enron mentions a dynegy - enron deal faces significant regulatory review
dow jones energy service , 11 / 08 / 01
us physical gas prices mostly down ; no demand
dow jones energy service , 11 / 08 / 01
usa : newpower shares advance on revised guidance .
reuters english news service , 11 / 08 / 01
enron investors still perplexed - and stock shows it
dow jones news service , 11 / 08 / 01
usa : update 1 - firstenergy sells $ 4 . 0 bln in 3 - part debt sale .
reuters english news service , 11 / 08 / 01
usa : wrapup 1 - enron , dynegy confirm possible merger talks .
reuters english news service , 11 / 08 / 01
in the money : enron transparency not transparent enough
dow jones news service , 11 / 08 / 01
s on watch negative
pr newswire , 11 / 08 / 01
rpt dynergy sharply higher , enron lower on merger talks
afx news , 11 / 08 / 01
us spot coal : prices weaken as buying for 2002 slows
dow jones energy service , 11 / 08 / 01
stockwatch dynergy sharply higher , enron flat on merger talks
afx news , 11 / 08 / 01
uk : rivals eye enron ' s metals trading business .
reuters english news service , 11 / 08 / 01
wrap : enron to restate results ; confirms dynegy talks
dow jones news service , 11 / 08 / 01
usa : enron fires two employees linked to partnerships .
reuters english news service , 11 / 08 / 01
enron restates net income for periods from 1997 to q 3 2001
afx news , 11 / 08 / 01
enron restates earnings as company confirms talks with dynegy
associated press newswires , 11 / 08 / 01
usa : update 1 - enron provides financing data , restates earnings .
reuters english news service , 11 / 08 / 01
is enron too big to fail ? bailout seen unlikely
dow jones energy service , 11 / 08 / 01
enron bonds give back gains as firm restates profit ( update 3 )
bloomberg , 11 / 08 / 01
apache to cut 2002 drilling budget 70 % on gas prices ( updatel )
bloomberg , 11 / 08 / 01
enron fires treasurer , alleges improper investment ( update 2 )
bloomberg , 11 / 08 / 01
dynegy rises on optimism it may get enron for bargain ( update 2 )
bloomberg , 11 / 08 / 01
newpower 3 rd - qtr loss narrows after adding customers ( update 4 )
bloomberg , 11 / 08 / 01
enron restates years of profits , in talks with dynegy ( update 4 )
bloomberg , 11 / 08 / 01
dj faber report : more on enron / dynegy > ene
bloomberg , 11 / 08 / 01
dynegy , enron negotiating merger
enron fires two officers ; financial results to be restated
cbsmarketwatch . com , 11 / 08 / 01
a dynegy - enron deal faces significant regulatory review
by bryan lee
11 / 08 / 2001
dow jones energy service
( copyright ( c ) 2001 , dow jones & company , inc . )
of dow jones newswires
washington - ( dow jones ) - any merger deal that may emerge between dynegy inc . ( dyn ) and enron corp . ( ene ) will face a complicated and time - consuming regulatory - review process , legal experts said thursday .
any equity deal would require approvals from numerous u . s . federal regulatory agencies and state utility regulators , as well as survive canadian and european antitrust reviews , energy attorneys contacted by dow jones newswires said .
a merger would require approvals from the federal energy regulatory commission , securities and exchange commission , department of justice and federal trade commission . and the illinois commerce commission likely would weigh into the mix , since dynegy owns illinova ' s illinois power co .
any effort to strike a deal quickly also could be complicated by enron ' s ownership of portland general electric co . while enron has entered into an agreement to sell the utility to northwest natural gas co . ( nwn ) , a previous attempt to sell the company fell through because of regulatory complications .
a key issue for federal regulators scrutinizing a potential enron - dynegy merger will be the degree of electricity market concentration such a transaction would entail , the attorneys said .
financially wounded enron is the nation ' s largest electricity and natural gas trader with an extensive network of gas pipelines .
dynegy is ranked sixth nationally in both electricity and natural gas marketing .
the transaction would receive the greatest scrutiny at ferc , where the merger application would challenge the commission ' s merger - review policy , attorneys said .
copyright ? 2000 dow jones no demand
11 / 08 / 2001
dow jones energy service
( copyright ( c ) 2001 , dow jones john . edmiston @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
usa : newpower shares advance on revised guidance .
11 / 08 / 2001
reuters english news service
( c ) reuters limited 2001 .
new york , nov 8 ( reuters ) - national power and gas marketer newpower holdings inc . revised its 2001 loss guidance downward on thursday and saw its stock post its best one - day gain in two months .
the projection came in newpower ' s report of a third quarter net loss of $ 67 . 1 million , or $ 1 . 15 per share , compared to a net loss of $ 69 . 9 million , or $ 2 . 96 per share for the third quarter of 2000 .
analysts had expected a per - share loss of $ 1 . 15 to $ 1 . 18 , according to research firm thomson financial / first call , which put the consensus at $ 1 . 16 .
purchase , new york - based newpower is the parent of the new power co . , which says it is the first national provider of electricity and natural gas to residential and small commercial customers in the united states . it said total customers increased 155 percent to 805 , 000 compared to the third quarter of 2000 . revenues were $ 54 . 7 million in the latest quarter , an increase of 201 percent from the third quarter of 2000 .
during the third quarter , newpower said , it gained about 80 , 000 new customers through the company ' s marketing efforts , primarily in the residential sector . newpower recently increased its emphasis on small business customers and at the end of september had over 25 , 000 small business accounts . newpower expects this to increase to more than 35 , 000 by the end of the year .
providing revised guidance for the rest of the year , the company said it expects a net loss of $ 41 million to $ 46 million or a loss per share of 65 cents to 73 cents for the fourth quarter . the full year net loss is estimated to be between $ 210 million and $ 215 million , or $ 3 . 55 to $ 3 . 63 per share .
analysts ' estimates of the year per share loss range from $ 3 . 68 to $ 3 . 74 , resulting in a consensus per share loss projection of $ 3 . 71 .
newpower said it projects the year - end customer count will be between 840 , 000 and 860 , 000 , of which the fourth - quarter increase is expected to be achieved entirely through marketing .
it said the revised forecast reflects a reduction in the number of customers the company expects to acquire through portfolio acquisitions and the impact of delays in switching texas customers to newpower , partly offset by the company ' s modified marketing strategies and continued cost reductions .
newpower shares reached a high of $ 1 . 25 in thursday afternoon trading and were still up 48 . 15 percent , or 39 cents , at $ 1 . 20 in the final half hour of trading .
the company is 44 percent owned by enron corp . , newpower ' s largest provider of electricity and natural gas .
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron investors still perplexed - and stock shows it
by christina cheddar
of dow jones newswires
11 / 08 / 2001
dow jones news service
( copyright ( c ) 2001 , dow jones 201 - 938 - 5166 ; christina . cheddar @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
usa : update 1 - firstenergy sells $ 4 . 0 bln in 3 - part debt sale .
by dena aubin
11 / 08 / 2001
reuters english news service
( c ) reuters limited 2001 .
new york , nov 8 ( reuters ) - utility holding company firstenergy corp . sold $ 4 billion of five - , 10 - and 30 - year debt on thursday , helped by investors ' preference for defensive sectors as the u . s . economy stalls .
firstenergy was able to lower its borrowing costs , trimming yields from initial indications . the sale originally was expected to offer generous yields as heavy bond issuance , weak wholesale power prices and investor jitters over the troubles of energy trading firm enron corp . weighed on the utility sector .
akron , ohio - based firstenergy will use proceeds for corporate purposes and to help pay for its recent purchase of morristown , new jersey - based gpu inc . . firstenergy purchased gpu for about $ 4 . 5 billion in cash and stock , plus the assumption of about $ 7 . 2 billion in debt . the sale closed on tuesday .
utility bonds are typically viewed as a conservative investments because of the industry ' s stable income during uncertain economic times . the sector has been under a cloud , though , as houston - based enron has struggled with a cash squeeze and writedowns from off - balance - sheet transactions .
" enron was held up as a model , growing extremely quickly , and the recent financial disclosures are just a shock , " said kelly perl , a project director at new york utility consulting firm applied economic research .
spreads , or the yield gaps between utility bonds and u . s . treasuries , have widened about 0 . 15 to 0 . 20 percentage point over the past two weeks , while spreads on gas and pipeline companies have widened about 0 . 30 percentage points , strategists said .
sale terms
firstenergy sold $ 1 billion of 5 . 5 percent five - year notes at 99 . 888 cents on the dollar , yielding 5 . 526 percent or 1 . 98 percentage points more than similar - maturity u . s . treasuries . it also sold $ 1 . 5 billion of 6 . 45 percent 10 - year notes at 99 . 651 cents on the dollar , yielding 6 . 498 percent or 2 . 25 percentage points more than treasuries , and $ 1 . 5 billion of 7 . 375 percent 30 - year bonds , yielding 7 . 389 percent or 2 . 45 percentage points more than the old long treasury bond .
initial price guidance had called for spreads as high as 2 . 20 , 2 . 35 and 2 . 60 percentage points more than treasuries for the five - , 10 - and 30 - year debt .
firstenergy ' s sale was helped by a 0 . 50 percentage point interest rate cut by the u . s . federal reserve on tuesday and signs that the fed could cut rates again .
" there is the perception that the fed is going to aggressively ease and err on the side of caution , " said peter palfrey , portfolio manager for loomis sayles & co . in boston . investors are betting that the fed will engineer an economic recovery , helping corporate profits and spurring price gains in corporate bonds , palfrey said .
analysts said firstenergy ' s acquisition of gpu should benefit its credit quality .
" it adds further diversity to their cash flow from regulated distribution companies , " said fitch analyst robert hornick .
falling wholesale power prices also should benefit firstenergy , hornick said .
" they ' re not a big seller of wholesale energy at this point , " hornick said . " they don ' t own generation facilities and need to buy ( electricity ) in the market , so to the extent wholesale prices are lower , they can benefit , " he said .
standard & poor ' s rates firstenergy ' s senior unsecured notes " bbb - minus , " its lowest investment grade . moody ' s investors service rates firstenergy ' s long - term debt " baa 2 , " roughly one notch higher , while fitch rates them " bbb . "
salomon smith barney , barclays capital and morgan stanley arranged the sale .
copyright ? 2000 dow jones & company , inc . all rights reserved .
usa : wrapup 1 - enron , dynegy confirm possible merger talks .
by jeff franks
11 / 08 / 2001
reuters english news service
( c ) reuters limited 2001 .
houston , nov 8 ( reuters ) - enron corp . , plagued by investor doubts and under the gun to shore up its crumbling finances , said on thursday it was talking with power trading rival dynegy inc . about a possible merger .
the company , whose stock and credit ratings have plummeted amid an uproar about questionable business transactions , admitted it made bookkeeping errors and restated earnings for the last four years .
it also said former chief financial officer andrew fastow , who abruptly left the company last month , had made $ 30 million managing partnerships linked to the deals . the deals , which were off the balance sheet , are now under investigation by the u . s . securities and exchange commission for possible conflict of interest .
two other executives , managing director and treasurer ben glisan and enron division general counsel kristina mordaunt , were both believed to have links to the fastow - led partnerships and have been fired , the company disclosed .
the announcements threw a spotlight on enron ' s stark situation , in which the nation ' s top energy trader has gone from wall street darling to pariah in a few weeks and now faces a cash crunch so dire it is seeking a merger with the much - smaller dynegy .
its credit ratings have fallen to near - junk levels in recent weeks , making it difficult to get money to boost investor confidence and back the trading operations that provide 90 percent of enron ' s income . the company reportedly has been seeking investors to provide a cash infusion for an equity stake .
moderate premium
word about a possible dynegy - enron deal leaked out on wednesday , and on thursday the two companies confirmed talks about a possible " business combination " were underway , but said no agreement had been reached .
sources told reuters that the two texas rivals , whose headquarters are a few blocks apart in downtown houston , were talking about a stock swap with a moderate premium for shareholders and a $ 1 . 5 billion capital infusion from chevrontexaco corp . , which owns 26 . 5 percent of dynegy .
the stock swap is valued at about $ 8 billion , or about $ 10 a share , the new york times reported on thursday .
a merger would catapult dynegy to the top of the energy trading industry now dominated by enron . last year , the company had $ 29 billion in revenues , compared to $ 100 billion for enron .
for enron , it would cap an astonishingly rapid fall from grace .
enron stock has lost $ 19 billion in market value since its crisis began in mid - october and was down another 45 cents to $ 8 . 60 in thursday trading . dynegy shares rose $ 3 . 87 to $ 36 . 87 .
enron restated its earnings going back to 1997 , saying its auditors advised that the off - the - balance sheet deals in question should have been included in the company ' s financial statements .
the restated results reduced enron ' s net income by $ 591 million , or 22 percent , from 1997 to 2000 , and increased its debt by $ 628 million , or 6 percent , after two of the partnership ' s financial statements were consolidated into enron ' s earnings .
enron said the restatement reflects a $ 1 . 2 billion reduction to shareholders ' equity that touched off the current controversy when the company offhandedly disclosed it last month . angry shareholders suddenly worried that enron was hiding other liabilities in its complex financial statements and began demanding more information .
in a statement , enron chief executive ken lay said the company hoped it had allayed wall street fears with thursday ' s announcements .
" we believe that the information we have made available addresses a number of the concerns that have been raised by our shareholders and the sec about these matters , " he said .
analysts , wary after last month ' s surprise revelations , said enron may have more to release , but they were pleased it was finally coming forth with information .
" it ' s an attempt to come clean , " said raymond moore , an analyst with weatherly securities .
copyright ? 2000 dow jones & company , inc . all rights reserved .
in the money : enron transparency not transparent enough
by michael rapoport
11 / 08 / 2001
dow jones news service
( copyright ( c ) 2001 , dow jones 201 - 938 - 5976 ; michael . rapoport @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
s on watch negative
11 / 08 / 2001
pr newswire
( copyright ( c ) 2001 , pr newswire )
new york , nov . 8 / prnewswire / - - standard & poor ' s today lowered its rating on yosemite securities trust i to triple - ' b ' from triple - ' b ' - plus and placed it on creditwatch with negative implications ( see list ) .
the lowered rating and creditwatch placement reflects the nov . 1 , 2001 rating action taken on enron corp . , which was based on standard & poor ' s belief that enron corp . ' s plan to employ asset sales and other means to repair its damaged balance sheet will be insufficient to restore its long - term credit quality to the historical triple - ' b ' - plus level . also , the creditwatch placement reflects the uncertainties surrounding the company and its credit quality in the short run due to the possibility of further unanticipated developments in the capital markets .
yosemite securities trust i is a synthetic issue that utilizes a credit default swap referencing enron corp . the rating on the credit - linked notes reflects the current senior unsecured rating of enron corp . yosemite securities trust i
$ 750 million credit linked notes
rating
to from
bbb / watch neg bbb +
/ contact : mary ryan , + 1 - 212 - 438 - 2090 , or frank j trick , + 1 - 212 - 438 - 1108 , both of standard & poor ' s / 13 : 26 est
copyright ? 2000 dow jones & company , inc . all rights reserved .
rpt dynergy sharply higher , enron lower on merger talks
11 / 08 / 2001
afx news
( c ) 2001 by afp - extel news ltd
( repeating to show in headline , lead that enron is trading lower )
new york ( afx ) - shares of dynergy inc were sharply higher , while enron corp lost ground in midsession trading after the two companies confirmed that they are holding merger talks .
at 12 . 25 pm , dynergy was up 3 . 17 usd , or 9 . 6 pct , at 36 . 17 , enron fell 0 . 34 usd , or 3 . 7 pct , to 8 . 71 usd and chevrontexaco dropped 0 . 18 usd to 87 . 10 . the djia was up 110 . 22 points at 9 , 664 . 59 , the s & p 500 index gained 12 . 88 points to 1 , 128 . 68 and the nasdaq composite rose 34 . 35 points to 1 , 871 . 88 .
enron share price today was hurt after the company announced a restatement of its net income from 1997 to the third quarter of 2001 . the revisions were , for the most part , reductions in the bottom - line figure .
the 8 bln usd tie - up talks , which come at a time when enron is being investigated by the us securities and exchange commission and the markets are losing faith in the energy trader , are seen as particularly positive for dynergy .
analysts see a tie - up as highly accretive for dynergy , which is 26 pct owned by chevrontexaco , with many synergies also possible .
banc of america analyst william maze , who rates dynergy ' strong buy ' , said : " if this transaction comes to fruition , we would be aggressive buyers of dynergy given its accretive nature as well as the lifting of enron ' s credibility issues that has been plaguing the entire industry . "
cibc world markets analyst william hyler , who rates enron ' buy ' , added : " the move would also catapult ( dynergy ) into a leadership role at what could prove near the bottom of the gas / power pricing cycle . "
on the other hand , enron ' s position would improve as its credibility within the trading world and in the face of its trading counterparties would recover somewhat .
to that end , dynergy would provide a yet unspecified cash injection , believed to be approximately 1 . 5 - 2 . 0 bln usd , to improve enron ' s standing and shore up its finances .
chevrontexaco , which is expected to provide a substantial part of the financing needed for the merger , also stands to gain from the situation as it would retain effective control of the combined company .
rdc / lj
for more information and to contact afx : www . afxnews . com and www . afxpress . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
us spot coal : prices weaken as buying for 2002 slows
11 / 08 / 2001
dow jones energy service
( copyright ( c ) 2001 , dow jones averages not volume weighted
4 q ' 01 lq ' 02 cal 2002
central appalachia low sulfur
f . o . b . barge $ 31 . 75 - 32 . 00 $ 32 . 00 - 32 . 25 $ 32 . 00 - 33 . 00
average / change 31 . 90 / - 1 . 85 32 . 12 / - 1 . 63 32 . 50 / - 1 . 00
f . o . b . rail $ 36 . 00 - 38 . 00 n / a $ 36 . 00 - 38 . 00
average / change 37 . 00 / - 1 . 25 n / a 37 . 00 / - 0 . 75
powder river basin
8400 b . t . u . $ 5 . 75 - 6 . 00 $ 6 . 45 - 6 . 60 $ 6 . 35 - 6 . 45
average / change 5 . 85 / - 0 . 15 6 . 50 / 0 . 00 6 . 40 / - 0 . 10
8800 b . t . u . $ 7 . 25 - 7 . 75 $ 8 . 10 - 8 . 40 $ 8 . 10 - 8 . 20
average / change 7 . 50 / - 0 . 10 ' 8 . 25 / 0 . 00 8 . 15 / - 0 . 15
note to u . s . spot coal prices :
prices are dollars per short ton , based on actual deals done during the month for the delivery period indicated .
averages are straight mathematical averages and aren ' t volume weighted .
change is from the average of deals done in the previous month .
the central appalachian low - sulfur category uses benchmark of 12 , 000 british thermal units per pound . barge delivery is to the big sandy river . rail delivery is to the norfolk southern .
for central appalachian coal , prices are accepted for coal within 500 btu of the benchmark btu and standardized adjustments are made .
powder river basin categories are quoted fob mine .
- by jennifer morrow , dow jones newswires ; 201 - 938 - 4377 ; jennifer . morrow @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
stockwatch dynergy sharply higher , enron flat on merger talks
11 / 08 / 2001
afx news
( c ) 2001 by afp - extel news ltd
new york ( afx ) - shares of dynergy inc were sharply higher , while enron corp continued to lose ground , in midsession trading after the two companies confirmed that they are holding merger talks .
at 12 . 25 pm , dynergy was up 3 . 17 usd , or 9 . 6 pct , at 36 . 17 , enron fell 0 . 34 usd , or 3 . 7 pct , to 8 . 71 usd and chevrontexaco dropped 0 . 18 usd to 87 . 10 . the djia was up 110 . 22 points at 9 , 664 . 59 , the s & p 500 index gained 12 . 88 points to 1 , 128 . 68 and the nasdaq composite rose 34 . 35 points to 1 , 871 . 88 .
enron share price today was hurt after the company announced a restatement of its net income from 1997 to the third quarter of 2001 . the revisions were , for the most part , reductions in the bottom - line figure .
the 8 bln usd tie - up talks , which come at a time when enron is being investigated by the us securities and exchange commission and the markets are losing faith in the energy trader , are seen as particularly positive for dynergy .
analysts see a tie - up as highly accretive for dynergy , which is 26 pct owned by chevrontexaco , with many synergies also possible .
banc of america analyst william maze , who rates dynergy ' strong buy ' , said : " if this transaction comes to fruition , we would be aggressive buyers of dynergy given its accretive nature as well as the lifting of enron ' s credibility issues that has been plaguing the entire industry . "
cibc world markets analyst william hyler , who rates enron ' buy ' , added : " the move would also catapult ( dynergy ) into a leadership role at what could prove near the bottom of the gas / power pricing cycle . "
on the other hand , enron ' s position would improve as its credibility within the trading world and in the face of its trading counterparties would recover somewhat .
to that end , dynergy would provide a yet unspecified cash injection , believed to be approximately 1 . 5 - 2 . 0 bln usd , to improve enron ' s standing and shore up its finances .
chevrontexaco , which is expected to provide a substantial part of the financing needed for the merger , also stands to gain from the situation as it would retain effective control of the combined company .
rdc / lj
for more information and to contact afx : www . afxnews . com and www . afxpress . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
uk : rivals eye enron ' s metals trading business .
by andy blamey
11 / 08 / 2001
reuters english news service
( c ) reuters limited 2001 .
london , nov 9 ( reuters ) - u . s . energy trading giant enron corp . , whose shares have tumbled amid a regulatory probe and doubts about its ability to raise cash , may lose or offload its metals business , senior industry sources said on thursday .
in the wings are several interested parties looking to snap up the company ' s metals customer base .
" there are people out there with the experience and the contacts who see this time as a good opportunity to get into the market , " a senior metals market source told reuters on thursday .
such a move for enron ' s metals portfolio would involve the acquisition of an existing organisation as a vehicle , the source added .
" we do not comment on rumours , " an enron spokeswoman said , declining further comment .
other enron metals assets were also said to be in play , including the henry bath warehousing company , which operates lme - registered warehouses in the uk , the netherlands , singapore and the united states .
major player
houston - based enron became a major player in the metals trade in may last year when it acquired mg plc , a leading independent international metals dealing firm in london , in a deal worth around 300 million pounds .
the company is a ring - dealing member of the london metal exchange ( lme ) , able to participate in open - outcry floor trade , and is active in screen - based metals trade via its enrononline platform ( www . enrononline . com ) .
the company no longer has a stake in online metals trading platform emetra ( www . emetra . com ) , having sold its holding to other emetra shareholders this summer .
but while enron may be a heavy hitter in the metals sector , base metals trading could hardly be regarded as one of its core businesses .
the company ' s third - quarter 2001 results statement shows income before interest , minority interests and taxes ( ibit ) from " europe and other commodity markets " - which includes metals and steel alongside european gas and power , among others - of $ 53 million , unchanged from the year - earlier period .
this compares with ibit from enron ' s gas and power market - making operations and merchant energy activities in north and south america of $ 710 million over the same period .
but the third - quarter figure that has slashed the value of the company ' s shares is a $ 1 . 2 billion write - down of shareholder equity related to off - balance sheet transactions .
on thursday the company said it would restate its earnings for 1997 to 2001 to reflect the transactions - a move which wipes $ 613 million of the company ' s reported net income from 1997 through the first half of this year .
the company ' s stock has dropped by almost 78 percent since enron released its earnings results on october 16 , falling to nine - year lows amid concerns about the company ' s ability to raise cash .
the story added an extra twist on wednesday as news broke that u . s . - based energy trading and marketing firm dynegy inc . was in talks to buy out enron .
against this background speculation is rife about the future of the metals operation , fuelled by the company ' s decision last month to trim between 10 and 20 percent of its metals workforce as part of a wider staff reduction by enron europe .
unlikely to remain intact
any decision by enron or a possible future purchaser to offload its metals operations would be unlikely to see enron metals remain intact , traders said .
" they paid $ 450 million for mg . would they get $ 450 million for enron metals ? i don ' t think so , " said one .
" why buy the whole concern when you can cherry - pick the best traders and the clients will follow ? " added another .
an increasing emphasis on screen trading at the expense of personal contacts may already have persuaded some enron clients to jump ship .
" we ' ve picked up a fair amount of small and mid - sized trade - type business in europe from people who ' ve said ' i ' m not going to be told just to trade on a screen , ' " said one trader .
another trader said : " a lot of this business revolves around who you ' ve been trading with and talking to over a period of time . it ' s about individuals , " he said .
" enron online . . . should be seen as an ' added value ' product , not as the only way of trading . customers still want to talk to their broker , and are willing to pay commission for the service , " the senior source said .
enron ' s financial position could also prompt customers to consider other options , the first trader said .
" as a customer , you want to place your business where there ' s financial stability . if a company isn ' t financially stable , you ' ll move elsewhere . "
enron ' s trade counterparties are also keeping a close eye on the company ' s financial situation , said a trader at one lme brokerage .
" people aren ' t particularly concerned about short - term trading ( with enron ) , but when it comes to otc business done outside the clearing market they ' re backing off a bit , " he said .
( additional reporting by martin hayes ) .
copyright ? 2000 dow jones confirms dynegy talks
11 / 08 / 2001
dow jones news service
( copyright ( c ) 2001 , dow jones & company , inc . )
houston - ( dow jones ) - enron corp . ( ene ) said it will restate its financial results from 1997 through the second quarter of 2001 , as the embattled energy company and dynegy inc . both confirmed they are in talks on a possible business combination .
in a filing thursday with the securities and exchange commission , enron said its financial and audit reports are unreliable for those periods .
enron said that three " unconsolidated entities should have been included in its consolidated financial statements , " based on generally accepted accounting principles . these entities are chewco investments lp , joint energy development investments lp and a wholly owned unit of ljm cayman lp .
enron said it has established a special committee to review all transactions . the committee will specifically review all " economic results " related to transactions between enron and ljm .
last month enron took a $ 1 . 01 billion charge in the third quarter related to write - downs of investments . of this , $ 35 million was attributed to partnerships run until recently by chief financial officer andrew fastow , who has since been replaced . enron also disclosed it shrank shareholder equity by $ 1 . 2 billion , as a result of several transactions including ones undertaken with fastow ' s investment vehicle .
later , enron said the sec would investigate the company ' s " related party transactions , " including those with the fastow partnerships .
the restatement will reflect the $ 1 . 2 billion reduction in shareholders ' equity , as well as various income - statement and balance - sheet adjustments determined by enron and its auditors .
" we believe that the information we have made available addresses a number of the concerns that have been raised by our shareholders and the sec about these matters , " said chairman and chief executive kenneth lay
over the past couple of days , enron has been scrambling to line up quick financing from a prominent outside investor and has been in discussions with private - equity firms and power - trading companies .
earlier , the wall street journal reported that dynegy was trying to buy enron for $ 7 billion to $ 8 billion in stock . both are houston - based energy - trading and power companies .
because any combination of the two would likely be scrutinized for many months , and enron needs to shore up its finances now , dynegy reportedly is expected to inject $ 1 . 5 billion into enron immediately , people familiar with the matter said .
chevrontexaco corp . ( cvx ) , which owns a 26 % stake in dynegy , is expected to provide dynegy with the funds for the cash infusion and is playing a significant role in the negotiations , the journal said .
the boards of dynegy , chevron and enron reportedly met wednesday to discuss a potential deal . enron ' s stock has plunged since oct . 16 , when the company posted a $ 618 million third - quarter loss and revealed that its shareholder equity had been reduced .
the talks between enron and dynegy follow a sharp decline in enron ' s stock over the past several weeks .
copyright ? 2000 dow jones & company , inc . all rights reserved .
usa : enron fires two employees linked to partnerships .
11 / 08 / 2001
reuters english news service
( c ) reuters limited 2001 .
new york , nov 8 ( reuters ) - enron corp . , the embattled energy trader , said on thursday fired its treasurer and a counsel who the company said were part - owners of one of its off - balance sheet partnerships now under investigation by u . s . regulators .
enron said it was terminating the employment of ben glisan , managing director and treasurer of enron corp . , and kristina mordaunt , a managing director and counsel of an enron division .
enron said it believes that these two employees , along with four other former enron employees , were involved as partners in a limited partnership called the ljml that had dealings with enron .
shares of enron were trading down 5 cents or . 55 percent at $ 9 on the new york stock exchange .
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron restates net income for periods from 1997 to q 3 2001
11 / 08 / 2001
afx news
( c ) 2001 by afp - extel news ltd
houston ( afx ) - enron corp announced it is restating its net results for 1997 to 2000 and for the first three quarters of 2001 to take account of various related party and off - balance sheet transactions in which the company was involved .
the restatement have no effect on enron ' s current financial position , it said .
in its restated figures , enron posted reductions to net income of 96 mln usd in 1997 , 113 mln usd in 1998 , 250 mln in 1999 and 132 mln in 2000 , as well as increases of 17 mln usd for the first quarter of 2001 and 5 mln for the second , but reduced the third quarter figure by 17 mln usd .
the restatement will have no negative impact on the company ' s reported earnings for the nine month period ending sept 2001 , however , it said .
the company said its changes to net income are the result of the retroactive consolidation of joint energy development investments lp and chewco investments lp beginning in november 1997 , the consolidation of the ljml subsidiary for 1999 and 2000 and prior year proposed audit adjustments .
the jedi and chewco consolidations will increase enron ' s debt by about 711 mln usd in 1997 , 561 mln in 1998 , 685 mln in 1999 and 628 mln in 2000 , the company said .
kgd / jkm / for more information and to contact afx : www . afxnews . com and www . afxpress . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron restates earnings as company confirms talks with dynegy
by brad foss
ap business writer
11 / 08 / 2001
associated press newswires
copyright 2001 . the associated press . all rights reserved .
new york ( ap ) - beleaguered energy trading giant enron corp . announced thursday it would restate its earnings since 1997 , in part to reflect a controversial dlrs 1 . 2 billion reduction in shareholder equity that has sparked a securities and exchange commission investigation .
enron , whose stock price has fallen roughly 80 percent in the past three weeks , also said it was holding talks with dynegy inc . relating to some form of business transaction . the new york times reported that dynegy was considering buying enron , its larger hometown rival for dlrs 8 billion .
in a filing with the sec , enron said financial statements from 1997 through the first half of 2001 " should not be relied upon " and that partnerships run by enron officials during that period should have been consolidated into the financial results of the houston - based energy trading giant .
these partnerships are chewco investments l . p . , joint energy development investments l . p . , and a wholly owned unit of ljm cayman l . p .
" we believe that the information we have made available addresses a number of the concerns that have been raised by our shareholders and the sec about these matters , " said kenneth lay , enron ' s chairman and chief executive .
by its own assessment , enron ' s restatement reduces previously reported net income by roughly dlrs 586 million and increases its debt by dlrs 2 . 59 billion . the change reflects the financial impact of retroactively consolidating the partnerships .
the company also fired two executives on thursday : ben glisan , its treasurer , and kristina mordaunt , general counsel for one of its divisions . previously , enron had ousted chief financial officer andrew fastow , who was in charge of some of the partnerships .
shares of enron were off 10 cents to dlrs 8 . 95 in heavy trading on the new york stock exchange .
enron said it believes the restatement will include a reduction to net income of about dlrs 96 million in 1997 , dlrs 113 million in 1998 , dlrs 250 million in 1999 and dlrs 132 million in 2000 , increases of dlrs 17 million for the first quarter of 2001 and dlrs 5 million for the second quarter and a reduction of dlrs 17 million for the third quarter of 2001 .
enron , the top buyer and seller of natural gas and the top wholesale marketer in the united states , had become one of the nation ' s 10 largest companies , recording revenue of dlrs 100 . 8 billion in 2000 .
but the company has been beset by huge investment losses and questions about its financial stability . in particular , its stock has plunged since oct . 16 , when the company posted a dlrs 618 million third quarter loss and revealed that its shareholder equity had been reduced .
enron ' s woes have prompted considerable speculation about a possible takeover of the company .
besides dynegy , companies mentioned as possible suitors included general electric ' s ge capital unit and royal dutch / shell group .
on thursday , both dynegy and enron released statements confirming they were in talks , but declined to provide any details .
the new york times reported earlier that dynegy is considering paying about dlrs 8 billion in stock , or roughly dlrs 10 per share .
under the terms of the deal , enron would receive an immediate dlrs 1 . 5 billion cash infusion from oil giant chevron texaco , which holds a 27 percent stake in dynegy , the times said , citing executives close to the discusssion .
chevron texaco would provide an additional dlrs 1 billion injection at a later date , the times reported , while dynegy would assume dlrs 12 . 8 billion in enron debt , plus billions of dollars in other debt that has been kept off the beleaguered company ' s balance sheet and has been a significant contributor to its current problems .
copyright ? 2000 dow jones & company , inc . all rights reserved .
usa : update 1 - enron provides financing data , restates earnings .
11 / 08 / 2001
reuters english news service
( c ) reuters limited 2001 .
houston , nov 8 ( reuters ) - enron corp . said on thursday it provided u . s . regulators with more information about off - balance sheet deals , and other transactions that led to a shattering of the company ' s credibility and to an investigation by the u . s . securities and exchange commission .
enron , the once high - flying houston - based energy trading company , also confirmed it was in talks with its hometown rival dynegy inc . over a possible business combination . terms of any deal have not been agreed on , the two companies said .
enron said that it will restate its earnings from 1997 to 2000 and the first two quarters of 2001 as the company addresses concerns raised by the sec and shareholders .
shares of enron dropped 20 cents , or 2 . 2 percent , to $ 8 . 85 in thursday morning trading on the new york stock exchange .
enron , the largest trader of electricity and natural gas in north america , said the required restatement reflects the surprising - and controversial - $ 1 . 2 billion reduction to shareholders ' equity the company recently disclosed .
the restatement also reflects adjustments to the company ' s income statement and balance sheet , now that enron has decided that the financial activities of chewco investments , l . p . , joint energy development investments limited partnership ( jedi ) and a wholly - owned subsidiary of ljml should indeed have been included in the company ' s consolidated financial statements .
as a result of the restatement , enron is reducing its 1997 net income by about $ 96 million , 1998 net income by $ 113 million , 1999 net income by $ 250 million and 2000 net income by $ 132 million .
it is also restating first quarter 2001 results with a $ 17 million net income increase , second quarter 2001 results with a $ 5 million increase and third quarter 2001 results with a $ 17 million net income decrease .
consolidating chewco and jedi also increases enron ' s debt by about $ 711 million in 1997 , $ 561 million in 1998 , $ 685 million in 1999 and $ 628 million in 2000 .
" we believe that the information we have made available addresses a number of the concerns that have been raised by our shareholders and the sec about these matters , " said chairman and chief executive ken lay in a statement .
copyright ? 2000 dow jones & company , inc . all rights reserved .
is enron too big to fail ? bailout seen unlikely
by jason leopold
11 / 08 / 2001
dow jones energy service
( copyright ( c ) 2001 , dow jones & company , inc . )
of dow jones newswires
( this story initially ran late wednesday . )
los angeles ( dow jones ) - - maybe enron corp . ( ene ) is just too big to fail . maybe not .
is the embattled energy trading company important enough to qualify for a federal bailout ?
not likely , according to a number of analysts who believe that there are enough big energy companies in the u . s . to keep markets liquid if enron goes under .
for that reason , a federal bailout is probably not in the cards , even though enron controls about 25 % of u . s . natural gas and electricity markets , they added .
" a bailout would only occur if needed to maintain liquidity in the energy markets in order to avoid potential for skyrocketing prices and avoid reliability risks , " said merrill lynch 323 - 658 - 3874 ; jason . leopold @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron bonds give back gains as firm restates profit ( update 3 )
2001 - 11 - 08 16 : 40 ( new york )
enron bonds give back gains as firm restates profit ( update 3 )
( updates bond and stock prices . )
new york , nov . 8 ( bloomberg ) - - enron corp . bonds pared
earlier gains as the biggest energy trader said it restated
earnings for more than four years , increasing concern that dynegy
inc . won ' t buy out the company .
enron ' s 7 . 88 percent coupon notes due in 2003 traded at 77
cents on the dollar to yield 27 percent , down from a bid of 82
cents this morning , traders said . the debt , which was trading near
100 last month , was bid at 77 cents yesterday . enron shares , down
75 percent in the last month , fell 64 cents to $ 8 . 41 today .
dynegy said today it ' s in talks to acquire enron in what
people familiar with the situation said would likely be a stock
transaction worth $ 8 billion . an acquisition would bolster enron ' s
credit rating , which was recently lowered , traders said .
` ` enron bonds justifiably rallied on the good news of dynegy .
they naturally settled back down as the market assesses the
significance of the restatement , ' ' said glenn reynolds , an analyst
at creditsights inc . ` ` the whole problem goes away and sighs of
relief all around if they come to terms with dynegy . ' '
enron ' s 6 . 4 percent notes due in 2006 were bid at around 70
cents , down from this morning when the debt traded at 84 cents .
yesterday , the notes were priced between 72 cents and 74 cents .
the difference between bid and ask prices for enron debt
widened to about 4 cents to 5 cents - - ` ` monster ' ' spreads ,
reynolds said - - from 2 cents this morning , indicating few
investors are willing to buy or sell the bonds without more news .
while moody ' s investors service rates enron ' s credit as
` ` baa 2 ' ' , one rung higher than its ` ` baa 3 ' ' grade for dynegy ,
other ratings companies including standard & poor ' s and fitch inc .
have assigned dynegy a higher rating . also , enron ' s ratings have
been cut in recent weeks and face further reduction , while
dynegy ' s credit outlook is stable .
enron bonds and shares have tumbled in recent weeks on
concern about partnerships run by the company ' s former chief
financial officer and concerns the company ' s trading business will
be hurt by the credit downgrades . enron and dynegy are both based
in houston .
enron has $ 15 . 8 billion of bonds outstanding , more than
double the $ 6 . 8 billion market value of its stock , according to
bloomberg data .
apache to cut 2002 drilling budget 70 % on gas prices ( updatel )
2001 - 11 - 08 16 : 34 ( new york )
apache to cut 2002 drilling budget 70 % on gas prices ( updatel )
( updates with closing share price in fifth paragraph and
closing nymex gas price in last paragraph . )
houston , nov . 8 ( bloomberg ) - - apache corp . , an oil and
natural - gas producer , plans to cut spending on drilling next year
by 70 percent , blaming wide swings in gas prices caused by traders
such as enron corp . and dynegy inc .
the company will trim spending to $ 300 million from $ 1
billion this year , chief executive officer raymond plank said in
an interview . gas on the new york mercantile exchange reached
$ 10 . 10 per million british thermal units in late december and
touched $ 1 . 76 per million british thermal units in september .
the market for gas derivatives is 15 times the cash market
for delivery to customers , and broad price changes make it
difficult for oil and gas companies to set budgets , plank said .
` ` you ' ve got a 150 - pound tail wagging a 10 - pound dog , ' ' plank
said . ` ` you can ' t predict what your cash flow may be . therefore ,
your budgeting is difficult . ' '
shares of apache were unchanged at $ 50 . 73 . they have fallen
28 percent this year . apache , dynegy and enron , the biggest energy
trader , are based in houston .
` ` we can always go back and take another look at ( spending )
later , ' ' apache spokesman tony lentini said . ` ` we look at our
( budget ) regularly , and we ' re known for moving pretty quickly . ' '
enron , whose plunging stock price forced it to begin merger
talks with rival dynegy , today restated earnings for more than
four years because of losses from partnerships under investigation
by the securities and exchange commission .
fearing an enron collapse might cripple the gas - derivatives
market , apache said yesterday it traded out of most of its gas
hedges , making $ 70 million so far .
` ` apache is trying to conserve cash and retain the maximum
amount of flexibility , ' ' said irene haas , an analyst at sanders
morris harris inc . ` ` apache has been traditionally very nimble in
responding to these cycles . there ' s something to be said for being
cautious and conservative when the visibility is bad . ' '
haas rates apache ` ` accumulate ' ' and doesn ' t own its shares .
nymex gas has averaged $ 2 . 7 per million british thermal units
so far this quarter , down almost half from the same time a year
earlier . it rose 9 cents to $ 2 . 96 per million british thermal
units today .
enron fires treasurer , alleges improper investment ( update 2 )
2001 - 11 - 08 16 : 31 ( new york )
enron fires treasurer , alleges improper investment ( update 2 )
( updates with closing share prices in ninth paragraph and
information on board approval starting in 17 th paragraph . )
houston , nov . 8 ( bloomberg ) - - enron corp . , which today
reduced its earnings for the last four years by $ 552 million
because of accounting errors involving affiliates , also said it
fired its treasurer and a corporate attorney for making improper
investments in one of the affiliates .
enron fired treasurer ben glisan and kristina mordaunt , the
general counsel of an unspecified enron division . the two invested
in an affiliate created by enron to buy and sell the company ' s
assets , the houston - based company said in filings with the
securities and exchange commission .
the transactions also involved two former enron employees and
former enron chief financial officer andrew fastow , who was
replaced two weeks ago , the filing said . the former employees were
kathy lynn , vice president of an unnamed enron division , and anne
yaeger , identified by enron as a non - officer employee .
lea fastow , andrew fastow ' s wife , referred all questions to
her husband ' s attorney , who couldn ' t immediately be reached for
comment . glisan wouldn ' t comment . attempts to reach mordaunt
weren ' t successful .
$ 30 million profit
fastow made more than $ 30 million by managing and investing
in two private limited partnerships called ljm cayman lp , known as
ljml , and ljm 2 co - investment lp . enron said on oct . 24 that fastow
had been replaced as cfo and put on leave . the filing said he is
no longer with the company .
enron said it believes lynn and yaeger remain associated with
ljm 2 .
the sec began a formal investigation into some of enron ' s
partnerships last month , causing the stock price to plummet from
already low levels . shares of enron had fallen 89 percent this
year , as of the close of trading yesterday .
enron , short on cash , began merger talks with dynegy inc .
yesterday , it failed to reach an agreement with dynegy to sell
itself for about $ 8 billion in stock . chevrontexaco corp . , which
owns 27 percent of dynegy , is also involved in the talks . dynegy
is concerned credit rating companies may downgrade enron ' s debt ,
people familiar with the situation said .
enron shares fell 64 cents , or 7 . 1 percent , $ 8 . 41 . shares of
dynegy , which is also based in houston , rose $ 3 . 50 , or 11 percent ,
to $ 36 . 50 . chevrontexaco rose 31 cents to $ 87 . 59 .
restatement
enron restated its earnings for the past four years and the
first three quarters of 2001 to incorporate the first ljm
partnership , as well as chewco investments lp and joint energy
development investments lp , known as jedi .
enron calls them special purpose entities , or spes . they are
vehicles for getting access to capital or hedging risk that can be
moved off the books under some circumstances . enron established
more than 30 spes .
the company reported that enron and ` ` enron - related
entities ' ' participated in 24 ` ` business relationships ' ' in which
ljml or ljm 2 participated . they included the sale of asset such as
unused fiber optic cable , the purchase of debt or equity interests
in enron affiliates , and the sale by ljm 2 of a call and a put
option on some assets .
in addition to chewco and jedi , a wholly owned subsidiary of
lmjl that ` ` engaged in derivative transactions with enron to
permit enron to hedge market risks of an equity investment in
rhythms netconnections , inc . , ' ' which provides high - speed
networking to businesses .
enron said in the sec filing that those hedging transactions
should have been consolidated into its 1999 and 2000 results
because the ljml subsidiary was inadequately capitalized . enron
did not specify why transactions by chewco and jedi should have
been included on its balance sheet .
enron said it believes that michael j . kopper , a former
company employee , managed a chewco general partner and invested in
it . the company said it also believes that kopper was the
controlling partner of a limited partnership that ( through another
limited partnership ) in march 2000 purchased interests in
affiliated subsidiaries of ljml . ' '
the company said that it believes the limited partners in
that deal also included glisan , mordaunt , lynn and yaeger . an
` ` entity associated with ' ' fastow was also a limited partner ,
enron said .
enron said that its board approved fastow ' s initial
transaction with ljml and put controls in place that required the
review and approval of each transaction by the office of the
chairman , the chief accounting officer and the chief risk officer .
lay and skilling were for many years the only members of the
office of the chairman . after skilling ' s resignation in august ,
enron promoted greg whalley to president and chief operating
officer and mark frevert to vice chairman . both became members of
the office of the chairman .
lay , as chairman , also had the authority to require fastow to
resign from the partnerships at any time . the board also directed
that its audit and compliance committee conduct annual reviews of
transactions between enron and ljml and ljm 2 completed during the
previous year , the filing said .
dynegy rises on optimism it may get enron for bargain ( update 2 )
2001 - 11 - 08 16 : 28 ( new york )
dynegy rises on optimism it may get enron for bargain ( update 2 )
( updates with closing share prices . )
houston , nov . 8 ( bloomberg ) - - dynegy inc . shares rose
11 percent on speculation that the company may be able to buy
enron corp . , the biggest energy trader , at a bargain price .
dynegy said today it ' s in talks to buy enron . dynegy , a rival
houston - based energy trader , is considering an acquisition of
enron for stock valued at almost $ 8 billion , people familiar with
the situation said . with 850 million shares outstanding , enron has
a market value of about $ 7 . 7 billion .
enron was forced to consider a sale after its stock plunged
this year and its credit ratings were cut amid a securities and
exchange commission investigation into partnerships run by a
former executive . enron shares yesterday touched $ 7 a share , their
lowest level in more than a decade . a year ago , the stock traded
at more than $ 80 a share .
` ` if dynegy can get enron for $ 10 or $ 11 a share , it ' s a heck
of a good deal , ' ' said sanders morris harris analyst john olson ,
who owns enron shares . ` ` that ' s why the shares are up . ' '
dynegy rose $ 3 . 50 a share to $ 36 . 50 . enron fell 64 cents , or
7 . 1 percent , to $ 8 . 41 .
enron failed yesterday to reach an agreement with dynegy ,
which is concerned that credit - rating agencies may reduce enron ' s
debt to junk status , people familiar with the situation said .
enron today restated earnings for more than four years to include
losses from investment partnerships .
` ` the lack of ( enron ) investor confidence at this point makes
it likely that dynegy could buy enron and pay little or no
premium , ' ' said commerzbank securities analyst andre meade . dynegy
` ` is unlikely to pay significantly more than enron ' s current share
price if it does make a bid , ' ' he said .
an acquisition of enron would make dynegy the biggest energy
trader , eliminating its largest rival , analysts said . dynegy also
would get the leading energy manager for commercial and small -
industrial customers , and an internet energy - trading operation
many times larger than its own , analysts said .
` ` people are betting for or against a deal with enron , ' ' said
meade , who rates enron shares ` ` accumulate ' ' and doesn ' t own them .
newpower 3 rd - qtr loss narrows after adding customers ( update 4 )
2001 - 11 - 08 16 : 08 ( new york )
newpower 3 rd - qtr loss narrows after adding customers ( update 4 )
( updates with closing share price in sixth paragraph . updates
enron ' s share decline in fifth paragraph . )
purchase , new york , nov . 8 ( bloomberg ) - - newpower holdings
inc . , a venture formed by enron corp . to compete with traditional
gas and electric utilities , said its third - quarter loss narrowed
after cutting costs and adding customers .
the loss was $ 67 . 1 million , or $ 1 . 15 a share , compared with a
loss of $ 69 . 9 million , or $ 2 . 96 , a year earlier . revenue tripled
to $ 54 . 7 million from $ 18 . 2 million , the company said . newpower
was forecast to have a loss of $ 1 . 16 a share , the average estimate
of three analysts polled by thomson financial / first call .
newpower added 80 , 000 customers in the third quarter and
expects to have 840 , 000 to 860 , 000 customers by the end of the
year . the company , based in purchase , new york , reduced sales ,
general and administrative costs by 41 percent , primarily by
cutting systems - development and professional expenses .
the company is eliminating 40 jobs , or 22 percent of its
workforce , to cut costs , chief financial officer william jacobs
said on a conference call . newpower expects costs of $ 16 million
in the fourth quarter for severance and to end a business alliance
with aol time warner inc . , spokeswoman gael doar said .
enron , the largest energy trader , owns about 44 percent of
newpower . houston - based enron , whose shares have fallen 75 percent
since oct . 16 amid concern over affiliated partnerships run by its
former chief financial officer , said it had $ 544 million in losses
on investments including newpower in the third quarter .
shares of newpower rose 42 cents to $ 1 . 23 . the company first
sold shares to the public in october 2000 for $ 21 a share . the
offering increased the number of shares outstanding to about
58 million from 23 million .
fourth quarter
excluding costs for severance and to end the aol agreement ,
newpower expects a fourth - quarter loss of $ 41 million to
$ 46 million , or 65 cents to 73 cents a share , and a full - year loss
of $ 210 million to $ 215 million , or $ 3 . 55 to $ 3 . 63 .
the company was expected to lose 74 cents in the fourth
quarter , according to first call ' s average of three analysts '
estimates . the full - year ' s loss was expected to be $ 3 . 71 , the
average of four analysts ' estimates .
in 2002 , newpower expects to have a loss of $ 100 million to
$ 125 million , or $ 1 . 59 to $ 1 . 99 a share . the average estimate of
four analysts polled by first call was $ 2 . 26 .
newpower expects to be profitable in 2003 with 1 . 5 million
customers . the company is focusing more on small businesses . it
now has 25 , 000 small - business customers and expects to have more
than 35 , 000 by the end of the year .
international business machines corp . owns 1 . 5 million shares
of newpower , less than 5 percent of the company .
enron restates years of profits , in talks with dynegy ( update 4 )
2001 - 11 - 08 15 : 41 ( new york )
enron restates years of profits , in talks with dynegy ( update 4 )
( adds dynegy share price in sixth paragraph . )
houston , nov . 8 ( bloomberg ) - - enron corp . , which began
merger talks with dynegy inc . after its stock plunged , restated
earnings for more than four years to include losses from
investment partnerships arranged by senior executives .
the largest energy trader failed yesterday to reach an
agreement with dynegy to sell itself for about $ 8 billion in
stock . dynegy is concerned credit rating companies may downgrade
enron ' s debt , people familiar with the situation said . a reduction
to junk status would precipitate a cash crisis by requiring enron
to repay early $ 3 . 3 billion of bonds .
` ` restating earnings for the past five years is suggestive of
fraud , which in itself is justification for a downgrade , ' ' said
donald coxe , who manages 78 , 000 enron shares as part of the harris
insight equity fund . ` ` i ' d be surprised if they ' re not
downgraded . ' '
the decision by chairman and chief executive officer kenneth
lay to reduce earnings by $ 586 million since 1997 is part of
enron ' s efforts to regain confidence among investors stung by the
89 percent plunge in the stock this year and a securities and
exchange commission investigation into how the company accounted
for partnerships it sponsored .
enron fired treasurer ben glisan and kristina mourdant , a
lawyer for an enron division . the company ` ` now believes ' ' glisan ,
mourdant and two other employees no longer working for enron
bought interests in subsidiaries of a partnership run by former
chief financial officer andrew fastow .
dynegy ' s shares rose as much as 14 percent on speculation
that it may decide not to buy cash - strapped enron , or , if it did ,
wouldn ' t pay much of a premium .
` ` people are betting for or against a deal with enron , ' ' said
andre meade , an analyst with commerzbank ag who rates enron
` ` accumulate . ' ' dynegy ` ` is unlikely to pay significantly more
than enron ' s current share price if it does make a bid , ' ' he said .
shares decline
enron shares declined 40 cents to $ 8 . 65 after the company
determined it violated generally accepted accounting rules when it
failed to consolidate results for three so - called special purpose
entities , vehicles for getting access to capital or hedging risk
that can be moved off the books under some circumstances .
enron ousted fastow last month after revealing an accounting
error for transactions with a group of the partnerships resulted
in a $ 1 . 2 billion reduction in shareholder equity in the third
quarter . arthur andersen llp was enron ' s independent auditor .
the company today reduced 1997 net income by $ 96 million ,
1998 earnings by $ 113 million , 1999 results by $ 250 million , and
2000 earnings by $ 132 million . in 2001 , the changes resulted in an
increase to net income of $ 17 million in the first quarter and $ 5
million in the second quarter , and a reduction of $ 17 million for
the third quarter .
enron bonds pared gains after the earnings were restated , as
the threat of a credit downgrade dimmed a rally sparked by the
dynegy talks . enron ' s debt doubled in the past four years to $ 13
billion at the end of the third quarter . both standard & poor ' s
and moody ' s investors service are considering lowering their
ratings , which are two levels above junk .
` ` enron is running out of time and that ' s what ' s pushing them
to the bargaining table , ' ' said zach wagner , an analyst with
edward jones joint energy development investments , known as
jedi ; and a wholly owned subsidiary of ljml that ` ` engaged in
derivative transactions with enron to permit enron to hedge market
risks of an equity investment in rhythms netconnections inc . , ' '
which provides high - speed networking to businesses .
some companies that trade natural gas , electricity and other
commodities with enron may pull back if enron ' s finances
deteriorate to the point that it loses its investment - grade credit
rating , investors say .
atlanta - based mirant corp . , a top u . s . energy trader , has
moved most of its trades away from enron to other exchanges , such
as intercontinenal exchange , a venture it formed in march 2000
with other partners including bp plc and goldman , sachs & co . ,
mirant spokesman james peters said . ` ` we are still trading with
them , but on a very limited basis , ' ' said peters .
` ` dynegy has to act fast , ' ' said roger hamilton , a money
manager with john hancock advisers inc . , which sold its enron
shares in recent weeks . ` ` if enron can ' t get financing and its
bonds go to junk , they lose counterparties and their marvelous
business vanishes . ' '
dynegy would gain a wholesale energy business , the leading
energy manager for commercial and small - industrial customers , and
an internet energy trading operation many times larger than its
own , said ubs warburg llc analyst james yanello .
` ` if history is any guide , dynegy is stingy when it comes to
acquisitions , so i don ' t expect them to do anything stupid ' ' such
as overpaying for enron , said yanello . ` ` a deal could provide
dynegy with tremendous opportunity . ' ' he rates dynegy ` ` strong
buy ' ' and doesn ' t own shares of either company .
chevrontexaco corp . , which owns about 27 percent of dynegy ,
is considering adding $ 1 . 5 billion to the transaction to help
enron . it would provide another $ 1 billion when the purchase is
closed , the new york times and wall street journal reported .
breakup fee
the companies agreed on a breakup fee providing dynegy with
about $ 400 million if enron accepts a higher offer , people
familiar with the talks said .
dynegy ' s shares rose as much as $ 4 . 30 , or 13 percent , to
$ 37 . 30 . the stock had dropped $ 3 yesterday when news of the enron
talks was first reported .
dynegy spokesman steve stengel , enron spokesman mark palmer
and chevrontexaco spokesman fred gorell declined to comment .
enron plans to meet with j . p . morgan chase financial results to be restated
cbsmarketwatch . com
lisa sanders
new york ( cbs . mw ) - - enron ' s troubles deepened thursday as the energy merchant confirmed it ' s in merger talks with dynegy and announced , in a securities and exchange commission filing , that it fired two officers and is restating financial results for four years and two quarters .
both dynegy and enron confirmed thursday that they ' re in negotiations following a published report that an $ 8 billion deal was close to being finalized .
the new york times reported that dynegy ' s board approved a stock offer worth $ 10 a share for enron .
while confirming the talks , the companies released no further details . dynegy had no additional comment . an enron spokeswoman stonewalled reporters thursday by saying the company was requiring all questions to be submitted in writing . enron did not respond to the questions .
shares of enron ( ene ) initially rallied but closed at $ 8 . 41 , down 64 cents , or 7 . 1 percent , while dynegy ( dyn ) tacked on $ 3 . 50 to close at $ 36 . 50 .
chevrontexaco ( cvx ) , which owns 27 percent of dynegy , will contribute $ 2 . 5 billion to the deal , the times reported . chevrontexaco , which added 31 cents to close at $ 87 . 59 , declined to comment .
also thursday , enron in an sec filing said it has fired its treasurer , ben glisan , and the general counsel of an enron division , kristina mordaunt . earlier in the month , enron fired chief financial officer andy fastow for his role in limited partnerships that are now under investigation by the sec . enron restated its financial results for the years 1997 through 2000 and the first two quarters of 2001 . enron has lost most of its market value over the past month after the sec launched a probe of some transactions by company executives .
enron would bring huge debt
a merger of dynegy and enron would require the smaller company to take on the $ 12 . 8 billion in debt that ' s now on enron ' s books . the acquisition would likely lead to the sale of additional enron assets to pay down the debts , the times reported .
boards of both companies were meeting in houston on wednesday night , according to the paper .
" if you look at the balance sheets of dynegy and enron , ( a merger ) would be a tough deal , " jeff dietert of simmons & co . he noted that dynegy ( dyn ) has $ 3 billion worth of debt and a market capitalization of $ 11 . 7 billion .
" enron ' s debt load is likely to be too significant for dynegy to step up and swallow , " dietert said . for dynegy to make the deal , it would have to issue equity , he added .
it would make more sense for dynegy to consider buying some enron assets , dietert said . that would also help enron clean up its balance sheet .
chris ellinghaus of williams capital group said that chevrontexaco ' s involvement would make a dynegy - enron combination more realistic .
" we would view this transaction favorably assuming dynegy intends to dispose of enron ' s myriad of non - core businesses , " ellinghaus said . dynegy and enron together would dwarf other natural gas and power marketers in the u . s .
ellinghaus said the possibility that dynegy would buy enron is " staggering . "
" however , the failure of enron to procure an outside equity infusion has apparently severely limited enron ' s options , " he said . " we do not believe the potential demise of enron invalidates the merchant energy model or suggest deeper problems within the wholesale energy markets . "
gregory phelps , vice president and portfolio manager of john hancock ' s patriot group of closed - end income funds , said enron , even in its current state , retains some intrinsic value .
" enron still has an incredible number of contractual trading arrangements out there that can ' t be allowed to crumble and fall , " he added . " i think that a firm like dynegy with a firm like chevrontexaco as partner adds the credibility that enron needs . "
dynegy gets to buy " assets on the cheap " that it can tie into its own growth - oriented operations , he said .
phelps has never owned enron stock in his funds because he says it ' s too volatile and the company makes it too hard to understand how it generates revenue .
bush ties
enron ' s chairman and ceo kenneth lay stepped back into the ceo spot following the abrupt departure of jeffrey k . skilling , who left after just six months on the job for " personal reasons . " skilling was called to testify in washington , d . c . , this week , though the sec would not confirm whether it was before their agency .
in a conference call with investors wednesday , el paso energy chairman and chief executive william wise said his company would consider buying some of enron ' s assets , though he declined to specify which ones .
" we are an asset - oriented company , and we would look at their assets , " wise said . " rather than list any of them for you , you can make your own judgments . "
wednesday , a . g . edwards cut its rating on enron to " sell " from " hold , " saying the only reason to own the stock now would be to bet that some company would bid for enron or a large part of its wholesale trading operations .
azurix divestiture
also thursday , azurix corp . , an affiliate of enron , said it sold its azurix north america and azurix industrial to american water works for $ 141 . 5 million in cash and the assumption of $ 6 . 1 million of debt .
azurix is a water and wastewater company . in the third quarter , enron took a $ 1 billion charge , which included $ 287 million for asset impairments at azurix .
lisa sanders is a dallas - based reporter for cbs . marketwatch . com .
enron mentions
a dynegy - enron deal faces significant regulatory review
dow jones energy service , 11 / 08 / 01
us physical gas prices mostly down ; no demand
dow jones energy service , 11 / 08 / 01
usa : newpower shares advance on revised guidance .
reuters english news service , 11 / 08 / 01
enron investors still perplexed - and stock shows it
dow jones news service , 11 / 08 / 01
usa : update 1 - firstenergy sells $ 4 . 0 bln in 3 - part debt sale .
reuters english news service , 11 / 08 / 01
usa : wrapup 1 - enron , dynegy confirm possible merger talks .
reuters english news service , 11 / 08 / 01
in the money : enron transparency not transparent enough
dow jones news service , 11 / 08 / 01
s on watch negative
pr newswire , 11 / 08 / 01
rpt dynergy sharply higher , enron lower on merger talks
afx news , 11 / 08 / 01
us spot coal : prices weaken as buying for 2002 slows
dow jones energy service , 11 / 08 / 01
stockwatch dynergy sharply higher , enron flat on merger talks
afx news , 11 / 08 / 01
uk : rivals eye enron ' s metals trading business .
reuters english news service , 11 / 08 / 01
wrap : enron to restate results ; confirms dynegy talks
dow jones news service , 11 / 08 / 01
usa : enron fires two employees linked to partnerships .
reuters english news service , 11 / 08 / 01
enron restates net income for periods from 1997 to q 3 2001
afx news , 11 / 08 / 01
enron restates earnings as company confirms talks with dynegy
associated press newswires , 11 / 08 / 01
usa : update 1 - enron provides financing data , restates earnings .
reuters english news service , 11 / 08 / 01
is enron too big to fail ? bailout seen unlikely
dow jones energy service , 11 / 08 / 01
enron bonds give back gains as firm restates profit ( update 3 )
bloomberg , 11 / 08 / 01
apache to cut 2002 drilling budget 70 % on gas prices ( updatel )
bloomberg , 11 / 08 / 01
enron fires treasurer , alleges improper investment ( update 2 )
bloomberg , 11 / 08 / 01
dynegy rises on optimism it may get enron for bargain ( update 2 )
bloomberg , 11 / 08 / 01
newpower 3 rd - qtr loss narrows after adding customers ( update 4 )
bloomberg , 11 / 08 / 01
enron restates years of profits , in talks with dynegy ( update 4 )
bloomberg , 11 / 08 / 01
dj faber report : more on enron / dynegy > ene
bloomberg , 11 / 08 / 01
dynegy , enron negotiating merger
enron fires two officers ; financial results to be restated
cbsmarketwatch . com , 11 / 08 / 01
a dynegy - enron deal faces significant regulatory review
by bryan lee
11 / 08 / 2001
dow jones energy service
( copyright ( c ) 2001 , dow jones & company , inc . )
of dow jones newswires
washington - ( dow jones ) - any merger deal that may emerge between dynegy inc . ( dyn ) and enron corp . ( ene ) will face a complicated and time - consuming regulatory - review process , legal experts said thursday .
any equity deal would require approvals from numerous u . s . federal regulatory agencies and state utility regulators , as well as survive canadian and european antitrust reviews , energy attorneys contacted by dow jones newswires said .
a merger would require approvals from the federal energy regulatory commission , securities and exchange commission , department of justice and federal trade commission . and the illinois commerce commission likely would weigh into the mix , since dynegy owns illinova ' s illinois power co .
any effort to strike a deal quickly also could be complicated by enron ' s ownership of portland general electric co . while enron has entered into an agreement to sell the utility to northwest natural gas co . ( nwn ) , a previous attempt to sell the company fell through because of regulatory complications .
a key issue for federal regulators scrutinizing a potential enron - dynegy merger will be the degree of electricity market concentration such a transaction would entail , the attorneys said .
financially wounded enron is the nation ' s largest electricity and natural gas trader with an extensive network of gas pipelines .
dynegy is ranked sixth nationally in both electricity and natural gas marketing .
the transaction would receive the greatest scrutiny at ferc , where the merger application would challenge the commission ' s merger - review policy , attorneys said .
copyright ? 2000 dow jones no demand
11 / 08 / 2001
dow jones energy service
( copyright ( c ) 2001 , dow jones john . edmiston @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
usa : newpower shares advance on revised guidance .
11 / 08 / 2001
reuters english news service
( c ) reuters limited 2001 .
new york , nov 8 ( reuters ) - national power and gas marketer newpower holdings inc . revised its 2001 loss guidance downward on thursday and saw its stock post its best one - day gain in two months .
the projection came in newpower ' s report of a third quarter net loss of $ 67 . 1 million , or $ 1 . 15 per share , compared to a net loss of $ 69 . 9 million , or $ 2 . 96 per share for the third quarter of 2000 .
analysts had expected a per - share loss of $ 1 . 15 to $ 1 . 18 , according to research firm thomson financial / first call , which put the consensus at $ 1 . 16 .
purchase , new york - based newpower is the parent of the new power co . , which says it is the first national provider of electricity and natural gas to residential and small commercial customers in the united states . it said total customers increased 155 percent to 805 , 000 compared to the third quarter of 2000 . revenues were $ 54 . 7 million in the latest quarter , an increase of 201 percent from the third quarter of 2000 .
during the third quarter , newpower said , it gained about 80 , 000 new customers through the company ' s marketing efforts , primarily in the residential sector . newpower recently increased its emphasis on small business customers and at the end of september had over 25 , 000 small business accounts . newpower expects this to increase to more than 35 , 000 by the end of the year .
providing revised guidance for the rest of the year , the company said it expects a net loss of $ 41 million to $ 46 million or a loss per share of 65 cents to 73 cents for the fourth quarter . the full year net loss is estimated to be between $ 210 million and $ 215 million , or $ 3 . 55 to $ 3 . 63 per share .
analysts ' estimates of the year per share loss range from $ 3 . 68 to $ 3 . 74 , resulting in a consensus per share loss projection of $ 3 . 71 .
newpower said it projects the year - end customer count will be between 840 , 000 and 860 , 000 , of which the fourth - quarter increase is expected to be achieved entirely through marketing .
it said the revised forecast reflects a reduction in the number of customers the company expects to acquire through portfolio acquisitions and the impact of delays in switching texas customers to newpower , partly offset by the company ' s modified marketing strategies and continued cost reductions .
newpower shares reached a high of $ 1 . 25 in thursday afternoon trading and were still up 48 . 15 percent , or 39 cents , at $ 1 . 20 in the final half hour of trading .
the company is 44 percent owned by enron corp . , newpower ' s largest provider of electricity and natural gas .
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron investors still perplexed - and stock shows it
by christina cheddar
of dow jones newswires
11 / 08 / 2001
dow jones news service
( copyright ( c ) 2001 , dow jones 201 - 938 - 5166 ; christina . cheddar @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
usa : update 1 - firstenergy sells $ 4 . 0 bln in 3 - part debt sale .
by dena aubin
11 / 08 / 2001
reuters english news service
( c ) reuters limited 2001 .
new york , nov 8 ( reuters ) - utility holding company firstenergy corp . sold $ 4 billion of five - , 10 - and 30 - year debt on thursday , helped by investors ' preference for defensive sectors as the u . s . economy stalls .
firstenergy was able to lower its borrowing costs , trimming yields from initial indications . the sale originally was expected to offer generous yields as heavy bond issuance , weak wholesale power prices and investor jitters over the troubles of energy trading firm enron corp . weighed on the utility sector .
akron , ohio - based firstenergy will use proceeds for corporate purposes and to help pay for its recent purchase of morristown , new jersey - based gpu inc . . firstenergy purchased gpu for about $ 4 . 5 billion in cash and stock , plus the assumption of about $ 7 . 2 billion in debt . the sale closed on tuesday .
utility bonds are typically viewed as a conservative investments because of the industry ' s stable income during uncertain economic times . the sector has been under a cloud , though , as houston - based enron has struggled with a cash squeeze and writedowns from off - balance - sheet transactions .
" enron was held up as a model , growing extremely quickly , and the recent financial disclosures are just a shock , " said kelly perl , a project director at new york utility consulting firm applied economic research .
spreads , or the yield gaps between utility bonds and u . s . treasuries , have widened about 0 . 15 to 0 . 20 percentage point over the past two weeks , while spreads on gas and pipeline companies have widened about 0 . 30 percentage points , strategists said .
sale terms
firstenergy sold $ 1 billion of 5 . 5 percent five - year notes at 99 . 888 cents on the dollar , yielding 5 . 526 percent or 1 . 98 percentage points more than similar - maturity u . s . treasuries . it also sold $ 1 . 5 billion of 6 . 45 percent 10 - year notes at 99 . 651 cents on the dollar , yielding 6 . 498 percent or 2 . 25 percentage points more than treasuries , and $ 1 . 5 billion of 7 . 375 percent 30 - year bonds , yielding 7 . 389 percent or 2 . 45 percentage points more than the old long treasury bond .
initial price guidance had called for spreads as high as 2 . 20 , 2 . 35 and 2 . 60 percentage points more than treasuries for the five - , 10 - and 30 - year debt .
firstenergy ' s sale was helped by a 0 . 50 percentage point interest rate cut by the u . s . federal reserve on tuesday and signs that the fed could cut rates again .
" there is the perception that the fed is going to aggressively ease and err on the side of caution , " said peter palfrey , portfolio manager for loomis sayles & co . in boston . investors are betting that the fed will engineer an economic recovery , helping corporate profits and spurring price gains in corporate bonds , palfrey said .
analysts said firstenergy ' s acquisition of gpu should benefit its credit quality .
" it adds further diversity to their cash flow from regulated distribution companies , " said fitch analyst robert hornick .
falling wholesale power prices also should benefit firstenergy , hornick said .
" they ' re not a big seller of wholesale energy at this point , " hornick said . " they don ' t own generation facilities and need to buy ( electricity ) in the market , so to the extent wholesale prices are lower , they can benefit , " he said .
standard & poor ' s rates firstenergy ' s senior unsecured notes " bbb - minus , " its lowest investment grade . moody ' s investors service rates firstenergy ' s long - term debt " baa 2 , " roughly one notch higher , while fitch rates them " bbb . "
salomon smith barney , barclays capital and morgan stanley arranged the sale .
copyright ? 2000 dow jones & company , inc . all rights reserved .
usa : wrapup 1 - enron , dynegy confirm possible merger talks .
by jeff franks
11 / 08 / 2001
reuters english news service
( c ) reuters limited 2001 .
houston , nov 8 ( reuters ) - enron corp . , plagued by investor doubts and under the gun to shore up its crumbling finances , said on thursday it was talking with power trading rival dynegy inc . about a possible merger .
the company , whose stock and credit ratings have plummeted amid an uproar about questionable business transactions , admitted it made bookkeeping errors and restated earnings for the last four years .
it also said former chief financial officer andrew fastow , who abruptly left the company last month , had made $ 30 million managing partnerships linked to the deals . the deals , which were off the balance sheet , are now under investigation by the u . s . securities and exchange commission for possible conflict of interest .
two other executives , managing director and treasurer ben glisan and enron division general counsel kristina mordaunt , were both believed to have links to the fastow - led partnerships and have been fired , the company disclosed .
the announcements threw a spotlight on enron ' s stark situation , in which the nation ' s top energy trader has gone from wall street darling to pariah in a few weeks and now faces a cash crunch so dire it is seeking a merger with the much - smaller dynegy .
its credit ratings have fallen to near - junk levels in recent weeks , making it difficult to get money to boost investor confidence and back the trading operations that provide 90 percent of enron ' s income . the company reportedly has been seeking investors to provide a cash infusion for an equity stake .
moderate premium
word about a possible dynegy - enron deal leaked out on wednesday , and on thursday the two companies confirmed talks about a possible " business combination " were underway , but said no agreement had been reached .
sources told reuters that the two texas rivals , whose headquarters are a few blocks apart in downtown houston , were talking about a stock swap with a moderate premium for shareholders and a $ 1 . 5 billion capital infusion from chevrontexaco corp . , which owns 26 . 5 percent of dynegy .
the stock swap is valued at about $ 8 billion , or about $ 10 a share , the new york times reported on thursday .
a merger would catapult dynegy to the top of the energy trading industry now dominated by enron . last year , the company had $ 29 billion in revenues , compared to $ 100 billion for enron .
for enron , it would cap an astonishingly rapid fall from grace .
enron stock has lost $ 19 billion in market value since its crisis began in mid - october and was down another 45 cents to $ 8 . 60 in thursday trading . dynegy shares rose $ 3 . 87 to $ 36 . 87 .
enron restated its earnings going back to 1997 , saying its auditors advised that the off - the - balance sheet deals in question should have been included in the company ' s financial statements .
the restated results reduced enron ' s net income by $ 591 million , or 22 percent , from 1997 to 2000 , and increased its debt by $ 628 million , or 6 percent , after two of the partnership ' s financial statements were consolidated into enron ' s earnings .
enron said the restatement reflects a $ 1 . 2 billion reduction to shareholders ' equity that touched off the current controversy when the company offhandedly disclosed it last month . angry shareholders suddenly worried that enron was hiding other liabilities in its complex financial statements and began demanding more information .
in a statement , enron chief executive ken lay said the company hoped it had allayed wall street fears with thursday ' s announcements .
" we believe that the information we have made available addresses a number of the concerns that have been raised by our shareholders and the sec about these matters , " he said .
analysts , wary after last month ' s surprise revelations , said enron may have more to release , but they were pleased it was finally coming forth with information .
" it ' s an attempt to come clean , " said raymond moore , an analyst with weatherly securities .
copyright ? 2000 dow jones & company , inc . all rights reserved .
in the money : enron transparency not transparent enough
by michael rapoport
11 / 08 / 2001
dow jones news service
( copyright ( c ) 2001 , dow jones 201 - 938 - 5976 ; michael . rapoport @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
s on watch negative
11 / 08 / 2001
pr newswire
( copyright ( c ) 2001 , pr newswire )
new york , nov . 8 / prnewswire / - - standard & poor ' s today lowered its rating on yosemite securities trust i to triple - ' b ' from triple - ' b ' - plus and placed it on creditwatch with negative implications ( see list ) .
the lowered rating and creditwatch placement reflects the nov . 1 , 2001 rating action taken on enron corp . , which was based on standard & poor ' s belief that enron corp . ' s plan to employ asset sales and other means to repair its damaged balance sheet will be insufficient to restore its long - term credit quality to the historical triple - ' b ' - plus level . also , the creditwatch placement reflects the uncertainties surrounding the company and its credit quality in the short run due to the possibility of further unanticipated developments in the capital markets .
yosemite securities trust i is a synthetic issue that utilizes a credit default swap referencing enron corp . the rating on the credit - linked notes reflects the current senior unsecured rating of enron corp . yosemite securities trust i
$ 750 million credit linked notes
rating
to from
bbb / watch neg bbb +
/ contact : mary ryan , + 1 - 212 - 438 - 2090 , or frank j trick , + 1 - 212 - 438 - 1108 , both of standard & poor ' s / 13 : 26 est
copyright ? 2000 dow jones & company , inc . all rights reserved .
rpt dynergy sharply higher , enron lower on merger talks
11 / 08 / 2001
afx news
( c ) 2001 by afp - extel news ltd
( repeating to show in headline , lead that enron is trading lower )
new york ( afx ) - shares of dynergy inc were sharply higher , while enron corp lost ground in midsession trading after the two companies confirmed that they are holding merger talks .
at 12 . 25 pm , dynergy was up 3 . 17 usd , or 9 . 6 pct , at 36 . 17 , enron fell 0 . 34 usd , or 3 . 7 pct , to 8 . 71 usd and chevrontexaco dropped 0 . 18 usd to 87 . 10 . the djia was up 110 . 22 points at 9 , 664 . 59 , the s & p 500 index gained 12 . 88 points to 1 , 128 . 68 and the nasdaq composite rose 34 . 35 points to 1 , 871 . 88 .
enron share price today was hurt after the company announced a restatement of its net income from 1997 to the third quarter of 2001 . the revisions were , for the most part , reductions in the bottom - line figure .
the 8 bln usd tie - up talks , which come at a time when enron is being investigated by the us securities and exchange commission and the markets are losing faith in the energy trader , are seen as particularly positive for dynergy .
analysts see a tie - up as highly accretive for dynergy , which is 26 pct owned by chevrontexaco , with many synergies also possible .
banc of america analyst william maze , who rates dynergy ' strong buy ' , said : " if this transaction comes to fruition , we would be aggressive buyers of dynergy given its accretive nature as well as the lifting of enron ' s credibility issues that has been plaguing the entire industry . "
cibc world markets analyst william hyler , who rates enron ' buy ' , added : " the move would also catapult ( dynergy ) into a leadership role at what could prove near the bottom of the gas / power pricing cycle . "
on the other hand , enron ' s position would improve as its credibility within the trading world and in the face of its trading counterparties would recover somewhat .
to that end , dynergy would provide a yet unspecified cash injection , believed to be approximately 1 . 5 - 2 . 0 bln usd , to improve enron ' s standing and shore up its finances .
chevrontexaco , which is expected to provide a substantial part of the financing needed for the merger , also stands to gain from the situation as it would retain effective control of the combined company .
rdc / lj
for more information and to contact afx : www . afxnews . com and www . afxpress . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
us spot coal : prices weaken as buying for 2002 slows
11 / 08 / 2001
dow jones energy service
( copyright ( c ) 2001 , dow jones averages not volume weighted
4 q ' 01 lq ' 02 cal 2002
central appalachia low sulfur
f . o . b . barge $ 31 . 75 - 32 . 00 $ 32 . 00 - 32 . 25 $ 32 . 00 - 33 . 00
average / change 31 . 90 / - 1 . 85 32 . 12 / - 1 . 63 32 . 50 / - 1 . 00
f . o . b . rail $ 36 . 00 - 38 . 00 n / a $ 36 . 00 - 38 . 00
average / change 37 . 00 / - 1 . 25 n / a 37 . 00 / - 0 . 75
powder river basin
8400 b . t . u . $ 5 . 75 - 6 . 00 $ 6 . 45 - 6 . 60 $ 6 . 35 - 6 . 45
average / change 5 . 85 / - 0 . 15 6 . 50 / 0 . 00 6 . 40 / - 0 . 10
8800 b . t . u . $ 7 . 25 - 7 . 75 $ 8 . 10 - 8 . 40 $ 8 . 10 - 8 . 20
average / change 7 . 50 / - 0 . 10 ' 8 . 25 / 0 . 00 8 . 15 / - 0 . 15
note to u . s . spot coal prices :
prices are dollars per short ton , based on actual deals done during the month for the delivery period indicated .
averages are straight mathematical averages and aren ' t volume weighted .
change is from the average of deals done in the previous month .
the central appalachian low - sulfur category uses benchmark of 12 , 000 british thermal units per pound . barge delivery is to the big sandy river . rail delivery is to the norfolk southern .
for central appalachian coal , prices are accepted for coal within 500 btu of the benchmark btu and standardized adjustments are made .
powder river basin categories are quoted fob mine .
- by jennifer morrow , dow jones newswires ; 201 - 938 - 4377 ; jennifer . morrow @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
stockwatch dynergy sharply higher , enron flat on merger talks
11 / 08 / 2001
afx news
( c ) 2001 by afp - extel news ltd
new york ( afx ) - shares of dynergy inc were sharply higher , while enron corp continued to lose ground , in midsession trading after the two companies confirmed that they are holding merger talks .
at 12 . 25 pm , dynergy was up 3 . 17 usd , or 9 . 6 pct , at 36 . 17 , enron fell 0 . 34 usd , or 3 . 7 pct , to 8 . 71 usd and chevrontexaco dropped 0 . 18 usd to 87 . 10 . the djia was up 110 . 22 points at 9 , 664 . 59 , the s & p 500 index gained 12 . 88 points to 1 , 128 . 68 and the nasdaq composite rose 34 . 35 points to 1 , 871 . 88 .
enron share price today was hurt after the company announced a restatement of its net income from 1997 to the third quarter of 2001 . the revisions were , for the most part , reductions in the bottom - line figure .
the 8 bln usd tie - up talks , which come at a time when enron is being investigated by the us securities and exchange commission and the markets are losing faith in the energy trader , are seen as particularly positive for dynergy .
analysts see a tie - up as highly accretive for dynergy , which is 26 pct owned by chevrontexaco , with many synergies also possible .
banc of america analyst william maze , who rates dynergy ' strong buy ' , said : " if this transaction comes to fruition , we would be aggressive buyers of dynergy given its accretive nature as well as the lifting of enron ' s credibility issues that has been plaguing the entire industry . "
cibc world markets analyst william hyler , who rates enron ' buy ' , added : " the move would also catapult ( dynergy ) into a leadership role at what could prove near the bottom of the gas / power pricing cycle . "
on the other hand , enron ' s position would improve as its credibility within the trading world and in the face of its trading counterparties would recover somewhat .
to that end , dynergy would provide a yet unspecified cash injection , believed to be approximately 1 . 5 - 2 . 0 bln usd , to improve enron ' s standing and shore up its finances .
chevrontexaco , which is expected to provide a substantial part of the financing needed for the merger , also stands to gain from the situation as it would retain effective control of the combined company .
rdc / lj
for more information and to contact afx : www . afxnews . com and www . afxpress . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
uk : rivals eye enron ' s metals trading business .
by andy blamey
11 / 08 / 2001
reuters english news service
( c ) reuters limited 2001 .
london , nov 9 ( reuters ) - u . s . energy trading giant enron corp . , whose shares have tumbled amid a regulatory probe and doubts about its ability to raise cash , may lose or offload its metals business , senior industry sources said on thursday .
in the wings are several interested parties looking to snap up the company ' s metals customer base .
" there are people out there with the experience and the contacts who see this time as a good opportunity to get into the market , " a senior metals market source told reuters on thursday .
such a move for enron ' s metals portfolio would involve the acquisition of an existing organisation as a vehicle , the source added .
" we do not comment on rumours , " an enron spokeswoman said , declining further comment .
other enron metals assets were also said to be in play , including the henry bath warehousing company , which operates lme - registered warehouses in the uk , the netherlands , singapore and the united states .
major player
houston - based enron became a major player in the metals trade in may last year when it acquired mg plc , a leading independent international metals dealing firm in london , in a deal worth around 300 million pounds .
the company is a ring - dealing member of the london metal exchange ( lme ) , able to participate in open - outcry floor trade , and is active in screen - based metals trade via its enrononline platform ( www . enrononline . com ) .
the company no longer has a stake in online metals trading platform emetra ( www . emetra . com ) , having sold its holding to other emetra shareholders this summer .
but while enron may be a heavy hitter in the metals sector , base metals trading could hardly be regarded as one of its core businesses .
the company ' s third - quarter 2001 results statement shows income before interest , minority interests and taxes ( ibit ) from " europe and other commodity markets " - which includes metals and steel alongside european gas and power , among others - of $ 53 million , unchanged from the year - earlier period .
this compares with ibit from enron ' s gas and power market - making operations and merchant energy activities in north and south america of $ 710 million over the same period .
but the third - quarter figure that has slashed the value of the company ' s shares is a $ 1 . 2 billion write - down of shareholder equity related to off - balance sheet transactions .
on thursday the company said it would restate its earnings for 1997 to 2001 to reflect the transactions - a move which wipes $ 613 million of the company ' s reported net income from 1997 through the first half of this year .
the company ' s stock has dropped by almost 78 percent since enron released its earnings results on october 16 , falling to nine - year lows amid concerns about the company ' s ability to raise cash .
the story added an extra twist on wednesday as news broke that u . s . - based energy trading and marketing firm dynegy inc . was in talks to buy out enron .
against this background speculation is rife about the future of the metals operation , fuelled by the company ' s decision last month to trim between 10 and 20 percent of its metals workforce as part of a wider staff reduction by enron europe .
unlikely to remain intact
any decision by enron or a possible future purchaser to offload its metals operations would be unlikely to see enron metals remain intact , traders said .
" they paid $ 450 million for mg . would they get $ 450 million for enron metals ? i don ' t think so , " said one .
" why buy the whole concern when you can cherry - pick the best traders and the clients will follow ? " added another .
an increasing emphasis on screen trading at the expense of personal contacts may already have persuaded some enron clients to jump ship .
" we ' ve picked up a fair amount of small and mid - sized trade - type business in europe from people who ' ve said ' i ' m not going to be told just to trade on a screen , ' " said one trader .
another trader said : " a lot of this business revolves around who you ' ve been trading with and talking to over a period of time . it ' s about individuals , " he said .
" enron online . . . should be seen as an ' added value ' product , not as the only way of trading . customers still want to talk to their broker , and are willing to pay commission for the service , " the senior source said .
enron ' s financial position could also prompt customers to consider other options , the first trader said .
" as a customer , you want to place your business where there ' s financial stability . if a company isn ' t financially stable , you ' ll move elsewhere . "
enron ' s trade counterparties are also keeping a close eye on the company ' s financial situation , said a trader at one lme brokerage .
" people aren ' t particularly concerned about short - term trading ( with enron ) , but when it comes to otc business done outside the clearing market they ' re backing off a bit , " he said .
( additional reporting by martin hayes ) .
copyright ? 2000 dow jones confirms dynegy talks
11 / 08 / 2001
dow jones news service
( copyright ( c ) 2001 , dow jones & company , inc . )
houston - ( dow jones ) - enron corp . ( ene ) said it will restate its financial results from 1997 through the second quarter of 2001 , as the embattled energy company and dynegy inc . both confirmed they are in talks on a possible business combination .
in a filing thursday with the securities and exchange commission , enron said its financial and audit reports are unreliable for those periods .
enron said that three " unconsolidated entities should have been included in its consolidated financial statements , " based on generally accepted accounting principles . these entities are chewco investments lp , joint energy development investments lp and a wholly owned unit of ljm cayman lp .
enron said it has established a special committee to review all transactions . the committee will specifically review all " economic results " related to transactions between enron and ljm .
last month enron took a $ 1 . 01 billion charge in the third quarter related to write - downs of investments . of this , $ 35 million was attributed to partnerships run until recently by chief financial officer andrew fastow , who has since been replaced . enron also disclosed it shrank shareholder equity by $ 1 . 2 billion , as a result of several transactions including ones undertaken with fastow ' s investment vehicle .
later , enron said the sec would investigate the company ' s " related party transactions , " including those with the fastow partnerships .
the restatement will reflect the $ 1 . 2 billion reduction in shareholders ' equity , as well as various income - statement and balance - sheet adjustments determined by enron and its auditors .
" we believe that the information we have made available addresses a number of the concerns that have been raised by our shareholders and the sec about these matters , " said chairman and chief executive kenneth lay
over the past couple of days , enron has been scrambling to line up quick financing from a prominent outside investor and has been in discussions with private - equity firms and power - trading companies .
earlier , the wall street journal reported that dynegy was trying to buy enron for $ 7 billion to $ 8 billion in stock . both are houston - based energy - trading and power companies .
because any combination of the two would likely be scrutinized for many months , and enron needs to shore up its finances now , dynegy reportedly is expected to inject $ 1 . 5 billion into enron immediately , people familiar with the matter said .
chevrontexaco corp . ( cvx ) , which owns a 26 % stake in dynegy , is expected to provide dynegy with the funds for the cash infusion and is playing a significant role in the negotiations , the journal said .
the boards of dynegy , chevron and enron reportedly met wednesday to discuss a potential deal . enron ' s stock has plunged since oct . 16 , when the company posted a $ 618 million third - quarter loss and revealed that its shareholder equity had been reduced .
the talks between enron and dynegy follow a sharp decline in enron ' s stock over the past several weeks .
copyright ? 2000 dow jones & company , inc . all rights reserved .
usa : enron fires two employees linked to partnerships .
11 / 08 / 2001
reuters english news service
( c ) reuters limited 2001 .
new york , nov 8 ( reuters ) - enron corp . , the embattled energy trader , said on thursday fired its treasurer and a counsel who the company said were part - owners of one of its off - balance sheet partnerships now under investigation by u . s . regulators .
enron said it was terminating the employment of ben glisan , managing director and treasurer of enron corp . , and kristina mordaunt , a managing director and counsel of an enron division .
enron said it believes that these two employees , along with four other former enron employees , were involved as partners in a limited partnership called the ljml that had dealings with enron .
shares of enron were trading down 5 cents or . 55 percent at $ 9 on the new york stock exchange .
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron restates net income for periods from 1997 to q 3 2001
11 / 08 / 2001
afx news
( c ) 2001 by afp - extel news ltd
houston ( afx ) - enron corp announced it is restating its net results for 1997 to 2000 and for the first three quarters of 2001 to take account of various related party and off - balance sheet transactions in which the company was involved .
the restatement have no effect on enron ' s current financial position , it said .
in its restated figures , enron posted reductions to net income of 96 mln usd in 1997 , 113 mln usd in 1998 , 250 mln in 1999 and 132 mln in 2000 , as well as increases of 17 mln usd for the first quarter of 2001 and 5 mln for the second , but reduced the third quarter figure by 17 mln usd .
the restatement will have no negative impact on the company ' s reported earnings for the nine month period ending sept 2001 , however , it said .
the company said its changes to net income are the result of the retroactive consolidation of joint energy development investments lp and chewco investments lp beginning in november 1997 , the consolidation of the ljml subsidiary for 1999 and 2000 and prior year proposed audit adjustments .
the jedi and chewco consolidations will increase enron ' s debt by about 711 mln usd in 1997 , 561 mln in 1998 , 685 mln in 1999 and 628 mln in 2000 , the company said .
kgd / jkm / for more information and to contact afx : www . afxnews . com and www . afxpress . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron restates earnings as company confirms talks with dynegy
by brad foss
ap business writer
11 / 08 / 2001
associated press newswires
copyright 2001 . the associated press . all rights reserved .
new york ( ap ) - beleaguered energy trading giant enron corp . announced thursday it would restate its earnings since 1997 , in part to reflect a controversial dlrs 1 . 2 billion reduction in shareholder equity that has sparked a securities and exchange commission investigation .
enron , whose stock price has fallen roughly 80 percent in the past three weeks , also said it was holding talks with dynegy inc . relating to some form of business transaction . the new york times reported that dynegy was considering buying enron , its larger hometown rival for dlrs 8 billion .
in a filing with the sec , enron said financial statements from 1997 through the first half of 2001 " should not be relied upon " and that partnerships run by enron officials during that period should have been consolidated into the financial results of the houston - based energy trading giant .
these partnerships are chewco investments l . p . , joint energy development investments l . p . , and a wholly owned unit of ljm cayman l . p .
" we believe that the information we have made available addresses a number of the concerns that have been raised by our shareholders and the sec about these matters , " said kenneth lay , enron ' s chairman and chief executive .
by its own assessment , enron ' s restatement reduces previously reported net income by roughly dlrs 586 million and increases its debt by dlrs 2 . 59 billion . the change reflects the financial impact of retroactively consolidating the partnerships .
the company also fired two executives on thursday : ben glisan , its treasurer , and kristina mordaunt , general counsel for one of its divisions . previously , enron had ousted chief financial officer andrew fastow , who was in charge of some of the partnerships .
shares of enron were off 10 cents to dlrs 8 . 95 in heavy trading on the new york stock exchange .
enron said it believes the restatement will include a reduction to net income of about dlrs 96 million in 1997 , dlrs 113 million in 1998 , dlrs 250 million in 1999 and dlrs 132 million in 2000 , increases of dlrs 17 million for the first quarter of 2001 and dlrs 5 million for the second quarter and a reduction of dlrs 17 million for the third quarter of 2001 .
enron , the top buyer and seller of natural gas and the top wholesale marketer in the united states , had become one of the nation ' s 10 largest companies , recording revenue of dlrs 100 . 8 billion in 2000 .
but the company has been beset by huge investment losses and questions about its financial stability . in particular , its stock has plunged since oct . 16 , when the company posted a dlrs 618 million third quarter loss and revealed that its shareholder equity had been reduced .
enron ' s woes have prompted considerable speculation about a possible takeover of the company .
besides dynegy , companies mentioned as possible suitors included general electric ' s ge capital unit and royal dutch / shell group .
on thursday , both dynegy and enron released statements confirming they were in talks , but declined to provide any details .
the new york times reported earlier that dynegy is considering paying about dlrs 8 billion in stock , or roughly dlrs 10 per share .
under the terms of the deal , enron would receive an immediate dlrs 1 . 5 billion cash infusion from oil giant chevron texaco , which holds a 27 percent stake in dynegy , the times said , citing executives close to the discusssion .
chevron texaco would provide an additional dlrs 1 billion injection at a later date , the times reported , while dynegy would assume dlrs 12 . 8 billion in enron debt , plus billions of dollars in other debt that has been kept off the beleaguered company ' s balance sheet and has been a significant contributor to its current problems .
copyright ? 2000 dow jones & company , inc . all rights reserved .
usa : update 1 - enron provides financing data , restates earnings .
11 / 08 / 2001
reuters english news service
( c ) reuters limited 2001 .
houston , nov 8 ( reuters ) - enron corp . said on thursday it provided u . s . regulators with more information about off - balance sheet deals , and other transactions that led to a shattering of the company ' s credibility and to an investigation by the u . s . securities and exchange commission .
enron , the once high - flying houston - based energy trading company , also confirmed it was in talks with its hometown rival dynegy inc . over a possible business combination . terms of any deal have not been agreed on , the two companies said .
enron said that it will restate its earnings from 1997 to 2000 and the first two quarters of 2001 as the company addresses concerns raised by the sec and shareholders .
shares of enron dropped 20 cents , or 2 . 2 percent , to $ 8 . 85 in thursday morning trading on the new york stock exchange .
enron , the largest trader of electricity and natural gas in north america , said the required restatement reflects the surprising - and controversial - $ 1 . 2 billion reduction to shareholders ' equity the company recently disclosed .
the restatement also reflects adjustments to the company ' s income statement and balance sheet , now that enron has decided that the financial activities of chewco investments , l . p . , joint energy development investments limited partnership ( jedi ) and a wholly - owned subsidiary of ljml should indeed have been included in the company ' s consolidated financial statements .
as a result of the restatement , enron is reducing its 1997 net income by about $ 96 million , 1998 net income by $ 113 million , 1999 net income by $ 250 million and 2000 net income by $ 132 million .
it is also restating first quarter 2001 results with a $ 17 million net income increase , second quarter 2001 results with a $ 5 million increase and third quarter 2001 results with a $ 17 million net income decrease .
consolidating chewco and jedi also increases enron ' s debt by about $ 711 million in 1997 , $ 561 million in 1998 , $ 685 million in 1999 and $ 628 million in 2000 .
" we believe that the information we have made available addresses a number of the concerns that have been raised by our shareholders and the sec about these matters , " said chairman and chief executive ken lay in a statement .
copyright ? 2000 dow jones & company , inc . all rights reserved .
is enron too big to fail ? bailout seen unlikely
by jason leopold
11 / 08 / 2001
dow jones energy service
( copyright ( c ) 2001 , dow jones & company , inc . )
of dow jones newswires
( this story initially ran late wednesday . )
los angeles ( dow jones ) - - maybe enron corp . ( ene ) is just too big to fail . maybe not .
is the embattled energy trading company important enough to qualify for a federal bailout ?
not likely , according to a number of analysts who believe that there are enough big energy companies in the u . s . to keep markets liquid if enron goes under .
for that reason , a federal bailout is probably not in the cards , even though enron controls about 25 % of u . s . natural gas and electricity markets , they added .
" a bailout would only occur if needed to maintain liquidity in the energy markets in order to avoid potential for skyrocketing prices and avoid reliability risks , " said merrill lynch 323 - 658 - 3874 ; jason . leopold @ dowjones . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron bonds give back gains as firm restates profit ( update 3 )
2001 - 11 - 08 16 : 40 ( new york )
enron bonds give back gains as firm restates profit ( update 3 )
( updates bond and stock prices . )
new york , nov . 8 ( bloomberg ) - - enron corp . bonds pared
earlier gains as the biggest energy trader said it restated
earnings for more than four years , increasing concern that dynegy
inc . won ' t buy out the company .
enron ' s 7 . 88 percent coupon notes due in 2003 traded at 77
cents on the dollar to yield 27 percent , down from a bid of 82
cents this morning , traders said . the debt , which was trading near
100 last month , was bid at 77 cents yesterday . enron shares , down
75 percent in the last month , fell 64 cents to $ 8 . 41 today .
dynegy said today it ' s in talks to acquire enron in what
people familiar with the situation said would likely be a stock
transaction worth $ 8 billion . an acquisition would bolster enron ' s
credit rating , which was recently lowered , traders said .
` ` enron bonds justifiably rallied on the good news of dynegy .
they naturally settled back down as the market assesses the
significance of the restatement , ' ' said glenn reynolds , an analyst
at creditsights inc . ` ` the whole problem goes away and sighs of
relief all around if they come to terms with dynegy . ' '
enron ' s 6 . 4 percent notes due in 2006 were bid at around 70
cents , down from this morning when the debt traded at 84 cents .
yesterday , the notes were priced between 72 cents and 74 cents .
the difference between bid and ask prices for enron debt
widened to about 4 cents to 5 cents - - ` ` monster ' ' spreads ,
reynolds said - - from 2 cents this morning , indicating few
investors are willing to buy or sell the bonds without more news .
while moody ' s investors service rates enron ' s credit as
` ` baa 2 ' ' , one rung higher than its ` ` baa 3 ' ' grade for dynegy ,
other ratings companies including standard & poor ' s and fitch inc .
have assigned dynegy a higher rating . also , enron ' s ratings have
been cut in recent weeks and face further reduction , while
dynegy ' s credit outlook is stable .
enron bonds and shares have tumbled in recent weeks on
concern about partnerships run by the company ' s former chief
financial officer and concerns the company ' s trading business will
be hurt by the credit downgrades . enron and dynegy are both based
in houston .
enron has $ 15 . 8 billion of bonds outstanding , more than
double the $ 6 . 8 billion market value of its stock , according to
bloomberg data .
apache to cut 2002 drilling budget 70 % on gas prices ( updatel )
2001 - 11 - 08 16 : 34 ( new york )
apache to cut 2002 drilling budget 70 % on gas prices ( updatel )
( updates with closing share price in fifth paragraph and
closing nymex gas price in last paragraph . )
houston , nov . 8 ( bloomberg ) - - apache corp . , an oil and
natural - gas producer , plans to cut spending on drilling next year
by 70 percent , blaming wide swings in gas prices caused by traders
such as enron corp . and dynegy inc .
the company will trim spending to $ 300 million from $ 1
billion this year , chief executive officer raymond plank said in
an interview . gas on the new york mercantile exchange reached
$ 10 . 10 per million british thermal units in late december and
touched $ 1 . 76 per million british thermal units in september .
the market for gas derivatives is 15 times the cash market
for delivery to customers , and broad price changes make it
difficult for oil and gas companies to set budgets , plank said .
` ` you ' ve got a 150 - pound tail wagging a 10 - pound dog , ' ' plank
said . ` ` you can ' t predict what your cash flow may be . therefore ,
your budgeting is difficult . ' '
shares of apache were unchanged at $ 50 . 73 . they have fallen
28 percent this year . apache , dynegy and enron , the biggest energy
trader , are based in houston .
` ` we can always go back and take another look at ( spending )
later , ' ' apache spokesman tony lentini said . ` ` we look at our
( budget ) regularly , and we ' re known for moving pretty quickly . ' '
enron , whose plunging stock price forced it to begin merger
talks with rival dynegy , today restated earnings for more than
four years because of losses from partnerships under investigation
by the securities and exchange commission .
fearing an enron collapse might cripple the gas - derivatives
market , apache said yesterday it traded out of most of its gas
hedges , making $ 70 million so far .
` ` apache is trying to conserve cash and retain the maximum
amount of flexibility , ' ' said irene haas , an analyst at sanders
morris harris inc . ` ` apache has been traditionally very nimble in
responding to these cycles . there ' s something to be said for being
cautious and conservative when the visibility is bad . ' '
haas rates apache ` ` accumulate ' ' and doesn ' t own its shares .
nymex gas has averaged $ 2 . 7 per million british thermal units
so far this quarter , down almost half from the same time a year
earlier . it rose 9 cents to $ 2 . 96 per million british thermal
units today .
enron fires treasurer , alleges improper investment ( update 2 )
2001 - 11 - 08 16 : 31 ( new york )
enron fires treasurer , alleges improper investment ( update 2 )
( updates with closing share prices in ninth paragraph and
information on board approval starting in 17 th paragraph . )
houston , nov . 8 ( bloomberg ) - - enron corp . , which today
reduced its earnings for the last four years by $ 552 million
because of accounting errors involving affiliates , also said it
fired its treasurer and a corporate attorney for making improper
investments in one of the affiliates .
enron fired treasurer ben glisan and kristina mordaunt , the
general counsel of an unspecified enron division . the two invested
in an affiliate created by enron to buy and sell the company ' s
assets , the houston - based company said in filings with the
securities and exchange commission .
the transactions also involved two former enron employees and
former enron chief financial officer andrew fastow , who was
replaced two weeks ago , the filing said . the former employees were
kathy lynn , vice president of an unnamed enron division , and anne
yaeger , identified by enron as a non - officer employee .
lea fastow , andrew fastow ' s wife , referred all questions to
her husband ' s attorney , who couldn ' t immediately be reached for
comment . glisan wouldn ' t comment . attempts to reach mordaunt
weren ' t successful .
$ 30 million profit
fastow made more than $ 30 million by managing and investing
in two private limited partnerships called ljm cayman lp , known as
ljml , and ljm 2 co - investment lp . enron said on oct . 24 that fastow
had been replaced as cfo and put on leave . the filing said he is
no longer with the company .
enron said it believes lynn and yaeger remain associated with
ljm 2 .
the sec began a formal investigation into some of enron ' s
partnerships last month , causing the stock price to plummet from
already low levels . shares of enron had fallen 89 percent this
year , as of the close of trading yesterday .
enron , short on cash , began merger talks with dynegy inc .
yesterday , it failed to reach an agreement with dynegy to sell
itself for about $ 8 billion in stock . chevrontexaco corp . , which
owns 27 percent of dynegy , is also involved in the talks . dynegy
is concerned credit rating companies may downgrade enron ' s debt ,
people familiar with the situation said .
enron shares fell 64 cents , or 7 . 1 percent , $ 8 . 41 . shares of
dynegy , which is also based in houston , rose $ 3 . 50 , or 11 percent ,
to $ 36 . 50 . chevrontexaco rose 31 cents to $ 87 . 59 .
restatement
enron restated its earnings for the past four years and the
first three quarters of 2001 to incorporate the first ljm
partnership , as well as chewco investments lp and joint energy
development investments lp , known as jedi .
enron calls them special purpose entities , or spes . they are
vehicles for getting access to capital or hedging risk that can be
moved off the books under some circumstances . enron established
more than 30 spes .
the company reported that enron and ` ` enron - related
entities ' ' participated in 24 ` ` business relationships ' ' in which
ljml or ljm 2 participated . they included the sale of asset such as
unused fiber optic cable , the purchase of debt or equity interests
in enron affiliates , and the sale by ljm 2 of a call and a put
option on some assets .
in addition to chewco and jedi , a wholly owned subsidiary of
lmjl that ` ` engaged in derivative transactions with enron to
permit enron to hedge market risks of an equity investment in
rhythms netconnections , inc . , ' ' which provides high - speed
networking to businesses .
enron said in the sec filing that those hedging transactions
should have been consolidated into its 1999 and 2000 results
because the ljml subsidiary was inadequately capitalized . enron
did not specify why transactions by chewco and jedi should have
been included on its balance sheet .
enron said it believes that michael j . kopper , a former
company employee , managed a chewco general partner and invested in
it . the company said it also believes that kopper was the
controlling partner of a limited partnership that ( through another
limited partnership ) in march 2000 purchased interests in
affiliated subsidiaries of ljml . ' '
the company said that it believes the limited partners in
that deal also included glisan , mordaunt , lynn and yaeger . an
` ` entity associated with ' ' fastow was also a limited partner ,
enron said .
enron said that its board approved fastow ' s initial
transaction with ljml and put controls in place that required the
review and approval of each transaction by the office of the
chairman , the chief accounting officer and the chief risk officer .
lay and skilling were for many years the only members of the
office of the chairman . after skilling ' s resignation in august ,
enron promoted greg whalley to president and chief operating
officer and mark frevert to vice chairman . both became members of
the office of the chairman .
lay , as chairman , also had the authority to require fastow to
resign from the partnerships at any time . the board also directed
that its audit and compliance committee conduct annual reviews of
transactions between enron and ljml and ljm 2 completed during the
previous year , the filing said .
dynegy rises on optimism it may get enron for bargain ( update 2 )
2001 - 11 - 08 16 : 28 ( new york )
dynegy rises on optimism it may get enron for bargain ( update 2 )
( updates with closing share prices . )
houston , nov . 8 ( bloomberg ) - - dynegy inc . shares rose
11 percent on speculation that the company may be able to buy
enron corp . , the biggest energy trader , at a bargain price .
dynegy said today it ' s in talks to buy enron . dynegy , a rival
houston - based energy trader , is considering an acquisition of
enron for stock valued at almost $ 8 billion , people familiar with
the situation said . with 850 million shares outstanding , enron has
a market value of about $ 7 . 7 billion .
enron was forced to consider a sale after its stock plunged
this year and its credit ratings were cut amid a securities and
exchange commission investigation into partnerships run by a
former executive . enron shares yesterday touched $ 7 a share , their
lowest level in more than a decade . a year ago , the stock traded
at more than $ 80 a share .
` ` if dynegy can get enron for $ 10 or $ 11 a share , it ' s a heck
of a good deal , ' ' said sanders morris harris analyst john olson ,
who owns enron shares . ` ` that ' s why the shares are up . ' '
dynegy rose $ 3 . 50 a share to $ 36 . 50 . enron fell 64 cents , or
7 . 1 percent , to $ 8 . 41 .
enron failed yesterday to reach an agreement with dynegy ,
which is concerned that credit - rating agencies may reduce enron ' s
debt to junk status , people familiar with the situation said .
enron today restated earnings for more than four years to include
losses from investment partnerships .
` ` the lack of ( enron ) investor confidence at this point makes
it likely that dynegy could buy enron and pay little or no
premium , ' ' said commerzbank securities analyst andre meade . dynegy
` ` is unlikely to pay significantly more than enron ' s current share
price if it does make a bid , ' ' he said .
an acquisition of enron would make dynegy the biggest energy
trader , eliminating its largest rival , analysts said . dynegy also
would get the leading energy manager for commercial and small -
industrial customers , and an internet energy - trading operation
many times larger than its own , analysts said .
` ` people are betting for or against a deal with enron , ' ' said
meade , who rates enron shares ` ` accumulate ' ' and doesn ' t own them .
newpower 3 rd - qtr loss narrows after adding customers ( update 4 )
2001 - 11 - 08 16 : 08 ( new york )
newpower 3 rd - qtr loss narrows after adding customers ( update 4 )
( updates with closing share price in sixth paragraph . updates
enron ' s share decline in fifth paragraph . )
purchase , new york , nov . 8 ( bloomberg ) - - newpower holdings
inc . , a venture formed by enron corp . to compete with traditional
gas and electric utilities , said its third - quarter loss narrowed
after cutting costs and adding customers .
the loss was $ 67 . 1 million , or $ 1 . 15 a share , compared with a
loss of $ 69 . 9 million , or $ 2 . 96 , a year earlier . revenue tripled
to $ 54 . 7 million from $ 18 . 2 million , the company said . newpower
was forecast to have a loss of $ 1 . 16 a share , the average estimate
of three analysts polled by thomson financial / first call .
newpower added 80 , 000 customers in the third quarter and
expects to have 840 , 000 to 860 , 000 customers by the end of the
year . the company , based in purchase , new york , reduced sales ,
general and administrative costs by 41 percent , primarily by
cutting systems - development and professional expenses .
the company is eliminating 40 jobs , or 22 percent of its
workforce , to cut costs , chief financial officer william jacobs
said on a conference call . newpower expects costs of $ 16 million
in the fourth quarter for severance and to end a business alliance
with aol time warner inc . , spokeswoman gael doar said .
enron , the largest energy trader , owns about 44 percent of
newpower . houston - based enron , whose shares have fallen 75 percent
since oct . 16 amid concern over affiliated partnerships run by its
former chief financial officer , said it had $ 544 million in losses
on investments including newpower in the third quarter .
shares of newpower rose 42 cents to $ 1 . 23 . the company first
sold shares to the public in october 2000 for $ 21 a share . the
offering increased the number of shares outstanding to about
58 million from 23 million .
fourth quarter
excluding costs for severance and to end the aol agreement ,
newpower expects a fourth - quarter loss of $ 41 million to
$ 46 million , or 65 cents to 73 cents a share , and a full - year loss
of $ 210 million to $ 215 million , or $ 3 . 55 to $ 3 . 63 .
the company was expected to lose 74 cents in the fourth
quarter , according to first call ' s average of three analysts '
estimates . the full - year ' s loss was expected to be $ 3 . 71 , the
average of four analysts ' estimates .
in 2002 , newpower expects to have a loss of $ 100 million to
$ 125 million , or $ 1 . 59 to $ 1 . 99 a share . the average estimate of
four analysts polled by first call was $ 2 . 26 .
newpower expects to be profitable in 2003 with 1 . 5 million
customers . the company is focusing more on small businesses . it
now has 25 , 000 small - business customers and expects to have more
than 35 , 000 by the end of the year .
international business machines corp . owns 1 . 5 million shares
of newpower , less than 5 percent of the company .
enron restates years of profits , in talks with dynegy ( update 4 )
2001 - 11 - 08 15 : 41 ( new york )
enron restates years of profits , in talks with dynegy ( update 4 )
( adds dynegy share price in sixth paragraph . )
houston , nov . 8 ( bloomberg ) - - enron corp . , which began
merger talks with dynegy inc . after its stock plunged , restated
earnings for more than four years to include losses from
investment partnerships arranged by senior executives .
the largest energy trader failed yesterday to reach an
agreement with dynegy to sell itself for about $ 8 billion in
stock . dynegy is concerned credit rating companies may downgrade
enron ' s debt , people familiar with the situation said . a reduction
to junk status would precipitate a cash crisis by requiring enron
to repay early $ 3 . 3 billion of bonds .
` ` restating earnings for the past five years is suggestive of
fraud , which in itself is justification for a downgrade , ' ' said
donald coxe , who manages 78 , 000 enron shares as part of the harris
insight equity fund . ` ` i ' d be surprised if they ' re not
downgraded . ' '
the decision by chairman and chief executive officer kenneth
lay to reduce earnings by $ 586 million since 1997 is part of
enron ' s efforts to regain confidence among investors stung by the
89 percent plunge in the stock this year and a securities and
exchange commission investigation into how the company accounted
for partnerships it sponsored .
enron fired treasurer ben glisan and kristina mourdant , a
lawyer for an enron division . the company ` ` now believes ' ' glisan ,
mourdant and two other employees no longer working for enron
bought interests in subsidiaries of a partnership run by former
chief financial officer andrew fastow .
dynegy ' s shares rose as much as 14 percent on speculation
that it may decide not to buy cash - strapped enron , or , if it did ,
wouldn ' t pay much of a premium .
` ` people are betting for or against a deal with enron , ' ' said
andre meade , an analyst with commerzbank ag who rates enron
` ` accumulate . ' ' dynegy ` ` is unlikely to pay significantly more
than enron ' s current share price if it does make a bid , ' ' he said .
shares decline
enron shares declined 40 cents to $ 8 . 65 after the company
determined it violated generally accepted accounting rules when it
failed to consolidate results for three so - called special purpose
entities , vehicles for getting access to capital or hedging risk
that can be moved off the books under some circumstances .
enron ousted fastow last month after revealing an accounting
error for transactions with a group of the partnerships resulted
in a $ 1 . 2 billion reduction in shareholder equity in the third
quarter . arthur andersen llp was enron ' s independent auditor .
the company today reduced 1997 net income by $ 96 million ,
1998 earnings by $ 113 million , 1999 results by $ 250 million , and
2000 earnings by $ 132 million . in 2001 , the changes resulted in an
increase to net income of $ 17 million in the first quarter and $ 5
million in the second quarter , and a reduction of $ 17 million for
the third quarter .
enron bonds pared gains after the earnings were restated , as
the threat of a credit downgrade dimmed a rally sparked by the
dynegy talks . enron ' s debt doubled in the past four years to $ 13
billion at the end of the third quarter . both standard & poor ' s
and moody ' s investors service are considering lowering their
ratings , which are two levels above junk .
` ` enron is running out of time and that ' s what ' s pushing them
to the bargaining table , ' ' said zach wagner , an analyst with
edward jones joint energy development investments , known as
jedi ; and a wholly owned subsidiary of ljml that ` ` engaged in
derivative transactions with enron to permit enron to hedge market
risks of an equity investment in rhythms netconnections inc . , ' '
which provides high - speed networking to businesses .
some companies that trade natural gas , electricity and other
commodities with enron may pull back if enron ' s finances
deteriorate to the point that it loses its investment - grade credit
rating , investors say .
atlanta - based mirant corp . , a top u . s . energy trader , has
moved most of its trades away from enron to other exchanges , such
as intercontinenal exchange , a venture it formed in march 2000
with other partners including bp plc and goldman , sachs & co . ,
mirant spokesman james peters said . ` ` we are still trading with
them , but on a very limited basis , ' ' said peters .
` ` dynegy has to act fast , ' ' said roger hamilton , a money
manager with john hancock advisers inc . , which sold its enron
shares in recent weeks . ` ` if enron can ' t get financing and its
bonds go to junk , they lose counterparties and their marvelous
business vanishes . ' '
dynegy would gain a wholesale energy business , the leading
energy manager for commercial and small - industrial customers , and
an internet energy trading operation many times larger than its
own , said ubs warburg llc analyst james yanello .
` ` if history is any guide , dynegy is stingy when it comes to
acquisitions , so i don ' t expect them to do anything stupid ' ' such
as overpaying for enron , said yanello . ` ` a deal could provide
dynegy with tremendous opportunity . ' ' he rates dynegy ` ` strong
buy ' ' and doesn ' t own shares of either company .
chevrontexaco corp . , which owns about 27 percent of dynegy ,
is considering adding $ 1 . 5 billion to the transaction to help
enron . it would provide another $ 1 billion when the purchase is
closed , the new york times and wall street journal reported .
breakup fee
the companies agreed on a breakup fee providing dynegy with
about $ 400 million if enron accepts a higher offer , people
familiar with the talks said .
dynegy ' s shares rose as much as $ 4 . 30 , or 13 percent , to
$ 37 . 30 . the stock had dropped $ 3 yesterday when news of the enron
talks was first reported .
dynegy spokesman steve stengel , enron spokesman mark palmer
and chevrontexaco spokesman fred gorell declined to comment .
enron plans to meet with j . p . morgan chase financial results to be restated
cbsmarketwatch . com
lisa sanders
new york ( cbs . mw ) - - enron ' s troubles deepened thursday as the energy merchant confirmed it ' s in merger talks with dynegy and announced , in a securities and exchange commission filing , that it fired two officers and is restating financial results for four years and two quarters .
both dynegy and enron confirmed thursday that they ' re in negotiations following a published report that an $ 8 billion deal was close to being finalized .
the new york times reported that dynegy ' s board approved a stock offer worth $ 10 a share for enron .
while confirming the talks , the companies released no further details . dynegy had no additional comment . an enron spokeswoman stonewalled reporters thursday by saying the company was requiring all questions to be submitted in writing . enron did not respond to the questions .
shares of enron ( ene ) initially rallied but closed at $ 8 . 41 , down 64 cents , or 7 . 1 percent , while dynegy ( dyn ) tacked on $ 3 . 50 to close at $ 36 . 50 .
chevrontexaco ( cvx ) , which owns 27 percent of dynegy , will contribute $ 2 . 5 billion to the deal , the times reported . chevrontexaco , which added 31 cents to close at $ 87 . 59 , declined to comment .
also thursday , enron in an sec filing said it has fired its treasurer , ben glisan , and the general counsel of an enron division , kristina mordaunt . earlier in the month , enron fired chief financial officer andy fastow for his role in limited partnerships that are now under investigation by the sec . enron restated its financial results for the years 1997 through 2000 and the first two quarters of 2001 . enron has lost most of its market value over the past month after the sec launched a probe of some transactions by company executives .
enron would bring huge debt
a merger of dynegy and enron would require the smaller company to take on the $ 12 . 8 billion in debt that ' s now on enron ' s books . the acquisition would likely lead to the sale of additional enron assets to pay down the debts , the times reported .
boards of both companies were meeting in houston on wednesday night , according to the paper .
" if you look at the balance sheets of dynegy and enron , ( a merger ) would be a tough deal , " jeff dietert of simmons & co . he noted that dynegy ( dyn ) has $ 3 billion worth of debt and a market capitalization of $ 11 . 7 billion .
" enron ' s debt load is likely to be too significant for dynegy to step up and swallow , " dietert said . for dynegy to make the deal , it would have to issue equity , he added .
it would make more sense for dynegy to consider buying some enron assets , dietert said . that would also help enron clean up its balance sheet .
chris ellinghaus of williams capital group said that chevrontexaco ' s involvement would make a dynegy - enron combination more realistic .
" we would view this transaction favorably assuming dynegy intends to dispose of enron ' s myriad of non - core businesses , " ellinghaus said . dynegy and enron together would dwarf other natural gas and power marketers in the u . s .
ellinghaus said the possibility that dynegy would buy enron is " staggering . "
" however , the failure of enron to procure an outside equity infusion has apparently severely limited enron ' s options , " he said . " we do not believe the potential demise of enron invalidates the merchant energy model or suggest deeper problems within the wholesale energy markets . "
gregory phelps , vice president and portfolio manager of john hancock ' s patriot group of closed - end income funds , said enron , even in its current state , retains some intrinsic value .
" enron still has an incredible number of contractual trading arrangements out there that can ' t be allowed to crumble and fall , " he added . " i think that a firm like dynegy with a firm like chevrontexaco as partner adds the credibility that enron needs . "
dynegy gets to buy " assets on the cheap " that it can tie into its own growth - oriented operations , he said .
phelps has never owned enron stock in his funds because he says it ' s too volatile and the company makes it too hard to understand how it generates revenue .
bush ties
enron ' s chairman and ceo kenneth lay stepped back into the ceo spot following the abrupt departure of jeffrey k . skilling , who left after just six months on the job for " personal reasons . " skilling was called to testify in washington , d . c . , this week , though the sec would not confirm whether it was before their agency .
in a conference call with investors wednesday , el paso energy chairman and chief executive william wise said his company would consider buying some of enron ' s assets , though he declined to specify which ones .
" we are an asset - oriented company , and we would look at their assets , " wise said . " rather than list any of them for you , you can make your own judgments . "
wednesday , a . g . edwards cut its rating on enron to " sell " from " hold , " saying the only reason to own the stock now would be to bet that some company would bid for enron or a large part of its wholesale trading operations .
azurix divestiture
also thursday , azurix corp . , an affiliate of enron , said it sold its azurix north america and azurix industrial to american water works for $ 141 . 5 million in cash and the assumption of $ 6 . 1 million of debt .
azurix is a water and wastewater company . in the third quarter , enron took a $ 1 billion charge , which included $ 287 million for asset impairments at azurix .
lisa sanders is a dallas - based reporter for cbs . marketwatch . com .