, managing partner for the law firm of Hagens Berman in Seattle=
, said Enron touted the value of its stock and encouraged employees to put =
their entire portfolio into Enron stock.=20
Enron officials didn't emphasize the risk and instead painted the situation=
as positive, especially when the company's stock began to slide, said Berm=
an, who is hoping to get the suit certified as a class-action case.=20
Berman wants to prove that the 401(k) plan executives failed to act respons=
ibly when they knew about serious business problems. He's also hoping to br=
eak new legal ground with his case.=20
The lawsuit is patterned after a case against Lucent Technologies in which =
Lucent employees sued their employer this summer for matching their 401(k) =
contributions with company stock that later tanked. That case is still in l=
itigation.=20
Earlier this year 54-year-old Rinard had $472,000 in his 401(k) plan, which=
had been growing for 21 years. Today, the plan is worth about $40,000. Enr=
on gives its employees their 401(k) match in company stock.=20
In January, Enron was trading for $84.87. Wednesday it closed at $5.01 a sh=
are.=20
The problem was compounded when many employees, including Rinard, saw Enron=
's stock doing so well that they decided to put their entire account into E=
nron stock.=20
Enron executives were talking about how the stock price was poised to climb=
above $100 a share, he told the Houston Chronicle for Thursday's editions.=
=20
Another troubling feature of the Enron 401(k) plan was that employees were =
not allowed to make trades for about a month. The lockdown began Oct. 17, t=
he day after Enron surprised the market that it was taking a $1.01 billion =
after-tax third-quarter charge to get out of bad investments.=20
Enron officials, who could not be reached, have said they had planned the l=
ockdown for several months because it was changing plan administrators.

...........................................................................=
..........................................................=20

Enron Workers Sue, Claim Troubled Energy Company Endangered Retirement Fund=
s

11/22/2001
Dow Jones Business News=20
(Copyright (c) 2001, Dow Jones & Company, Inc.)=20

Associated Press=20
HOUSTON -- Two Enron Corp. workers are suing the company, claiming it endan=
gered their retirement funds.
The lawsuit, filed in federal court in Houston under the Employee Retiremen=
t Income Security Act, alleges that Enron encouraged the employees to inves=
t more heavily in company stock just before the stock tanked. The lawsuit w=
as filed by Portland, Ore., utility lineman Roy Rinard and co-worker, Steve=
Lacey.=20
Enron (ENE) shares have plunged more than 90% over the past several months =
after the departure of the energy company's chief executive and an accounti=
ng controversy that eventually caused it to restate its earnings since 1997=
, eliminating more than $580 million of reported income.=20
Steve Berman, managing partner for the law firm of Hagens Berman in Seattle=
, said Enron touted the value of its stock and encouraged employees to put =
their entire portfolio into Enron stock.=20
Enron officials didn't emphasize the risk and instead painted the situation=
as positive, especially when the company's stock began to slide, said Mr. =
Berman, who is hoping to get the suit certified as a class-action case.=20
Mr. Berman wants to prove that the 401(k) plan executives failed to act res=
ponsibly when they knew about serious business problems. He's also hoping t=
o break new legal ground with his case.=20
The lawsuit is patterned after a case against Lucent Technologies Inc. (LU)=
in which Lucent employees sued their employer this summer for matching the=
ir 401(k) contributions with company stock that later tanked. That case is =
still in litigation.=20
Earlier this year 54-year-old Mr. Rinard had $472,000 in his 401(k) plan, w=
hich had been growing for 21 years. Today, the plan is worth about $40,000.=
Enron gives its employees their 401(k) match in company stock.=20
In January, Enron was trading for $84.87. Wednesday it closed at $5.01 a sh=
are.=20
The problem was compounded when many employees, including Mr. Rinard, saw E=
nron's stock doing so well that they decided to put their entire account in=
to Enron stock.=20
Enron executives were talking about how the stock price was poised to climb=
above $100 a share, he told the Houston Chronicle for Thursday's editions.=
=20
Another troubling feature of the Enron 401(k) plan was that employees weren=
't allowed to make trades for about a month. The lockdown began Oct. 17, th=
e day after Enron surprised the market by saying it was taking a $1.01 bill=
ion after-tax third-quarter charge to get out of bad investments.=20
Enron officials, who couldn't be reached, have said they had planned the lo=
ckdown for several months because it was changing plan administrators.=20
Copyright (c) 2001 Dow Jones & Company, Inc.=20
All Rights Reserved

...........................................................................=
..........................................................=20

Enron's Japan subsidiary reviewing its business

11/22/2001
Associated Press Newswires=20
Copyright 2001. The Associated Press. All Rights Reserved.=20

TOKYO (AP) - The Japanese subsidiary of Enron Corp., the beleaguered U.S. e=
nergy trading company, is reviewing its business here and hopes to conclude=
its findings in the next few weeks, a company spokeswoman said Thursday.=
=20
Earlier this month, rival Dynegy Inc. said it plans to acquire Enron. Enron=
has begun an assessment of its global operations.
Enron Japan Corp., a wholly owned subsidiary of the Houston-based company, =
began its own assessment about a week ago, said spokeswoman Mika Watanabe.=
=20
Enron Japan's business includes E Power Corp., a venture set up in Japan by=
Enron and Orix Corp., a leasing company, which had been studying possible =
electric power plants.=20
Shares of Enron plummeted another 28 percent Wednesday even though it reach=
ed a critical agreement to extend a $690 million debt payment.=20
Analysts continued to question, however, whether Dynegy's planned $8.9 bill=
ion acquisition of its larger rival Enron will survive, particularly as som=
e traders are limiting business with Enron because they don't know if more =
negative revelations are coming.=20
Enron shares have plunged more than 90 percent over the past several months=
following the departure of the company's chief executive and an accounting=
controversy that eventually caused it to restate its earnings since 1997, =
eliminating more than $580 million of reported income.=20
Its latest round of woes started Monday, after Enron filed a document with =
the Securities and Exchange Commission saying it would have to repay $690 m=
illion in debt by Nov. 26 because of decreased credit ratings.=20
Enron Japan was established in April 2000 and employs about 60 people, and =
had hoped to eventually break into Japan's power industry, which is gradual=
ly growing more open.

...........................................................................=
..........................................................=20

Major Enron Unit Stake May Be Sold For Under $700M-Source

11/22/2001
Dow Jones International News=20
(Copyright (c) 2001, Dow Jones & Company, Inc.)=20

NEW DELHI -(Dow Jones)- The foreign-owned 85% stake in India's $2.9 billion=
Dabhol Power Co. may be sold for under $700 million, a senior Indian gover=
nment source told Dow Jones Newswires Thursday.=20
"The two prospective buyers for Dabhol's foreign equity, BSES Ltd. (P.BSX) =
and Tata Power Co. (P.TPW) have currently suggested a price which is below =
$500 million. During the final purchase negotiations, their take-it-or-leav=
e-it offer may go up to as high as around $700 million," said the official.
U.S. energy company Enron Corp. (ENE) owns a controlling 65% stake in the 2=
,184-megawatt Dabhol power project, located in the western Indian state of =
Maharashtra.=20
Enron wants to sell its stake because of payment defaults by its sole custo=
mer - the Maharashtra State Electricity Board - and the Indian federal gove=
rnment's failure to honor payment guarantees. In August, the U.S. company s=
aid it was willing to sell its stake at cost. MSEB owns 15%, while General =
Electric Co. (GE) and Bechtel (X.BTL) own 10% each in Dabhol Power.=20
Tata and BSES were expected to complete their due diligence on the Dabhol p=
roject by end January 2002 at the latest. After the due diligence is comple=
ted, price negotiations will start and thereafter, the transfer of shares a=
nd transfer of ownership will take place, said the official.=20
He said India's state-owned utility National Thermal Power Corp. (P.NTP) wa=
s keeping a close eye on DPC's negotiations with BSES and Tata and there wa=
s a possibility that at some stage it may quote its price to buy a stake in=
Dabhol.=20
"NTPC might join the race at some stage. They have the financial resources =
and the core competence in the power sector. There's a possibility that NTP=
C may make its price offer just about the time the final price negotiations=
of BSES and Tata with Dabhol Power Co. start," said the official.=20
-By Himendra Kumar, Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dow=
jones.com

...........................................................................=
..........................................................=20

JAPAN: Shock waves from Enron crisis felt in Japan.

11/22/2001
Reuters English News Service=20
(C) Reuters Limited 2001.=20

TOKYO, Nov 22 (Reuters) - The shock waves from the crisis at Enron Corp are=
being felt in Japan, where the stressed energy group has about 60 billion =
yen ($486.9 million) of bonds outstanding, money market dealers said on Thu=
rsday.=20
Dealers said most of Enron's yen-denominated bonds are believed to be held =
by Japanese investors.
In the U.S. bond market, Enron's 6.4 percent dollar-denominated notes matur=
ing in 2006 were selling at a deep discount of 62 cents on the dollar on We=
dnesday.=20
The price of Enron's yen bonds are also under pressure, but because the Jap=
anese market is far less liquid than the U.S. market it is virtually imposs=
ible to quote a price.=20
"Even if you want to sell them, there's no one is out there to buy," said a=
market source, who declined to be identified.=20
Some investors holding Enron's bonds put on brave face.=20
"Enron's core business is still doing fairly good. And we have bonds due ne=
xt May. So we have concluded that there won't be grave concerns for its red=
emption," said Yasushi Inoue, manager at UFJ Partners Asset Management.=20
Some in the market are concerned, however, that some money management funds=
(MMFs) have Enron bonds in their portfolio.=20
MMFs, seen as an alternative to bank deposits, generally invest in safe ass=
ets in order to secure stable fixed income.=20
But because the Bank of Japan has been guiding short-term rates to near zer=
o since last March, some funds are allocating money to riskier bonds, or co=
mmercial paper, to raise returns.=20
Five MMFs run by four asset management companies hold Enron bonds totaling =
about 38.5 billion yen nominal value.=20
DEFAULT WORRY=20
Should Enron default on the yen bonds, the price of those MMFs would fall b=
elow their purchase price, meaning some funds would be unable to fully pay =
back the money entrusted to them.=20
Although MMFs technically do not guarantee principle, they are widely regar=
ded be almost as safe as deposits.=20
"If the MMF prices fall below purchase price, investors may lose confidence=
in MMFs, which could trigger an exodus of funds out of MMFs," said the mar=
ket source.=20
That would force fund managers of MMFs to sell a large part of assets in th=
eir funds, which could in turn push up short-term interest rates.=20
"I could not rule out such possibility," said the source.=20
Separately on Thursday, Enron said it was reviewing operations in Japan, in=
cluding an option to sell the business to a third party.=20
"Enron Corp is reviewing its operations in Japan ... considering every poss=
ibility including retaining the operations or selling a part of it," a spok=
eswoman in Tokyo said.=20
The company will likely finalise its plans within five or six weeks, she sa=
id.=20
Enron gained its first foothold in Japan in 1999, when it established affil=
iate E Power Corp, hoping to benefit from Japan's deregulation of the retai=
l power market.=20
In April last year, it set up Enron Japan Corp, which has so far introduced=
electricity trading and marketing and other financial instruments. The com=
pany has 70 employees in Japan.=20
Shares of Enron closed down 28.33 percent at $5.01 on the New York Stock Ex=
change on Wednesday. ($1=3D123.22 yen).

...........................................................................=
..........................................................=20

Enron's Wessex Water unit faces possible bid from institutions - report

11/22/2001
AFX News=20
(c) 2001 by AFP-Extel News Ltd=20

LONDON (AFX) - At least four financial institutions are circling Wessex Wat=
er PLC as possible bidders for the south-west of England water company that=
Enron, the struggling US energy group, needs to sell, according to the Fin=
ancial Times.=20
The newspaper did not name its source, but said Royal Bank of Scotland PLC,=
Candover Investments, WestLB and Barclays Capital are understood to have e=
xpressed an interest in buying Wessex, which provides water and sewage serv=
ices to 2.4 mln people.
Nomura, the Japanese investment bank, has previously expressed an interest =
in Wessex.=20
Enron, which bought Wessex in 1998 for 1.36 bln stg revealed on Monday that=
it must repay 6.35 bln stg of debt by the end of next year.=20
The newspaper said a purchase is likely to be complicated.=20
Enron -- subject of a 9 bln usd bid from Dynegy, its smaller US energy riva=
l -- could be faced with a charge of 650 mln usd if the combined value of A=
zurix, which controls its water interests, falls to 1.95 bln usd or 25 pct =
below its book value, the newspaper said. ml/rn For more information and to=
contact AFX: www.afxnews.com and www.afxpress.com

...........................................................................=
..........................................................=20

Asia Energy Watch:PlattsDirect To Launch In Rough Waters
By Jeremy Bowden

11/22/2001
Dow Jones International News=20
(Copyright (c) 2001, Dow Jones & Company, Inc.)=20

A DOW JONES NEWSWIRES COLUMN=20

SINGAPORE -(Dow Jones)- Credit concerns at Enron Online and repeated delays=
to the launch of eNymex have dramatically altered the outlook for online e=
nergy trading over recent months.
The big-oil backed Internet site, Intercontinental Exchange, or ICE, has so=
far been the main beneficiary of its competitors' problems, with recent tr=
ade volumes jumping sharply. But its growing hegemony may soon be challenge=
d by a very different online trading system, run by Platts, a unit of publi=
sher McGraw-Hill Cos. (MHP).=20
Aware of sensitivity to its role in oil markets from within the industry, P=
latts is approaching electronic trading with a very different business mode=
l from existing commission-based sites.=20
Platts sources say its new system, dubbed PlattsDirect, is designed - initi=
ally at least - as a "communication device" to enhance its existing role of=
assessing and publishing benchmark energy prices. Its current telephone-ba=
sed systems, they say, can't cope with rising liquidity, all of which must =
be factored in when making its price assessments.=20
They hope PlattsDirect will develop as a "master exchange," providing a "ne=
utral base" for other exchanges to feed pricing information, in order to co=
mpliment Platts leading role as price benchmark assessor and publisher.=20
PlattsDirect is more likely to charge a subscription fee than commissions, =
sources said, although a final decision has yet to be made. Unlike some oth=
er systems, PlattsDirect will offer no clearing or counterparty service.=20
While a launch date hasn't been fixed, Platts hopes PlattsDirect will be up=
and running in early 2002. Nymex by contrast, is without a launch date for=
its eNymex Internet system, which has suffered repeated delays since its o=
riginal launch date of October 2000.=20
Is Nymex Leaving It Too Late?=20

Some oil traders suggest Nymex has "missed the boat" in its efforts to deve=
lop electronic trading, bogged down by its desire to keep local floor trade=
rs happy.=20
In September, Nymex President J. Robert Collins said the launch of eNymex h=
ad been delayed by factors including the bankruptcy of one of the system's =
developers, Globalview Software Inc., according to industry publications Oi=
l and Gas Journal and Petroleum Intelligence Weekly.=20
But several months later, Globalview continues to be alive and well, despit=
e legal action taken against it by Nymex, and has posted a 25% increase in =
sales so far this year. A senior Globalview official said his company is co=
untersuing, without providing further details.=20
ICE invited Nymex to join it last year, but Nymex rejected the offer, prefe=
rring to focus on its own electronic system. In June, ICE acquired London's=
International Petroleum Exchange, which plans to scrap floor trading and a=
dopt electronic trading for all its products.=20
Enron Corp.'s (ENE) Enron Online faces even more serious problems than Nyme=
x. Oil trading sources say it has seen a sharp reduction in trade volume ov=
er recent weeks as counterparties grow increasingly wary over the company's=
financial position. The system Enron designed to reduce credit risk - wher=
e Enron itself acts as a counterparty to every online trade - appears to ha=
ve backfired.=20
Even if the system is successfully transferred to Dynegy Inc. (DYN) - which=
has agreed to take over Enron, pending legal objections - trading sources =
say counterparties are likely to be wary of placing so much risk with a sin=
gle company again, leaving the Enron Online trading model at a disadvantage=
.=20
They added that unless the Dynegy takeover is quick, Enron Online liquidity=
could dry up completely. Enron itself has warned that reduced trading acti=
vity will hit fourth-quarter earnings.=20
Platts' Independence, Physical Trade Advantageous=20

While it doesn't appear keen to compete with other systems head-on initiall=
y, PlattsDirect has several advantages which could persuade traders to use =
its system. A possible absence of commissions is of concern to Singapore br=
okers and probably other online sites too.=20
Platts sources claim the site's independence and resulting objectivity is a=
lso a major advantage over other sites. But the concern for Platts is that =
that very independence also means it has no guaranteed support from within =
the trading community.=20
ICE, by contrast, was developed and is owned by a selection of companies in=
volved in the trading of oil, including oil majors BP PLC (BP), Total Fina =
Elf SA (TOT) and Royal Dutch/Shell Group (RD), and enjoys IPE support.=20
PlattsDirect is also able to offer physical trade - unique so far among on-=
line energy trading sites. Some traders say Platts' existing role as a publ=
isher of benchmark oil price assessments - particularly in Asia - is bound =
to attract trade to the new system.=20
"Some companies will want to trade on PlattsDirect because prices from the =
system will be used when assessing benchmarks," said one trader. The majori=
ty of physical oil trade is priced against benchmarks rather than on a spot=
basis, and most over-the-counter derivative products are also settled agai=
nst Platts' benchmark assessments - including Nymex Brent and many on ICE.=
=20
Platts claims physical and derivative products worth US$10 billion are trad=
ed against its benchmark quotes everyday, and this makes influencing those =
quotes a priority for traders.=20
Platts also plans to use the prices of oil derivative trades from PlattsDir=
ect to improve the accuracy of its daily assessments of forward prices.=20
However, Platts must be careful. It not only faces wariness from existing i=
ndustry-driven sites, it can't afford to undermine the independence of its =
parent company, credit rating agency Standard & Poor's, a unit of McGraw-Hi=
ll.=20
Part of the loss of faith in Enron's creditworthiness came as Moody's and S=
tandard & Poor's downgraded Enron's credit rating to Baa3 and BBB, respecti=
vely - just above junk bond status. However justified the downgrade, Standa=
rd & Poor's can't be seen to gain competitive advantage for a unit through =
a change in a client's credit assessment.=20
ICE is also considering the introduction of physical trade, and could event=
ually publish competing benchmark assessments. But without an existing pres=
ence in the energy benchmark publishing business, ICE would face an uphill =
struggle. And its owners' involvement in trading could also be seen as comp=
romising its objectivity when assessing benchmarks, say trading sources.=20
-By Jeremy Bowden, Dow Jones Newswires; 65-415-4062; Jeremy.bowden@dowjones=
.com

...........................................................................=
..........................................................=20

Enron stock free-fall continues
By KRISTEN HAYS
Associated Press Writer

11/22/2001
Associated Press Newswires=20
Copyright 2001. The Associated Press. All Rights Reserved.=20

HOUSTON (AP) - Shares of embattled Enron Corp. continued their rapid declin=
e as analysts and investors expressed more doubt that the once-mighty energ=
y trader could recover lost business and investor confidence.=20
Analysts are questioning whether Dynegy Inc.'s planned dlrs 8.9 billion acq=
uisition of Enron will survive.
Enron shares fell 23 percent Tuesday, then slid another 28 percent Wednesda=
y, to close down dlrs 1.98 at dlrs 5.01 on the New York Stock Exchange.=20
Shares of Dynegy fell dlrs 1.94 to dlrs 39.76 on the NYSE.=20
In a report issued Wednesday morning, Goldman Sachs & Co. analyst David Fle=
ischer became the latest to question Enron's future, saying a Securities an=
d Exchange Commission filing by the Houston-based company earlier this week=
"raised new issues about liquidity and the ability of the company to even =
finance itself over the next several months."=20
Documents that Enron filed with the SEC late Monday restated the company's =
third-quarter earnings and said the company may have to repay a dlrs 690 mi=
llion debt by next week because of its decreased credit ratings.=20
Fleischer said Enron's Nov. 16 cash balance of dlrs 1.2 billion is inadequa=
te to meet remaining debt obligations.=20
Fleischer acknowledged, however, Enron's efforts to renegotiate next week's=
due date for the dlrs 690 million debt. He said there were indications tha=
t Enron's banks may be willing to restructure the debt.=20
Michelle Foss, director of the Energy Institute at the University of Housto=
n, said this latest round of troubles had to raise concerns about whether t=
he Dynegy-Enron deal will be pulled off.=20
"It doesn't look like it's going to be able to happen," Foss said. "It did =
look like a decent idea when they proposed the merger, but today I'm sure t=
hey'll look at it and see if they can salvage their attempt to buy Enron."=
=20
Representatives of Enron and Dynegy did not immediately return telephone ca=
lls for comment Wednesday.=20
Enron agreed to be bought after its stock price plunged about 80 percent in=
the weeks after disclosing a dlrs 1.2 billion reduction in shareholder equ=
ity related to partnerships run by company officers. The arrangements allow=
ed Enron to keep about half a billion dollars in debt off its books.=20
Those partnerships are being investigated by the SEC.=20
Earlier this month, Enron said it overstated earnings from 1997 through the=
first half of 2001 by dlrs 586 million and revised its debt upward by dlrs=
628 million.=20
---=20
On the Net:=20
Enron: http://www.enron.com=20
Dynegy: http://www.dynegy.com

...........................................................................=
..........................................................=20

Business
Enron seeks to stave off collapse
Chris Ayres in New York

11/22/2001
The Times of London=20
News International=20
Final 4
30
(Copyright Times Newspapers Ltd, 2001)=20

DIRECTORS of Enron, the US energy group with close ties to President Bush, =
will spend today's Thanksgiving holiday locked in emergency negotiations to=
save the company from collapse, after a 44 per cent plunge in its share pr=
ice over two days.=20
Investors were increasingly worried last night that rival Dynegy's $8.9 bil=
lion (Pounds 6 billion) all-stock rescue bid will fall apart over the holid=
ay period. As part of the deal, ChevronTexaco, which owns a quarter of Dyne=
gy, will inject $1.5 billion of emergency funding into Enron.
Enron, which has admitted to huge accounting errors amid a Securities and E=
xchange Commission inquiry, said on Monday that it could be forced to pay b=
ack $690 million of debt because of its deteriorating creditworthiness. In =
a crucial concession, that payment was yesterday delayed to mid-December. I=
t will have to pay another $9.1 billion by the end of 2002.=20
Enron is being investigated by the SEC for allegedly making complex investm=
ent deals that kept billions of dollars of debt off the company's books.

...........................................................................=
..........................................................=20

Enron may have to sell stake in Dabhol plant at half price

11/22/2001
Press Trust of India Limited=20
(c) 2001 PTI Ltd.=20

Washington, Nov 22 (PTI) Embattled US power major Enron may be forced to se=
ll its stake in the Dabhol power plant at around half a billion dollars ins=
tead of the asking price of a billion dollars, a report here said.=20
Tata Power and BSES, the Indian bidders for Enron's stake in the 2184 MW Dh=
abol power plant were reportedly willing to pay only half of the asking pri=
ce which stood over a billion dollars, the New York Times reported.
If the lenders and prospective buyers adopt a take it or leave it line, Enr=
on may have little choice but to accept their offer and swallow a huge loss=
on a controversial project which one gleamed with promise, it said.=20
"It is bound to be a distress sale," one banker told the paper.=20
Though Enron's chairman and chief executive Kenneth L Lay was earlier quote=
d as saying that India would have to face economic sanctions if the governm=
ent did not create a favourable climate for the sale of Enron's stake, the =
paper said "Enron now will find little lobbying traction in either Washingt=
on or New Delhi".=20
"The coalition-building diplomacy of the war in Afghanistan makes it unlike=
ly that the Bush administration would agree to press India on Enron's behal=
f," the paper said.=20
(THROUGH ASIA PULSE) 22-11 2001

...........................................................................=
..........................................................=20

Business
Enron joins list of bookkeeping rogues
AP FILE PHOTO

11/22/2001
The Toronto Star=20
Ontario
C15
Copyright (c) 2001 The Toronto Star=20

IT'S BEEN FOREVER long since a juicy accounting scandal hit the business pr=
ess, so a big hearty thanks to Enron Corp. of Houston for making up for los=
t time.=20
Who knew that the largest energy company in the United States - one of the =
biggest in the world, in fact - would suddenly be keeping company with such=
disgraceful accounting debacles as Waste Management Inc., the garbage-haul=
ing company that overstated earnings by $1.43 billion (U.S.), Safety-Kleen =
Corp. ($534 million), Sunbeam Corp., Cendant Corp., and, lest we forget, Bo=
ston Chicken Inc., which made a tasty bucket-of-cluck but kept losses off i=
ts balance sheet until it went bankrupt and shareholders were wiped out.
Back to Enron. In the past decade and a half, the company, under the leader=
ship of Kenneth Lay, was remade from an uninspiring regional pipeline calle=
d Houston Natural Gas into what Lay called an "energy store" branded with a=
jazzy name. Enron and its CEO drew much laudatory press for virtually crea=
ting wholesale markets for electricity and natural gas just when deregulati=
on allowed for open market competition. Moving into online energy trading w=
as inspired - the company laid claim to being the world's largest e-commerc=
e concern. One-stop shopping for all your energy needs! Revenues were enorm=
ous. Profits nudged $1 billion. Its place in the business firmament was sec=
ured when the Houston Astros' quarter-billion-dollar retractable roof ballp=
ark was named Enron Field.=20
Now we know that the transformation was more magical than anyone imagined.=
=20
The first clue was the company's announcement that it was restating earning=
s going back four years plus a few quarters. Call it five years. Now that j=
ust might be a record.=20
It's never good news when a company says it will be rethinking its profit n=
umbers. They never seem to go up as a result. Sure enough, in the case of E=
nron approximately $590 million was erased from the earnings line starting =
in '97, when the company should have netted $96 million less than it previo=
usly claimed, through to last year, in which it should have taken a $132 mi=
llion haircut to its earnings.=20
For Enron, it has been a long, if swift, fall for a firm once voted by Fort=
une magazine as more innovative than either Intel Corp. or Microsoft Corp. =
The Securities and Exchange Commission is investigating. The stock once tra=
ded at $80. It closed yesterday at $5.01 on the New York Stock Exchange.=20
This week, a former accountant with the SEC pronounced that the Enron disas=
ter, added to the accounting messes that have gone before, make for investo=
r losses to rival the savings and loan fiasco. The company's debt rating is=
barely investment grade and its survival strategy - delivering itself to a=
takeover by the much smaller Dynegy Inc. - is in jeopardy. In a securities=
filing Monday, Enron said that a ratings downgrade will force it to meet a=
debt obligation of $690 million before month's end, an obligation that it =
may not be able to meet. Yesterday the company said it had bought some brea=
thing room on that debt, to mid-December. Any more "ratings events," that i=
s, another downgrade, will cause the company to "repay, refinance or cash c=
ollateralize" another $3.9 billion. Short story: the company's unravelling.=
=20
Did it have to come to this? Judging from the off-balance sheet shenanigans=
at the company, the answer to that question is a clear yes. We need only c=
onsider the moment in 1999 when Enron's board endorsed a move by none other=
than its own chief financial officer to head up a couple of wholly-owned s=
ubsidiaries that would do business with the principal company. The results =
of the subsidiaries would not be consolidated on Enron's balance sheet. A s=
prinkling of insiders constituted the review and approval team that would o=
versee the transactions.=20
Andrew Fastow was the lucky CFO. Lucky is an apt description, as Enron has =
now disclosed that Fastow earned more than $30 million from a host of manag=
ement and investment activities through both the subsidiaries and related p=
artnerships called JEDI and Chewco. (Yes, they were named in honour of the =
Star Wars movies.)=20
Enron always had a reputation for being fast and entrepreneurial. Investors=
just never knew how fast and entrepreneurial the company was. Fastow was p=
ushed out the door three weeks ago. The company's treasurer and its general=
counsel were fired. Both had participated in a limited partnership that ha=
d purchased interests in affiliated subsidiaries of the Fastow subsidiaries=
. It's as simple as that.=20
Some of the Fastow transactions, involving investments in power projects fr=
om Poland to Brazil or call options on gas turbines, are as clear as mud. O=
thers are more transparent. Example: in December, 1999, Enron sold an equit=
y investment in Enron Nigeria Barge Ltd., providing "seller financing" to t=
he purchasing investment bank. Seven months later, LJM2, one of the Fastow-=
managed subsidiaries, purchased the investment and assumed the seller-finan=
ced note from Enron. When LJM2 subsequently sold the investment it repaid t=
he Enron note and pocketed a $700,000 profit.=20
There are plenty of conflict of interest examples. Plus numerous losses tha=
t should have accrued to Enron as a result of the subsidiaries' activities,=
losses that the company thought it would rather not recognize.=20
Chastened, Enron has established a special committee to study all such tran=
sactions. It won't help investor confidence that the investigation may iden=
tify even more bad news. It's doubtful that the proposed merger with Dynegy=
can take place any more.=20
JP Morgan Chase and Salomon Smith Barney, which have acted as advisers to E=
nron on the merger, have financed $1 billion in loan assistance to help the=
company through the critical period ahead. An analyst at Goldman Sachs cal=
led it "another win for the bank/broker model." Here's a different way to l=
ook at it: Morgan and Citigroup, Salomon's parent, share a wide range of ex=
posures within the Enron empire and are desperate to see the deal done.=20
If the merger fails, Enron will have to pay a $297.5 million breakup fee to=
Dynegy and a further $52.5 to ChevronTexaco Corp., which has 26 per cent o=
f Dynegy.=20
Investors can't see a win anywhere in the story. Their stock is in the base=
ment. Multiple class-action suits have been launched, citing fraud, materia=
l misrepresentation, breach of duty of disclosure, unjust enrichment. A sep=
arate lawsuit aims to enjoin the merger.=20
And what of Enron's auditors? On Monday, Michigan Democratic Representative=
John Dingell called for an investigation into Arthur Andersen LLP for the =
work it did for both the energy company and, years ago, for Waste Managemen=
t. (In July, without admitting or denying any fraud allegations in the Wast=
e Management affair, the Big Five accounting firm paid a $7 million fine to=
the SEC.)=20
The Public Oversight Board, which oversees the accounting profession in the=
United States, now says that any scrutiny of Andersen's work is a job for =
the SEC. The numbers mess will predictably spur more criticism of the role =
of the auditor and an examination of how impartial any auditor can hope to =
be when it's being paid both for accounting work and for consulting service=
s, as Andersen was. Did Andersen ever argue for more conservative accountin=
g? Or how about this: how is it that all these "special purpose entities" -=
JEDI, etc. - were kept off the balance sheet when they did not qualify for=
non-consolidation treatment? Isn't the auditor supposed to know that?=20
For the moment, Kenneth Lay is wearing the most laundry. It was on Lay's wa=
tch that the web of off-balance sheet business was established. The Missour=
i-born son of a Baptist minister retired in February, then stepped back int=
o the job in August when his replacement announced he was leaving for perso=
nal reasons, something to do with a new marriage and a big house being buil=
t. "There's nothing to disclose," said Jeffrey Skilling on his way out the =
door. "The company's in great shape."=20
The company is in dreadful shape. The news gets worse with every passing mi=
nute.

AP FILE PHOTO WINNING SMILES: Federal Reserve Board chairman Alan Greenspan=
, left, accepts a public service prize from Enron CEO Kenneth Lay last week=
in Houston.=20
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Financial Post: World
Enron tops up US$1B credit line: Secures US$450-million: Skepticism high fi=
rm can last long enough for Dynegy merger
C. Bryson Hull
Reuters

11/22/2001
National Post=20
National
FP10
(c) National Post 2001. All Rights Reserved.=20

HOUSTON - Enron Corp. said yesterday it secured the remaining US$450-millio=
n of a new US$1-billion credit line, but the news did little to reassure in=
vestors it can stay afloat long enough to complete its merger with rival Dy=
negy Inc.=20
Shares of the Houston-based energy giant were off 26%, despite the announce=
ment in which Enron also said it had pushed back the deadline for repaying =
a US$690-million debt to mid-December from a deadline of next Tuesday.
Enron's shares fell 23% on Tuesday after it raised credit concerns in a fil=
ing with the Securities and Exchange Commission.=20
"The Dynegy deal will take a long time and a lot of things could happen ove=
r that time period," said Michael Barbis, a Fulcrum Global Partners analyst=
. "Dynegy did their homework, but if they missed anything, they have a numb=
er of exit opportunities."=20
In yesterday's statement, Enron said it is in feverish talks with its other=
lenders to restructure its debt obligations and reaffirmed its commitment =
to the Dynegy deal, tagged at US$9-billion in stock.=20
"We continue to believe that this merger is in the best interests of our sh=
areholders, employees, and lenders," said Ken Lay, Enron's chairman and chi=
ef executive.=20
Enron was the most actively traded issue on the New York Stock Exchange for=
the second day in a row.=20
Chuck Watson, Dynegy's chairman and chief executive, said he is encouraged =
by the new US$450-million loan and the debt extension for the US$690-millio=
n.=20
"We are continuing our confirmatory due diligence and working to accelerate=
the regulatory approvals required to complete the merger in accordance wit=
h the previously announced agreement," he said.=20
Mr. Watson said ChevronTexaco Corp., which owns 26% of Dynegy, reiterated i=
ts "full confidence in Dynegy's disciplined management approach to complete=
the merger and to build a new company into an industry leader."=20
Privately, analysts were calling the odds of a successful merger lower in t=
he wake of new negative news made in a U.S. Securities and Exchange filing.=
Most analysts called the chances of success even, whereas most had called =
the odds of success at 60% to 70% earlier.=20
Wall Street analysts said Enron is losing market share because of credit co=
ncerns by its trading partners and questions over Dynegy's takeover offer.=
=20
"Enron is definitely losing market share on credit concerns. Cash needs to =
run the business have now increased. The market perceives Enron as needing =
more cash," said Mr. Barbis.=20
Goldman Sachs & Co. downgraded Enron and Dynegy to "market perform" on Tues=
day, and took both off its recommended list. It said the cash infusion from=
Dynegy -- US$1.5-billion -- "appears inadequate to restore the confidence =
of Enron customers."=20
The bad news in Monday's filing with the SEC included the acceleration of t=
he US$690-million debt because of a credit downgrade on Nov. 12, a new redu=
ction in third-quarter earnings, word that Enron has only about US$1.5-bill=
ion cash on hand after new infusions of US$5.5-billion over the past few we=
eks and an admission that trading volumes had dropped.=20
The trading business, Enron's crown jewel and the part most coveted by Dyne=
gy, relies on volume for profitability, and Enron said it was possible the =
lower volumes would hamper fourth-quarter earnings.=20
Its trading partners, now more publicly than before, on Tuesday said they w=
ere treading carefully.=20
"We've been scaling back for some time, but we're still dealing with Enron.=
Everyday, our credit people are watching," said Al Butkus, a vice-presiden=
t with Kansas City-based Utilicorp United.=20
Cinergy, a Cincinnati-based energy firm, said through a spokesman that it c=
ontinued to trade with Enron but was keeping a close eye on its health.=20
An indicator of Enron's shape was the fact its bonds are being quoted by pr=
ice, like junk bonds, rather than how much extra yield they carry over U.S.=
Treasuries, like investment-grade bonds.

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..........................................................=20

City - Enron moves.

11/22/2001
The Daily Telegraph=20
P39
(c) Telegraph Group Limited, London, 2001=20

DYNEGY, the energy company, said it was continuing due diligence for its pr=
oposed merger with Enron. Enron earlier had been granted an extension until=
mid-December of a $690m ( #490m) debt payment that had been due next week.

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Business
Enron crisis deepens, bankruptcy looms The crisis of confidence ...

11/22/2001
The Star-Ledger Newark, NJ=20
FINAL
084
(c) 2001. The Star-Ledger. All rights reserved.=20

Enron crisis deepens, bankruptcy looms The crisis of confidence ravaging ca=
sh-strapped Enron Corp. deepened yesterday amid mounting concerns that a pr=
oposed rescue by rival Dynegy Inc. could fall through, threatening the ener=
gy trading giant with bankruptcy. While the Houston-based energy giant said=
it secured the remaining $450 million of a new $1 billion credit line and =
pushed back the deadline for repaying a $690 million debt, its shares fell =
a further 28 percent, after falling 23 percent Tuesday.=20
Enron's shares fell $1.98, or 28 percent, to close at $5.01. It was the mos=
t actively traded issue on the New York Stock Exchange for the second day i=
n a row. FDA moves on sepsis The government approved a drug that could save=
tens of thousands of lives a year from sepsis - the first treatment to dir=
ectly attack these overwhelming bloodstream infections.
Doctors call Xigris a breakthrough, and Eli Lilly & Co. pledged to ship the=
medicine to hospital intensive-care units within days.=20
The Food and Drug Administration approved Xigris as a treatment for the mos=
t severe sepsis patients, those deemed least likely to survive. When given =
to such people, the drug can cut the chances of death by 13 percent. Jobles=
s claims down For four weeks in a row, fewer Americans filed new claims for=
state unemployment benefits, suggesting the steep increase in layoffs afte=
r the terrorist attacks may be abating.=20
However, economists warn that the country is still in for a period of risin=
g unemployment.=20
The Labor Department reported for the work week ending Nov. 17, new jobless=
claims dipped by a seasonally adjusted 15,000 to 427,000. That followed a =
drop of 10,000, according to revised figures, an even bigger decline than t=
he government previously estimated. Too many coins A surplus of coins, perh=
aps compounded by Americans emptying their change jars in the softening eco=
nomy, has prompted the U.S. Mint to begin layoffs.=20
Instead of 23 billion new pennies, nickels, dimes and quarters next year, m=
int officials now believe they'll need only 15 billion. The mint already ha=
d made too many coins during the past year. The mint has begun laying off 3=
57 workers nationwide, including major coin-production plants in Philadelph=
ia and Denver.=20
Cuban deal In the first such deals in 40 years, several food companies, inc=
luding Archer Daniels Midland Co. and Cargill Inc., have agreed to sell Cub=
a grains and soybeans. The move was prompted by the recent devastation caus=
ed by Hurricane Michelle.=20
A joint venture of ADM and Kansas City, Mo.-based Farmland Industries Inc. =
will sell hard, red winter wheat to Cuba, ADM Vice President Larry Cunningh=
am said.=20
Minneapolis-based Cargill will sell corn, wheat and soybean oil, while Stut=
tgart, Ark.-based Riceland Foods Inc., which donated rice to Cuba last year=
, will be selling rice to Cuba for the first time since an embargo was impo=
sed.=20
The shipments are expected to begin arriving early next year. Health insura=
nce merger Maryland insurance regulators expect to spend as long as a yea