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Date: Fri, 23 Nov 2001 07:35:37 -0800 (PST)
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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

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

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.

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

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)

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

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

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

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.

...........................................................................=
..........................................................=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.

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

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.

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

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.


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

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

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.

...........................................................................=
..........................................................=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.


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

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 year =
evaluating the proposed $1.3 billion purchase of CareFirst BlueCross BlueSh=
ield by California-based WellPoint Health Networks Inc., the state's insura=
nce commissioner said.=20
Microsoft loses lawyer Microsoft's bow tie-wearing top lawyer, who lost the=
 company's landmark antitrust case against the Justice Department, but help=
ed the company escape a government-ordered breakup and other tough penaltie=
s, will retire in June. William Neukom, executive vice president of law and=
 corporate affairs, announced he will leave Microsoft to concentrate on phi=
lanthropy and to spend more time with his grown children. Neukom started wo=
rking with the company when it was little more than a dozen employees in 19=
79, while a partner at the Seattle-area law firm of the father of Microsoft=
 Chairman Bill Gates. He joined the company full time in 1985.=20
Brad Smith, Neukom's deputy, will succeed Neukom as a senior vice president=
 and general counsel. Credit card payments stable Americans kept up payment=
s on their credit card bills in September, despite a deteriorating jobs mar=
ket and the Sept. 11 hijacked airplane attacks, bond rating service Standar=
d & Poor's said.=20
But Americans' ability to meet their debt obligations will likely be pinche=
d in the coming months as more workers lose their jobs in a sluggish econom=
y, S&P warned.=20
Earnings news Department store chain Dillard's Inc. posted a wider-than-exp=
ected third-quarter loss as declining consumer confidence after the Sept. 1=
1 attacks stunted sales.=20
The Little Rock, Ark.-based retailer, an operator of more than 340 stores i=
n 29 states, recorded a net loss in the quarter, ended Nov. 3, of $40 milli=
on, or 48 cents a share. That compared with a net loss of $4 million, or 4 =
cents a share, a year ago.=20
Foot Locker Inc. posted a strong rise in third-quarter profits, despite the=
 generally dismal U.S. retail climate, as it focuses on its core athletic s=
hoe and apparel businesses.=20
Foot Locker said its net income for the third quarter, ended Nov. 3, was $3=
3 million, or 23 cents a share, compared with $25 million, or 21 cents a sh=
are, a year earlier.=20
People eating more meals at home following the Sept. 11 terrorist attacks h=
elped boost fourth-quarter earnings for Hormel Foods Corp. by 13 percent.=
=20
For the fiscal quarter ended Oct. 27, the Austin, Texas-based company earne=
d $68.8 million, or 49 cents a share, up from $61 million, or 44 cents a sh=
are, a year earlier. The results beat by 2 cents a share the consensus esti=
mate of analysts. - Star-Ledger wire services

NEUKOM=20
...........................................................................=
..........................................................=20

Report on Business: International
Banks to extend Enron debt but share price still plummets
LILY NGUYEN
The Globe and Mail, Reuter News Agency

11/22/2001
The Globe and Mail=20
Metro
B1
"All material Copyright (c) Bell Globemedia Publishing Inc. and its licenso=
rs. All rights reserved."=20

CALGARY -- Enron Corp. won some financial breathing room yesterday, but its=
 shares plunged as much as a third before recovering slightly over continui=
ng fears that a deal to rescue the once-mighty U.S. energy trader could be =
in jeopardy.=20
Shares in the beleaguered Houston company sank at one point to $4.55 (U.S.)=
 in trading on the New York Stock Exchange. For the second successive day, =
investors were beating up the company over news Monday that $690-million in=
 debt is rapidly coming due as a result of Enron's slashed credit ratings.
Reassurances from Enron that banks have agreed to extend the due date past =
next Tuesday gave the stock a modest prop. Shares closed the day at $5.01, =
down $1.98, for a market capitalization of less than $4-billion. Enron shar=
es now stand 45 per cent below their Monday close, and a fraction of their =
$80 level in February.=20
Industry observers fear the news of the debt problem -- the latest in a str=
ing of nasty surprises from the company -- could jeopardize a rescue of the=
 once-dominant global energy merchant by smaller hometown rival Dynegy Inc.=
 The two companies struck a merger deal that would see Dynegy buy Enron for=
 about $8.9-billion in stock on Nov. 9.=20
U.S. analyst Michael Worms said Enron's recent disclosures made the deal's =
fate uncertain.=20
"Obviously, with the most recent disclosures regarding Enron, it renewed un=
certainty as to whether or not this deal would still go through," said Mr. =
Worms, an analyst at Gerard Klauer Mattison in New York who was bullish abo=
ut the deal last week.=20
The market apparently considers it far from a done deal as well, with the s=
pread between Dynegy's share offer and Enron's price widening substantially=
 this week. At a share exchange ratio of 0.2685 of a Dynegy share for each =
Enron share, Enron shareholders would receive about $10.67 at Dynegy's clos=
ing price of $39.76 on the NYSE yesterday.=20
But in a statement issued later in the day, the two companies insisted the =
merger is still on.=20
"We are continuing our confirmatory due diligence and working to accelerate=
 the regulatory approvals required to complete the merger," Chuck Watson, D=
ynegy's chairman and chief executive officer, said in a statement.=20
In a separate statement, Enron chairman and CEO Kenneth Lay said company ex=
ecutives "continue to believe that this merger is in the best interests of =
our shareholders, employees and lenders."=20
But industry observers said Enron remains in a precarious position. As cred=
it concerns balloon, trading partners are increasingly reluctant to do busi=
ness with the company.=20
"Enron is definitely losing market share on credit concerns," said Michael =
Barbis, an analyst at Fulcrum Global Partners. As a result, "the market per=
ceives Enron as needing more cash."=20
The very methods that contributed to Enron's rapid rise are generally seen =
now as the reason for its woes.=20
Enron, established in 1985, grew from a modest natural gas pipeline company=
 with annual revenue of less than $5-billion to an energy giant with revenu=
e pegged at about $200-billion this year.=20
To finance this explosive rate of growth, the company created a vast and im=
penetrable network of affiliated entities or partnerships to divert billion=
s of dollars of debt -- which would have jeopardized Enron's credit rating =
and limited growth -- from its balance sheet.=20
But the off-balance sheet transactions caught up with the company in recent=
 months, with Enron announcing a $618-million third-quarter loss and disclo=
sed a $1.2-billion reduction in shareholder equity in part because of the p=
artnerships.=20
The company followed with more disturbing news, saying earnings have been o=
verstated by about $600-million since 1997.=20
The U.S. Securities and Exchange Commission is now investigating Enron in r=
elation to the partnerships, some of which were headed by former Enron exec=
utives.=20
Lawsuits have also been flying at the company as shareholders line up in an=
 attempt to recover more than $15-billion in lost market value since Septem=
ber.=20
Meanwhile, its would-be acquirer, Dynegy, hasn't been immune to the fallout=
 of the latest developments. Its stock dropped yesterday too, and at $39.76=
 is well below the $47.20 it hit last week, but above the $33 low it was tr=
ading at before the merger deal was announced.=20
Analysts said that if the merger goes through, Dynegy stands to gain consid=
erably. The company estimates the addition of Enron will beef up its bottom=
 line by about 35 per cent or 90 to 95 cents a share next year, a sizable c=
hunk of profit that would justify a share price in the $60 to $70 range.=20
"The outlook for earnings over the next couple of years, assuming the acqui=
sition of Enron is successful, is significant," said Mr. Worms of Gerard Kl=
auer Mattison. Despite Enron's latest troubles, he maintained a "buy" ratin=
g on Dynegy with a 12-month target of $68.=20
Dynegy has also taken moves to limit its downside. The company is injecting=
 $1.5-billion of cash into Enron, but it gets rights to Enron's prized 27,0=
00-kilometre Northern Natural Gas pipeline in return for its investment if =
Enron goes under.=20
As well, the merger agreement specifies that Dynegy can walk away from the =
deal if legal costs exceed $3.5-billion.=20
"The bet here is, can Dynegy's management pull this off, and can Enron stay=
 afloat until the merger closes?" said John Meloy, an analyst at Simmons & =
Co. International in Houston.

Illustration=20
...........................................................................=
..........................................................=20

BUSINESS
ENRON'S COLLAPSE CONTINUES

11/22/2001
South Florida Sun-Sentinel=20
Broward Metro
1D
(Copyright 2001 by the Sun-Sentinel)=20

Shares of embattled Enron Corp. plunged another 28.3 percent Wednesday as a=
nalysts and investors continued to doubt the once- mighty energy trader's a=
bility to recover lost business and investor confidence.=20
In a report released Wednesday morning, Goldman Sachs & Co. analyst David F=
leischer became the latest to question Enron's future, saying that a filing=
 by the Houston-based company with the Securities and Exchange Commission e=
arlier this week "raised new issues about liquidity and the ability of the =
company to even finance itself over the next several months." Analysts are =
also questioning whether Dynegy Inc.'s planned $8.9 billion acquisition of =
Enron will survive given the latest revelations.
Enron fell $1.98 to $5.01. Dynegy fell $1.94, or 4.7 percent, to $39.76.=20
Consumer sentiment rebounding=20
Consumers were more upbeat about their finances and economic prospects this=
 month than they were in October, according to a study by the University of=
 Michigan. The university said its final index of consumer sentiment for No=
vember was 83.9, compared with 82.7 in October. The mid-November preliminar=
y reading was 83.5.=20
The index, set up in 1966, has a base of 100. Increases or decreases from t=
hat level indicate Americans' degree of comfort with their finances and the=
 state of the economy.=20
Buffett's offer put in jeopardy=20
Fruit of the Loom Inc. failed to win court approval of its proposed bankrup=
tcy sale procedures, jeopardizing an $835 million offer for the underwear m=
aker by Warren Buffett's Berkshire Hathaway Inc.=20
U.S. Bankruptcy Court Judge Peter Walsh turned down Fruit of the Loom's req=
uest to approve the procedures after Berkshire's lawyer said the company wo=
uldn't accept less than $30 million if it's outbid for Fruit of the Loom or=
 the recovery plan based on Berkshire's bid is rejected.=20
Group chairman to depart Merrill=20
Merrill Lynch & Co.'s Herb Lurie, the investment banker who announced $115 =
billion in mergers in a single week in 1998, said he will leave the biggest=
 securities firm at the end of the year.=20
The 41-year-old Lurie, who is chairman of Merrill's financial institutions =
investment-banking group, said he decided to depart before the firm offered=
 most of its employees incentives to leave and started cutting more jobs to=
 save costs amid a profit slide.=20
Verizon dispatches buyout offers=20
Verizon Communications Inc., the biggest U.S. local-telephone company, sent=
 buyout offers to several thousand employees in the past week to cut costs =
as the economy slows, a spokesman said.=20
Verizon, based in New York, has offered packages this year "to something in=
 the order of 30,000 employees," said Peter Thonis, a spokesman. The total =
includes managers and employees at Verizon Wireless who were excluded from =
the most recent offer, he said.=20
The company has about 256,000 employees.=20
NationsRent suspended by NYSE=20
The New York Stock Exchange will suspend trading in shares of NationsRent I=
nc., the Fort Lauderdale-based construction equipment rental company, becau=
se of the stock's "abnormally" low prices, which dipped recently to levels =
of about 10 cents a share. The stock will stop trading before the opening b=
ell on Monday or earlier, the NYSE said Wednesday.=20
Florida jobless filings decline again=20
New claims for state unemployment benefits fell for the fourth straight wee=
k, suggesting that the surge of layoffs seen after the terror attacks might=
 be easing. The Labor Department reported Wednesday that for the work week =
ending Nov. 17, new jobless claims dipped by a seasonally adjusted 15,000 t=
o 427,000. That followed a drop of 10,000, an even bigger decline than the =
government previously estimated, according to revised figures.=20
Nintendo ships more GameCubes=20
Nintendo Co., the maker of video games such as Pokemon, will ship 18 percen=
t more GameCube game systems to U.S. retailers this year than previously pl=
anned. Nintendo plans to deliver 1.3 million units, an increase from 1.1 mi=
llion, the company said in a statement. The $199 GameCube, which went on sa=
le Sunday, competes with Microsoft Corp.'s new $299 Xbox and Sony Corp.'s $=
299 PlayStation 2.=20
Luxottica faces federal court order=20
Luxottica SpA said a California court issued a restraining order temporaril=
y barring the company from selling some sunglasses in the United States aft=
er Oakley Inc. claimed the Italian company was selling knock-off designs.=
=20
The U.S. District Court for the Central District of California barred Luxot=
tica from selling three sunglass models until Nov. 30. Oakley claimed in a =
lawsuit that rival Luxottica bought its biggest customer, the Coral Gables-=
based Sunglass Hut store chain, and began selling knockoffs of Oakley desig=
ns.=20
Markets giving thanks=20
U.S. stock and bond markets will be closed today for Thanksgiving. On Frida=
y, regular stock trading will close at 1 p.m. and the bond market will clos=
e at 2 p.m.

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

Business
Enron's cash woes endanger merger ; Dynegy mulls whether to ask for renegot=
iation
From Tribune news services

11/22/2001
Chicago Tribune=20
North Final ; N
1
(Copyright 2001 by the Chicago Tribune)=20

Officials of Dynegy Inc. on Wednesday weighed whether to seek to renegotiat=
e the terms of an agreement to acquire Enron Corp., its Houston rival, whil=
e Enron and its bankers sought to shore up the energy trader's finances, ex=
ecutives close to the two firms said.=20
Although Enron said it secured the remaining $450 million of a new $1 billi=
on credit line and pushed back the deadline for repaying a $690 million deb=
t, its shares fell a further 28 percent, after falling 23 percent on Tuesda=
y.
"If Dynegy steps away entirely from the merger, Enron's credit situation se=
ems untenable, with a bankruptcy filing highly possible," rating agency Fit=
ch Investors said.=20
UBS Warburg analyst Ron Barone said "bankruptcy would not be out of the que=
stion" if the merger fell through or ran into obstacles.=20
"We believe the odds of Enron incurring a material adverse change on its op=
erations is soaring," Barone said in a research note, saying that Dynegy ma=
y invoke clauses allowing it to walk away from or alter the terms of the $9=
 billion agreement.=20
In a statement, Enron said it was in feverish talks with its other lenders =
to restructure its debt obligations and reaffirmed its commitment to the Dy=
negy deal.=20
"We continue to believe that this merger is in the best interests of our sh=
areholders, employees and lenders," Enron Chairman and Chief Executive Kenn=
eth Lay said.=20
J.P. Morgan Chase & Co. Vice Chairman James Lee said in the same statement =
that Chase believes its interests and those of Enron and its other primary =
lenders are aligned, and that the bank would "develop a plan to strengthen =
Enron's financial position up to and through its merger with Dynegy."=20
Enron's shares fell $1.98 to close at $5.01. It was the most actively trade=
d issue on the New York Stock Exchange for a second day in a row.=20
The shares had dipped as low as $4.55 on Wednesday, rebounding slightly aft=
er Enron's announcement. Accounting for stock splits, that is the lowest En=
ron has traded since February 1989.=20
Dynegy shares were off $1.94, or 4.65 percent, at $39.76.=20
Dynegy on board=20
Dynegy Chairman and CEO Chuck Watson said he is encouraged by the new loan =
and debt extension. Watson said in a statement that Dynegy was working to "=
accelerate the regulatory approvals required to complete the merger."=20
Watson said ChevronTexaco Corp., which owns 26 percent of Dynegy, reiterate=
d its "full confidence" in Dynegy's ability to complete the merger.=20
However, Dynegy officials worried Wednesday that even discussing the idea o=
f renegotiating the merger agreement could damage confidence in Enron among=
 investors and other energy traders.=20
An executive close to Dynegy said that there did not yet appear to be legal=
 grounds on which to break up the deal unilaterally. Nor, he added, was Dyn=
egy prepared to demand that Enron allow the terms of the deal to be changed=
.=20
An Enron spokeswoman said that she was not aware of any attempts by Dynegy =
to renegotiate the deal.=20
Privately, analysts were calling the odds of success lower since Enron made=
 a filing with the Securities and Exchange Commission on Monday alerting in=
vestors to its credit crunch.=20
Monday's filing noted that Enron's financial woes have led to a "reduced le=
vel of transaction activity" with the company by trading partners.=20
Most analysts interviewed by Reuters called the chances of the deal even, w=
here earlier they had listed odds of success at 60 percent to 70 percent.=
=20
However, one analyst said he thought emotion was driving the current stock =
moves, and that it comes despite three powerful factors in favor of the dea=
l.=20
"The bottom line, Enron needs this to happen, Dynegy wants this to happen, =
and ChevronTexaco is supportive of it happening," Credit Suisse First Bosto=
n analyst Curt Launer said.=20
Trading deals down=20
Goldman Sachs downgraded Enron and Dynegy to "market perform," and took bot=
h off its recommended list. Goldman said the cash infusion from Dynegy--$1.=
5 billion--"appears inadequate to restore the confidence of Enron customers=
."=20
Enron's trading partners said they were treading carefully.=20
"We've been scaling back for some time, but we're still dealing with Enron.=
 Every day, our credit people are watching," said Al Butkus, a vice preside=
nt with Kansas City-based UtiliCorp United Inc.=20
The trading business, Enron's crown jewel and the part most coveted by Dyne=
gy, relies on volume for profitability, and Enron has said it was possible =
that the lower volumes would hamper fourth- quarter earnings.=20
One indicator of Enron's shape was the fact that its bonds are being quoted=
 by price, like junk bonds, rather than by how much extra yield they carry =
over U.S. Treasuries, like investment-grade bonds.=20
The company's 6.4 percent notes maturing in 2006 and 6.75 percent notes mat=
uring in 2009 were respectively bid Wednesday afternoon at 62 and 60 cents =
on the dollar, each down from the high 60s on Tuesday. Their yields to matu=
rity were a respective 19 and 16 percent. Its 20-year zero-coupon convertib=
le bonds traded Wednesday at just over 34 cents on the dollar, down from 38=
 cents on Tuesday.

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

U.S. Watchdog Group Refuses Inquiry of Enron Audit Woes
By Judith Burns
Dow Jones Newswires

11/22/2001
The Wall Street Journal Europe=20
18
(Copyright (c) 2001, Dow Jones & Company, Inc.)=20

WASHINGTON -- An accounting industry watchdog won't investigate auditing pr=
oblems at Enron Corp. despite a request from a senior U.S. lawmaker, but ma=
y take a broader look at what's causing recent audit debacles.=20
"Investigation of the Enron situation rests with the SEC," Public Oversight=
 Board Chairman Charles Bowsher said. "We can't run a separate investigatio=
n."
The Securities and Exchange Commission is examining accounting and audit pr=
oblems at Houston-based Enron, focusing on investments in limited partnersh=
ips tied to former Chief Financial Officer Andrew Fastow. Enron has acknowl=
edged it overstated net income by $586 million (663.8 million euros) and wi=
ll need to restate five years of financial reports.=20
Citing concerns about the accounting industry's peer-review process, Rep. J=
ohn Dingell asked the Public Oversight Board to conduct a special investiga=
tion of Arthur Andersen LLP and its audit work for Enron.=20
Mr. Bowsher said the oversight board won't open a special investigation, le=
aving that to the SEC and the industry's quality-control inquiry committee,=
 but will decide at its next meeting whether to take "a hard look" at recen=
t, high-profile audit blowups.=20
"We're probably going to want to look at some of these major audit failures=
, and that's not limited to Andersen," Mr. Bowsher said.=20
He cited recent audit failures involving Cendant Corp., Microstrategy Inc.,=
 Sunbeam Corp. and Waste Management Inc., saying "I think we ought to look =
at them all."=20
Former SEC chief accountant Lynn Turner expressed disappointment at the ove=
rsight board's reluctance to exercise its investigative muscle, given a ras=
h of financial restatements and frauds that have cost investors more than $=
100 billion in recent years.=20
"In light of losses that have reached the magnitude of the savings-and-loan=
 debacle, it's time for the POB to start carrying out investigations of wha=
t's happening at the audit firms," Mr. Turner said.=20
He said Rep. Dingell is right to question the accounting profession's abili=
ty to police itself through so-called peer reviews, saying recent audit fai=
lures "are evidence that the peer-review process is not as robust as it nee=
ds to be."=20
Firms that audit public companies must undergo peer review every three year=
s, subjecting their work to scrutiny by a competing audit firm or a panel a=
ppointed by the American Institute of Certified Public Accountants. In prac=
tice, the Big Five firms hire each other to conduct the oversight, with no =
requirement to rotate assignments, and critics say reviewers aren't as toug=
h as they could or should be.=20
"There's a tendency in the peer reviews, even when problems are identified,=
 to regard them as isolated instances," not evidence of a systemic failure =
at an audit firm, said Douglas Carmichael, an accounting professor at Baruc=
h College in New York.=20
Mr. Bowsher defends peer reviews as "a very rigorous, thorough process," bu=
t concedes they haven't prevented a recent bout of problematic audits. He s=
uggested that may be due to factors from bad judgment on the part of indivi=
dual partners to questions about applying accounting and auditing standards=
.=20
In Enron's case, the quality-control inquiry committee, composed of about a=
 dozen CPAs, will investigate Andersen's audit work but critics doubt it wi=
ll do much digging.

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

Business/Financial Desk; Section A
Employees' Retirement Plan Is a Victim as Enron Tumbles
By RICHARD A. OPPEL Jr.

11/22/2001
The New York Times=20
Page 1, Column 2
c. 2001 New York Times Company=20

The rapid decline of the Enron Corporation has devastated its employees' re=
tirement plan, which was heavy with company stock, and has infuriated worke=
rs, who were prohibited from changing their investments as the stock plunge=
d.=20
Through the 401(k) retirement plan, employees chose to put much of their sa=
vings in Enron shares, and the company made contributions in company stock =
as well. But around the time Enron disclosed serious financial problems las=
t month, the company froze the assets in the plan because of an administrat=
ive change. For several weeks, as the stock lost much of its value, workers=
 stood by helplessly as their retirement savings evaporated. They were not =
allowed to switch investments at all -- even though the plan had far less r=
isky choices.
The unfortunate timing caps a year of pain for Enron's workers. At the end =
of last year, the 401(k) plan had $2.1 billion in assets. More than half wa=
s invested in Enron, an energy conglomerate. Since then, the stock has lost=
 94 percent of its value.=20
At Portland General Electric, the Oregon utility acquired by Enron four yea=
rs ago, some workers nearing retirement have lost hundreds of thousands of =
dollars. The utility has lined up grief counselors to help them work throug=
h their problems.=20
''We had some married couples who both worked who lost as much as $800,000 =
or $900,000,'' said Steve Lacey, an emergency-repair dispatcher for Portlan=
d General. ''It pretty much wiped out every employee's savings plan.''=20
''Shortly after it was frozen, the articles started coming out about some o=
f the questionable activities of Enron,'' Mr. Lacey added. ''The stock took=
 a tremendous drop, and we were pretty much helpless.''=20
The loss serves as a grim reminder of the danger of relying too heavily on =
one investment. Stock plunges similar to Enron's have also wiped out the re=
tirement savings of many employees of the Nortel Networks Corporation, Luce=
nt Technologies Inc. and Global Crossing Ltd.=20
The loss by Enron's workers also stands in stark contrast to the profits ma=
de by some senior Enron executives, who sold stock during the last few year=
s. Enron's chairman, Kenneth L. Lay, made $20.7 million during the first se=
ven months of 2001 by exercising stock options -- and more than $180 millio=
n by exercising options during the three prior years. Last week, Mr. Lay ag=
reed to forgo a $60 million severance package after Enron traders and emplo=
yees made clear how upset they were that he would profit from the proposed =
acquisition of the company by Dynegy Inc. while they were suffering.=20
Enron -- which is already the subject of a Securities and Exchange Commissi=
on investigation of transactions among Enron and partnerships headed by the=
 company's former chief financial officer, Andrew S. Fastow, and a number o=
f shareholders' suits -- now has an additional legal problem.=20
On Tuesday, Steve W. Berman, a lawyer from Seattle who represented states a=
gainst the tobacco industry, filed a lawsuit in Federal District Court in H=
ouston seeking class-action status on behalf of Enron employees who lost mo=
ney on the stock through their retirement plan. The lawsuit says that Enron=
 schemed to pump up the price of the stock artificially and violated its fi=
duciary duty to its employees by failing to act in their best interests.=20
''They were promoting Enron as a retirement investment vehicle and matching=
 employees' contributions with Enron stock, when they knew the stock was ov=
ervalued, and that's a breach of their fiduciary duties,'' Mr. Berman said =
in an interview yesterday.=20
What's more, he said, the assets were frozen on Oct. 17, with the stock at =
$32.20, even though Enron executives knew there would be imminent disclosur=
es about the company's accounting practices. ''They knew the worst news was=
 about to come out, but they froze the stock,'' he said.=20
Enron closed yesterday at $5.01.=20
The company declined to comment on much of the allegations because of pendi=
ng litigation. A spokeswoman, Karen Denne, said that the change in plan adm=
inistrators had been in the works for a number of months and that she did n=
ot know the exact date the change was put into effect.=20
Like many other big companies, Enron made its contributions to the plan in =
company shares. But employees also chose to put much of their own contribut=
ions into the stock, lured by its stellar past performance. The company say=
s that 89 percent of the Enron stock in the plan wound up there because emp=
loyees chose it, and 11 percent was the company's contribution.=20
''A lot of people believed in the stock, so it wasn't just the company matc=
h,'' said an employee at Enron's headquarters in downtown Houston. ''It was=
 their own money, too. People are just shell-shocked.''=20
The stock's past performance had lured many workers. Last year, as the stoc=
k soared, total assets in the 401(k) plan rose more than 35 percent.=20
About 57 percent of Enron's 21,000 employees participate in the 401(k) plan=
. The company generally matches employee contributions at 50 cents on the d=
ollar, up to 6 percent of their salary, with Enron stock, which cannot be s=
old and put into another investment until the employee reaches age 50. But =
Ms. Denne said workers otherwise ''have a range of options'' in which to in=
vest their money.=20
Gerry O'Connor, a senior consultant with the Spectrem Group, a consulting f=
irm based in Chicago, said it was not uncommon for companies to freeze asse=
ts when administrators were switched. ''If you don't, you can wind up with =
misallocated money, wrong statements, and all kinds of complicating factors=
,'' he said.=20
But a heavy dose of assets in one company stock has been a concern to many =
specialists in retirement planning. Employees are taking ''a lot of risk, b=
ut they don't think of it as such,'' Mr. O'Connor said.=20
''They say, 'You know, I work for this company, and we're doing great.' ''=
=20
In addition to the swoon in their 401(k) plans, Enron employees have watche=
d the value of their stock options wither. Enron gave a far larger percenta=
ge of employees options than most companies do, but now, with the fall in E=
nron shares, nearly all of those options are worthless.=20
Enron's tumbling fortunes have come as a particular shock to some of its wo=
rkers in Oregon. About 95 percent of the 2,700 employees of Portland Genera=
l, which Enron recently agreed to sell to help it raise badly needed cash, =
are invested in the 401(k) plan, said Scott Simms, a spokesman.=20
The losses, he added, have hit everyone ''including officers all the way th=
rough to other staff.''=20
''It's certainly not something in which certain employees have lost out and=
 others haven't,'' he said. ''It was the same plan for everyone.''=20
In an interview with The Oregonian in Portland, Peggy Y. Fowler, Portland G=
eneral's chief executive, said the asset freeze was an unfortunate coincide=
nce. ''The timing couldn't have been worse,'' she said.=20
''We refer to our retirement program as a three-legged stool -- Social Secu=
rity, the company pension and the 401(k),'' Ms. Fowler said. ''One of the l=
egs has been cut off.''

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

Business/Financial Desk; Section C
Circling the Wagons Around Enron
Risks Too Great To Let Trader Just Die
By ANDREW ROSS SORKIN and RIVA D. ATLAS

11/22/2001
The New York Times=20
Page 1, Column 2
c. 2001 New York Times Company=20

Officials of Dynegy yesterday weighed whether to seek to renegotiate the te=
rms of the company's agreement to acquire Enron, its Houston rival, while E=
nron and its bankers sought to shore up its finances, executives close to t=
he two companies said.=20
The discussions came as the stock and energy markets continued to register =
doubts about the financial stability of Enron, the energy trading concern. =
Enron's stock fell another 27 percent, even though the company won a three-=
week reprieve from its banks on a $690 million note that would have come du=
e next Tuesday if Enron had been unable to come up with collateral.
An executive close to Enron described the loan extension, by J. P. Morgan C=
hase and Citigroup, as a Band-Aid, given the approach of Thanksgiving. ''Pe=
ople are trying to take the time to come up with something for the intermed=
iate term,'' the executive added.=20
The bankers also met with investors, including leveraged buyout firms and t=
wo industrial companies, which might inject up to $2 billion into Enron und=
er arrangements that would protect them from a further collapse in the comp=
any's stock, the executives said.=20
The new investments would be in Enron's Transwestern Pipeline, which links =
natural gas fields in Texas to the California market, they said. The deals =
would be structured like Dynegy's agreement, as part of the merger, to infu=
se $1.5 billion into the Enron subsidiary that owns the Northern Natural Ga=
s pipeline. That arrangement lets Dynegy keep the pipeline even if the merg=
er falls apart.=20
Besides talking with other potential investors, J. P. Morgan Chase and Citi=
group agreed to terms that have each taking a $250 million equity stake in =
such a deal, the executives said. The bankers plan to meet with Enron offic=
ials on Monday to complete the transactions, they added.=20
Karen Denne, an Enron spokeswoman, noted that the company had previously sa=
id it was seeking a further infusion of up to $1 billion in equity. ''We ar=
e not going to discuss the specifics of who we are talking to,'' she said.=
=20
Though investors again manhandled the stock of Enron, which is down 94 perc=
ent this year, the banks, Dynegy and credit-rating agencies all sought to p=
roceed delicately. Executives explained that hasty moves could only deepen =
the crisis of confidence in Enron, wiping out the energy trading operations=
 that only months ago made it one of the nation's most admired and politica=
lly influential companies.=20
Dynegy officials worried yesterday that even talking about renegotiating th=
e merger deal could damage confidence in Enron among investors and other en=
ergy traders.=20
An executive close to Dynegy said that there did not yet appear to be legal=
 grounds on which to break up the deal unilaterally. Nor, he added, was Dyn=
egy prepared to demand that Enron allow the terms of the deal to be changed=
. But he indicated that the situation could change.=20
Ms. Denne, the Enron spokeswoman, said that she was not aware of any attemp=
ts by Dynegy to renegotiate the deal. Dynegy issued a statement saying that=
 its chief executive, Chuck Watson, was encouraged by the steps Enron had t=
aken with its bankers. Mr. Watson said the company was continuing its due d=
iligence on the deal.=20
Dynegy's shares, which rose as high as $46.94 in the days after the merger =
was announced, on Nov. 9, closed yesterday at $39.76, down more than 4 perc=
ent for the second consecutive day.=20
Enron was the most actively traded stock on the New York Stock Exchange, cl=
osing at $5.01, down $1.98. That means the premium that Dynegy would be pay=
ing for Enron has risen to 115 percent.=20
Analysts following Enron's debt said that bankers had little choice but to =
support the company, given that most of Enron's bank debt is not secured. T=
hat means that if bankers pushed Enron into bankruptcy, they would receive =
no better treatment than the holders of more than $6 billion in Enron bonds=
 and other debt.=20
Enron said it was in talks with lenders to restructure $9.15 billion in deb=
t that will come due by the end of 2002. ''If the Dynegy deal closed, that =
would be the best thing for the banks,'' said one analyst following the deb=
t.=20
James B. Lee Jr., vice chairman of J. P. Morgan Chase, echoed that thought =
in a statement issued by Enron. ''We believe the interests of Chase and Enr=
on's other primary lenders are aligned in this restructuring effort,'' he s=
aid. ''We will work with Enron and its other primary lenders to develop a p=
lan to strengthen Enron's financial position up to and through its merger w=
ith Dynegy.'' Along with Citigroup, J. P. Morgan Chase is Enron's lead bank=
, and it is also an adviser on the merger with Dynegy.=20
Another group with the power to push Enron to the brink, the big credit-rat=
ing agencies, continued to step gingerly. The agencies have held Enron's de=
bt rating one step above ''junk'' status, knowing that downgrading it furth=
er would force the company to pay or refinance up to $3.9 billion in debt -=
- effectively rendering Enron insolvent. One rating agency official said ye=
sterday that such a move would roil the entire debt market, adding that it =
was ''patriotic'' to hold off.=20
Still, one rating agency, Fitch, put out a strongly worded commentary yeste=
rday.=20
''If Dynegy steps away entirely from the merger, Enron's credit situation s=
eems untenable, with a bankruptcy filing highly possible,'' wrote Ralph Pel=
lecchia and Glen Grabelsky, the Fitch analysts following Enron. ''Our prese=
nt BBB- rating rests on the merger possibility and continued support of the=
 lending banks, without which Fitch would consider lowering the rating.''=
=20
Analysts and energy executives said that Enron's collapse -- though unthink=
able just weeks ago -- would be unlikely to cause a meltdown in the nation'=
s energy markets. While Enron has been the nation's biggest trader of elect=
ric power and natural gas, many other companies -- including Dynegy -- make=
 markets in those commodities. Analysts say the gradual unfolding of Enron'=
s financial woes this fall has given its trading partners time to unwind de=
als and limit their exposure to Enron.=20
Yet even one of Enron's most stubborn supporters was forced to concede yest=
erday that his confidence had been shattered by the company's problems, inc=
luding the rapid depletion of its cash reserves, restatements that erased $=
600 million in earnings and the surprise disclosure of the $690 million deb=
t.=20
That fan, Goldman, Sachs & Company's energy analyst, David Fleischer, downg=
raded the shares to neutral. Until yesterday, Goldman had kept the stock on=
 its recommended list.

Photo: Kenneth L. Lay of Enron, left, and Chuck Watson of Dynegy, on Nov. 9=
, when the acquisition was announced. (Associated Press) Chart: ''The Stock=
's Collapse'' Enron's stock has lost more than 90 percent of its value in t=
he last year. Graph tracks the daily closing price of Enron shares from Nov=
ember 2000 to yesterday. (Source: Bloomberg Financial Markets)=20
...........................................................................=
..........................................................=20

Houston Chronicle Working Column
L.M. Sixel

11/22/2001
KRTBN Knight-Ridder Tribune Business News: Houston Chronicle - Texas=20
Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World=
 Reporter (TM)=20

On the days it was cold and damp, utility lineman Roy Rinard would think ab=
out the future.=20
His hip hurt from arthritis, and his lungs hurt from sarcoidosis, but Rinar=
d knew on days like that he'd be climbing poles for only four or five more =
years.
That's because the 54-year-old was pumping every dime he could into his 401=
(k) plan at work and getting a dollar-for-dollar match. And the money was p=
iling up in the 21 years he worked there.=20
Earlier this year, Rinard had $472,000 in his 401(k) plan. Today, it's wort=
h about $40,000.=20
That's because Rinard is a lineman with Enron-owned Portland General Electr=
ic in Portland, Ore.=20
In January, Enron was trading for $84.87. Wednesday it closed at $5.01 a sh=
are.=20
Part of the reason that Rinard lost so much money is that Enron gives its e=
mployees their 401(k) match in company stock. That was great when the stock=
 was flying high but as the stock has tanked, employee retirement accounts =
have evaporated.=20
It's fairly common for employers to give their 401(k) match in their own co=
mpany stock, said Scott Alt, assistant vice president of Aon Consulting, a =
human resources consulting firm in Houston.=20
It's often cheaper for a company to provide stock because they don't have t=
o put out the cash, said Alt, who sets up 401(k) plans for companies.=20
And giving stock makes the employees shareholders, which many executives be=
lieves breed loyalty. They work a little harder when they own the company, =
Alt said.=20
And employees like it -- except, of course, if the stock plummets.=20
At Enron, the problem was compounded when many employees, including Rinard,=
 saw Enron's stock doing so well that they decided to put their entire acco=
unt into Enron stock.=20
Enron executives were talking about how the stock price was poised to climb=
 above $100 a share, he recalled. It was going to $120.=20
Rinard and a co-worker, Steve Lacey, have filed an Employee Retirement Inco=
me Security Act, or ERISA, lawsuit in Houston contending that Enron reckles=
sly endangered their retirement funds.=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 things were going downhill, said Berman, who =
is hoping to get the suit certified as a class-action case.=20
He's hoping to prove that the 401(k) plan executives failed to act responsi=
bly when they knew about serious business problems.=20
Berman is hoping to break some new legal ground with his case. It's pattern=
ed after a case against Lucent Technologies in which Lucent employees sued =
their employer this summer for matching their 401(k) contributions with com=
pany stock that later tanked. That case is still in litigation.=20
Another troubling feature of the Enron 401(k) plan was that employees were =
not allowed to make trades for about a month. Unfortunately, the lockdown b=
egan Oct. 17, the 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 did not return a telephone call for this column, have =
said they had planned the lockdown for several months because it was changi=
ng plan administrators.=20
But that timing was disastrous for Rinard and his co-workers who couldn't s=
ell their shares between the time it was $33.84 a share on Oct. 16 and when=
 they could begin to trade again at less than $10 a share.=20
"I just watched it drop, horrified," Rinard said. "There wasn't a thing I c=
ould do about it."=20
Like many employees, Rinard's 401(k) retirement fund was the only thing he =
had. And now Rinard is kicking himself for trusting his company too much.=
=20
Before the wheels came off the wagon, retirement was a doable thing, Rinard=
 said. The end was in sight.=20
"Now, after 35 years of climbing poles, I'm just right back to where I star=
ted."

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

Business; Financial Desk
Enron Shares Fall Again on Doubts Energy: A retreat by bankers or a credit =
downgrade could threaten Dynegy merger and land firm in bankruptcy. Stock t=
umbles to 12-year low.
THOMAS S. MULLIGAN
TIMES STAFF WRITER

11/22/2001
Los Angeles Times=20
Home Edition
C-1
Copyright 2001 / The Times Mirror Company=20

NEW YORK -- Investors pounded shares of Enron Corp. to a 12-year low Wednes=
day amid mounting doubts about whether the Houston-based energy-trading kin=
g can survive long enough to complete its announced takeover by cross-town =
rival Dynegy Inc.=20
Enron shares plunged $1.98, or 28%, to close at $5.01 in New York Stock Exc=
hange trading, its lowest level since April 1989. Enron, a Wall Street darl=
ing just months ago, is down 94% year-to-date.
A minefield stands between Enron and the merger, analysts said. Almost any =
stumble--a further downgrade by a credit rating agency, a retreat by Enron'=
s bankers or trading partners, another negative surprise about its financia=
l condition--could pitch it into bankruptcy.=20
Still, the credit rating agencies held their fire Wednesday, keeping Enron'=
s bonds one notch above "junk," or sub-investment-grade, status.=20
Enron also gained some breathing space from its lenders, announcing that a =
$690-million note payment due Tuesday had been postponed to mid-December.=
=20
"I think they'll probably limp through [to the merger]," said analyst Micha=
el S. Worms of Gerard Klauer Mattison in New York. "But it's a bad limp."=
=20
There were no major new disclosures to prompt Wednesday's sell-off, but inv=
estors seemed to be afraid to hold Enron stock over the Thanksgiving weeken=
d, traders said. The stock market is closed today and open Friday for an ab=
breviated session--traditionally the lightest trading day of the year.=20
Enron shares plummeted 23% on Tuesday in reaction to a filing Monday with t=
he Securities and Exchange Commission in which Enron disclosed the $690-mil=
lion obligation. The disclosure was a surprise even to the credit rating ag=
encies that have been in constant contact with Enron executives since the c=
ompany's finances began unraveling last month.=20
The rating agencies' view is critical, because under some controversial Enr=
on deals that have come to light recently, a downgrade to junk level would =
be a "trigger event" requiring Enron to immediately pay $3.9 billion to cre=
ditors, the company said in Monday's SEC filing.=20
Such an event could instantly bankrupt the company, analysts said.=20
Enron has been reeling since mid-October, when it began disclosing details =
of deals involving limited partnerships organized by current or former comp=
any executives. The partnerships' purpose appears partly to have been to pu=
mp up Enron's reported profit while concealing large amounts of debt it was=
 incurring.=20
The SEC has announced that it is investigating the situation.=20
In addition to announcing the delayed payment, Enron said Wednesday that it=
 had tapped the remaining $450 million of a previously announced $1-billion=
 credit line from its chief lenders, J.P. Morgan Chase & Co. and Citigroup =
Inc.=20
Enron probably can restructure its debts and postpone most payments until M=
ay, analyst Ronald M. Barone of Standard & Poor's rating agency said Wednes=
day. It is in the lenders' interest to cooperate, as much of Enron's debt i=
s unsecured by hard assets, and the banks would stand to lose most of their=
 principal in a bankruptcy, he said.=20
Dynegy broke its recent silence Wednesday by issuing a statement in which C=
hairman and Chief Executive Chuck Watson said he was "encouraged" by the ne=
ws of Enron's agreements with its lenders.=20
Dynegy is "working to accelerate the regulatory approvals required to compl=
ete the merger," Watson said, adding that oil giant ChevronTexaco Corp., wh=
ich owns 26% of Dynegy's stock, reiterated its support for the deal.=20
Ratcheting up the pressure on Enron, another credit rating agency, Fitch In=
c., issued a statement Wednesday listing its own concerns. Enron's energy t=
rading partners seem to be demanding more cash collateral and reducing thei=
r exposure to Enron, which calls into question the ongoing value of the com=
pany's core trading business, Fitch said.=20
Although Dynegy has reiterated its intention to complete the merger, Enron'=
s problems make renegotiating the merger terms or canceling the deal a poss=
ibility, Fitch said.=20
"If Dynegy steps away entirely from the merger, Enron's credit situation se=
ems untenable, with a bankruptcy filing highly possible," Fitch said.=20
If the merger falls through, Dynegy still will retain the right to purchase=
 Enron's Northern Natural Gas Co. pipeline system for $1.5 billion.=20
However, analyst Andre Meade of Commerzbank Securities said he believes Dyn=
egy still is mainly interested in the trading franchise.=20
"I don't think it's worth Dynegy's while to go through all this pain if the=
y just want to pick up assets [such as the pipeline] on the cheap," Meade s=
aid.

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

Enron Stock Declines Further On Release of Regulatory Filing --- Document R=
eveals Potential Fresh Problems
By John R. Emshwiller
Staff Reporter

11/22/2001
The Asian Wall Street Journal=20
M7
(Copyright (c) 2001, Dow Jones & Company, Inc.)=20

Enron Corp.'s stock and bond prices took another beating after the energy c=
ompany's release late Monday of its much-anticipated third-quarter financia=
l filing with the U.S. Securities and Exchange Commission. This revealed po=
tentially major new cash-flow and earnings headaches.=20
As of 4 p.m. in New York Tuesday, Enron shares were at $6.99, down $2.07, o=
r 23%. Enron once again topped the exchange's most-active list with 89.9 mi=
llion shares traded, more than twice the volume of the next most active sto=
ck.
Enron bond prices fell into the range of between 70 cents and 80 cents on t=
he dollar, according to market observers. Following the announcement earlie=
r this month of Dynegy Inc.'s plan to buy Enron for around $10 billion in s=
tock, bond prices had firmed to above 80 cents on the dollar.=20
A Dynegy spokesman Tuesday wouldn't comment on the status of the pending ac=
quisition, other than to say his company was reviewing Enron's third-quarte=
r financial report, filed with the SEC, as part of continuing "due diligenc=
e." Under the proposed acquisition, Dynegy would exchange 0.2685 of its sha=
res for each Enron share. Based on Dynegy's 4 p.m. price Tuesday of $41.70 =
a share, off $1.90, the deal values Enron shares at about $11.20 -- well ab=
ove the current market price.=20
Monday's third-quarter financial report from Enron, which supplemented and =
revised Enron's earnings announcement last month, reinforced fears that the=
 energy-trading company is in a "precarious financial position and will be =
for awhile," said Andre Meade, head of U.S. utility research at Commerzbank=
 Securities.=20
Enron's SEC filing Monday said that because of the company's deteriorated c=
redit standing, it might have to repay a $690 million note by this coming M=
onday. The filing also said Enron might be forced to take a $700 million pr=
etax charge to earnings in the current quarter, ending Dec. 31, due to a dr=
op in value of some of its assets.=20
Houston-based Enron has been in deepening financial distress for the past m=
onth, since announcing big asset and shareholder-equity reductions in the t=
hird quarter.

...........................................................................=
..........................................................=20
FRONT PAGE - FIRST SECTION - Enron granted breathing space.
By ROBERT CLOW, ANDREW HILL, SHEILA MCNULTY and GARY SILVERMAN.

11/22/2001
Financial Times=20
(c) 2001 Financial Times Limited . All Rights Reserved=20

FRONT PAGE - FIRST SECTION - Enron granted breathing space - US energy grou=
p postpones $690m in repayments as it fights for survival.=20
Enron, the crisis-hit US energy trader, won a stay of execution from its le=
nders yesterday but remained on a knife edge as it struggled to restore the=
 confidence of customers, bankers and investors.
The former stock market star said repayment of $690m ( #479m) of outstandin=
g notes would be postponed from next Tuesday to "mid-December". The group a=
lso said it had finalised the remaining $450m of a $1bn credit line from JP=
 Morgan Chase and Salomon Smith Barney, part of Citigroup.=20
Enron's survival is crucial to the smooth functioning of the US energy mark=
et, which the group dominates. Its failure would also have severe repercuss=
ions in the wider financial markets, where Enron offsets much of the risk o=
f energy price changes.=20
Negotiations with lenders are set to continue through today's Thanksgiving =
holiday, according to people close to the talks.=20
Whether Enron can survive depends on the commitment of Dynegy, rival US ene=
rgy group, to its $9bn rescue takeover bid, announced two weeks ago. Dynegy=
 said yesterday it was "encouraged" that Enron had progressed in boosting i=
ts liquidity and it was continuing the "due diligence" review of Enron's op=
erations.=20
Some analysts believe Enron will burn through its cash balances of $1.2bn b=
efore the Dynegy deal can be completed next year.=20
David Fleischer of Goldman Sachs, one of the last remaining bulls on Enron,=
 downgraded the stock yesterday, pointing out that cash balances were inade=
quate to pay off debt obligations of $2.8bn by the end of the year.=20
One person close to the talks with lenders said Enron had a medium-term pla=
n for restructuring $9.15bn of debt due by the end of next year. Jimmy Lee,=
 vice-chairman of JP Morgan Chase, said the bank would work to "strengthen =
Enron's financial position up to and through its merger with Dynegy".=20
In morning trading yesterday, Enron's stock fell 33 per cent before it anno=
unced the extension of the $690m repayment. The group's bonds had also fall=
en to levels that suggested Enron faced bankruptcy.=20
By lunchtime in New York the stock had recovered slightly and was trading a=
t $4.97, 29 per cent lower on the day. The shares started the week at $9, b=
ut a regulatory filing by Enron on Monday that detailed the extent of its d=
ebt prompted traders to limit exposure before Thanksgiving.=20
Additional reporting by Gary Silverman and Robert Clow .. Lex, Page 22 Enro=
n seeks sale, Page 24.=20
(c) Copyright Financial Times Ltd. All rights reserved.=20
http://www.ft.com.

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

Lenders throw Enron lifeline but Dynegy is main rescue hope
NEIL HUME I N NEW YORK

11/22/2001
The Guardian=20
Copyright (C) 2001 The Guardian; Source: World Reporter (TM)=20

Enron, the debt-stricken energy trading group that owns Wessex Water, was t=
hrown a lifeline yesterday by its lenders who postponed the repayment of a =
$690m (pounds 487m) loan due next week. But its survival still depends on w=
hether its smaller rival Dynegy goes ahead with its $9.6bn rescue takeover.=
=20
Last night Dynegy said it was encouraged by the agreement and was seeking w=
ays to speed up regulatory clearance of the deal that would create the domi=
nant force in US energy trading.
Enron shares, which touched $4.55 - their lowest price since February 1989 =
- before the banks announced that the repayment deadline would be extended =
from next Tuesday to mid-December, were down in afternoon trading yesterday=
 by $1.74 at $5.25.=20
Enron also said it had drawn down the remaining $450m of a $1bn secured cre=
dit line from JP Morgan and Schroder Salomon Smith Barney.=20
"We have been in contact with our banks and believe we can identify a mutua=
lly beneficial restructuring to enhance our cash position, strengthen our b=
alance sheet and address upcoming maturities," said Jeffrey McMahon, Enron'=
s chief financial officer=20
This week, Enron shares went into yet another free fall following the publi=
cation of a third-quarter filing with the securities and exchange commissio=
n in which the company warned that last week's credit rating downgrade by S=
tandard & Poor's would trigger the repayment of the $690m loan on Tuesday. =
Enron also revealed it would have to repay $9.15bn of debt by the end of ne=
xt year.=20
That news sparked fears that Enron might run out of cash before the Dynegy =
takeover. Both firms estimated it could take six to nine months to gain reg=
ulatory approval without special dispensation.=20
Dynegy is offering 0.2685 shares for each Enron share and under the terms o=
f the deal can walk away if Enron's problems turn out to be worse than prev=
iously thought.=20
Yesterday's agreements will help restore confidence among Enron's customers=
, seen as the key to the deal. The energy trading division is Enron's main =
profit engine and the major attraction for Dynegy.=20
In the past two months Enron has suffered a fall from grace. It shares have=
 lost 90% of their value since it sacked its finance director Andrew Fastow=
 in October for unusual transactions carried out off balance sheet. These f=
orced it to take a $1bn charge and cut shareholder equity by $1.2bn.=20
To shore up its financial position, Enron is likely to sell Wessex Water, f=
or which it paid pounds 1.4bn in 1998, and a number of gas-fired power stat=
ions, including the high performing 1,900MW Teesside plant.

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

M and A
Dynegy aims for quick merger with Enron
by Padraic Cassidy

11/22/2001
The Daily Deal=20
Copyright (c) 2001 The Deal LLC=20

Prompted by Enron's recent stock sell off, Houston energy trader Dynegy is =
trying to quicken the pace of the companies' $24 billion merger.=20
After watching Enron Corp.'s stock plummet at the start of a short holiday =
week, Houston energy trader Dynegy Inc. said Wednesday it would try to quic=
ken the pace of the companies' $24 billion merger.
Prompting Dynegy's statement was Enron's announcement that it closed on $45=
0 million of a promised $1 billion line of financing from J.P. Morgan Chase=
 & Co. and Salomon Smith Barney Inc., secured by the assets of its subsidia=
ry, Northern Natural Gas Co.=20
Dynegy, which has agreed to acquire crosstown rival Enron in an all-stock d=
eal, said it was encouraged by the development and was working to accelerat=
e the transaction.=20
The companies announced Nov. 9 their intent to merge in a deal that was val=
ued at $24 billion, including $13 billion in Enron debt.=20
Enron's stock price has plummeted since the company acknowledged the Securi=
ties and Exchange Commission was investigating its financial disclosures an=
d trading activities.=20
Dynegy said the financing terms also pleased ChevronTexaco Corp., which own=
s 29% of Dynegy.=20
ChevronTexaco agreed to pump $2.5 billion of new equity into Dynegy, $1.5 b=
illion of which immediately will be channeled into Enron and $1 billion at =
closing.=20
Dynegy will use the initial $1.5 billion to acquire preferred stock and oth=
er rights in an Enron subsidiary that owns the Northern Natural Gas pipelin=
e system. The funds will give Enron additional cash liquidity to support it=
s operations.=20
Enron, which last week closed on $650 million of financing secured by its T=
ranswestern Pipeline Co., also said it is in discussions with its primary l=
enders to make a formal postponement to mid-December of a $690 million paym=
ent that is due Tuesday.=20
"We believe the interests of Chase and Enron's other primary lenders are al=
igned in this restructuring effort," said James B. Lee, vice chairman of J.=
P. Morgan.=20
-- Padraic Cassidy=20
www.TheDeal.com

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

Enron Tries to Pacify Worries as More Investors Decide to Sell Shares
Charlene Oldham

11/22/2001
KRTBN Knight-Ridder Tribune Business News: The Dallas Morning News - Texas=
=20
Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World=
 Reporter (TM)=20

Faltering Houston energy trader Enron Corp. tried to calm investors' worrie=
s Wednesday, announcing progress in relieving its debt situation, but its s=
tock lost a quarter of its value for the second day in a row.=20
At one point Wednesday, shares hit a 12-year low, touching $4.55.
The stock partially recovered after the company said it negotiated a three-=
week extension on a $690 million note that became due next week after the c=
ompany's debt rating deteriorated.=20
Enron also said it closed on the remaining $450 million of a previously ann=
ounced $1 billion line of credit and is trying to restructure other debt.=
=20
Still, counting debts owed at the parent company and a subsidiary, Enron ne=
eds to raise nearly $1 billion to pay off notes coming due in the next mont=
h or so, said Scott Keller, an analyst at DealAnalytics.com.=20
Shares closed at $5.01, down $1.98, or 28 percent, in New York Stock Exchan=
ge trading.=20
Around 115.6 million shares changed hands, making it the most active stock =
on U.S. exchanges Wednesday.=20
Until its recent downfall, Enron was regarded as a high-flier among energy =
companies, having diversified from its natural gas roots to the electricity=
 trading and telecommunications industries. The stock hit a 52-week high of=
 $84.88 late last year.=20
An investigation by the Securities and Exchange Commission this fall led to=
 the restatement of Enron's earnings back to 1997 and the disclosure of a n=
umber of complex and questionable partnerships -- some run by the company's=
 chief financial officer.=20
Mr. Keller said Wednesday that it's crucial that a special committee appoin=
ted by the company's board complete an internal investigation of financial =
dealings that prompted the SEC probe.=20
"Once your short-term liquidity runs out, it doesn't matter who wants to bu=
y you," Mr. Keller said=20
Although both Enron and Dynegy reaffirmed their commitment to a merger Wedn=
esday, analysts said Enron could be facing a bankruptcy filing long before =
a buyout if it doesn't restore enough confidence to raise the funds it need=
s.=20
The merger deal between Dynegy and Enron -- announced Nov. 9 --allows Dyneg=
y to back out of the transaction should there be a "material adverse change=
" in conditions.=20
Houston-based Dynegy could also decide to renegotiate the terms of the deal=
, which currently prices Enron at about $11 a share.=20
Considering Enron's credit problems and the growing number of companies can=
celing transactions with the energy trader, analysts are increasingly uncer=
tain that the deal will close at any price.=20
"What Dynegy is buying more than anything else is the trading operations," =
said Edward Jones analyst Brian Youngberg. "A week ago, I would have said t=
here was a 90 percent chance that this deal would go through. Now, I would =
say it's 50-50."=20
Early Wednesday, Goldman Sachs lowered its rating on Enron's stock. CIBC Wo=
rld Markets also cut Enron to a "hold" from a "buy."=20
And Mr. Youngberg lowered his rating to "sell" late Tuesday.=20
"Individual investors who are buying the stock now are really gambling with=
 their money," he said.=20
Indeed, those who are still holding Enron stock are in an all-or-nothing gu=
essing game, analysts said. Should they sell out now or hold on with the ho=
pe that the Dynegy deal will go through before Enron faces bankruptcy?=20
Lately, investors have been deciding in droves to sell. Enron has logged an=
 average daily trading volume of 47 million shares for the last month, comp=
ared with 2.1 million shares trading each day this time last year.=20
"What the market activity represents is the increasing uncertainty about wh=
ether you're going to get $10 or $11 or zero," Mr. Keller said.

...........................................................................=
..........................................................=20
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09


