enron mentions s on watch neg
pr newswire , 11 / 07 / 01
dj cnbc ' s faber report : enron / dynegy deal talk
dow jones , 11 / 07 / 01
enron in talks with dynegy that may include merger , cnbc says
bloomberg , 11 / 07 / 01
wsj : dynegy in talks to put about $ 2 b into enron now
dow jones news service , 11 / 07 / 01
enron shares fall on concern about finding investors ( update 2 )
bloomberg , 11 / 07 / 01
enron credit - linked note ratings reduced 6 days late ( update 2 )
bloomberg , 11 / 07 / 01
former sec chairman levitt ( transcript of interview )
bloomberg , 11 / 07 / 01
usa : u . s . ferc watching enron ' s impact on energy markets .
reuters english news service , 11 / 07 / 01
apache unwinds most gas hedges ; cites enron uncertainty
dow jones news service , 11 / 07 / 01
usa : enron shares fall below $ 8 - set new nine - year low .
reuters english news service , 11 / 07 / 01
enron ' s stock drops 25 percent
associated press newswires , 11 / 07 / 01
rabin & peckel llp commences class action against enron corporation and certain of its officers and directors , alleging violations of federal securities laws
business wire , 11 / 07 / 01
enron ' s power company in india calls off singapore meeting after indian lenders file lawsuit
associated press newswires , 11 / 07 / 01
usa : el paso says it does not expect enron bankruptcy .
reuters english news service , 11 / 07 / 01
energy traders are icing out enron
shares trade at 9 - year lows for 2 nd straight day
cbs . marketwatch . com , 11 / 07 / 01
legal group plans suit to void california power contracts
bloomberg , 11 / 07 / 01
s on watch neg
11 / 07 / 2001
pr newswire
( copyright ( c ) 2001 , pr newswire )
new york , nov . 7 / prnewswire / - - standard & poor ' s today lowered its ratings on enron credit linked notes trusts ' credit linked notes and placed them on creditwatch with negative implications ( see list ) .
the lowered ratings reflect the nov . 1 , 2001 rating action taken on enron corp . , which was based on standard & poor ' s belief that enron ' 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 . the creditwatch placements recognize the uncertainties that surround the company and its credit quality in the short run due to the possibility of further unanticipated developments in the capital markets .
these synthetic issues utilize a credit default swap that references enron ' s senior unsecured debt and therefore the rating on the credit - linked notes will reflect the current senior unsecured rating of enron . outstanding ratings lowered and placed on creditwatch negative
enron credit linked notes trust
us $ 500 million credit linked notes
rating
to from
notes bbb / watch neg bbb +
enron credit linked notes trust ii
us $ 500 million credit linked notes
rating
to from
notes bbb / watch neg bbb +
enron euro credit linked notes trust
eur 200 million credit linked notes
rating
to from
notes bbb / watch neg bbb +
enron sterling credit linked notes trust
gbpl 25 million credit linked notes
rating
to from
notes bbb / watch neg bbb +
/ contact : mary ryan , new york , + 1 - 212 - 438 - 2090 , or frank j . trick , new york , + 1 - 212 - 438 - 1108 , both for standard & poor ' s / 11 : 47 est
copyright ? 2000 dow jones & company , inc . all rights reserved .
dj cnbc ' s faber report : enron / dynegy deal talk
2001 - 11 - 07 14 : 56 ( new york )
the following is a transcript of a report aired wednesday by cnbc reporter
david faber :
enron is in discussions with dynegy about a range of options that include a
merger of the two companies .
while such an outcome is only one of a number of options being discussed ,
sources close to the talks tell me such an outcome is being considered .
enron is trying to raise equity capital and restore confidence amid the
complete collapse of its stock price .
today , the houston - based energy trading concern ' s shares have fallen another
25 % , while its bonds , perhaps a better barometer of the market ' s concerns about
credit quality , have shed roughly ten points .
enron will not comment . but sources close to the situation tell me the
company continues to speak with a handful of private equity firms about an
investment . those talks are still in the early stages .
talks with dynegy , a cross - town rival of enron ' s that also markets and trades
energy , have progressed at a faster pace .
dynegy is unlike enron in that it owns more hard assets , many of which came
along with the acquisition of illnova , completed in 2000 .
while many potential acquirers have shied away from enron due to continued
concern about unknown liabilities the company may have , dynegy is very familiar
with its energy trading business .
dynegy is the number two player in the u . s . energy trading market and would
clearly become the dominant player were it to merge with or acquire enron . a
dynegy spokesman declined comment .
while dynegy has off - balance sheet financings that are similar to enron ' s ,
those financings are not guaranteed by the parent .
it is such guarantees that have concerned enron investors along with a series
of questionable investments .
given the massive decline in enron ' s stock price , dynegy now has a market
value that is twice that of enron .
that decline in enron ' s stock price would make any equity infusion heavily
dilutive , if private equity firms were to choose to invest in enron they would
likely do so in the form of a security that converted to equity and paid a
dividend .
still , because enron now has a market value of only $ 5 . 3 billion , the roughly
$ 2 billion it may want represents an enormous percentage of its overall equity
value .
hence , discussion with dynegy may have taken on the form of a merger , rather
than a strategic investment .
enron in talks with dynegy that may include merger , cnbc says
2001 - 11 - 07 13 : 39 ( new york )
houston , nov . 7 ( bloomberg ) - - enron corp . is talking with
rival energy company dynegy inc . about a number of options ,
including merger , to help it raise equity capital and restore
confidence , financial news network cnbc reported .
spokesmen for dynegy and enron declined to comment .
wsj : dynegy in talks to put about $ 2 b into enron now
by robin sidel
11 / 07 / 2001
dow jones news service
( copyright ( c ) 2001 , dow jones the wall street journal ; 212 - 274 - 7991
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron shares fall on concern about finding investors ( update 2 )
2001 - 11 - 07 14 : 06 ( new york )
enron shares fall on concern about finding investors ( update 2 )
( adds cnbc report on talks with dynegy in fifth paragraph . )
houston , nov . 7 ( bloomberg ) - - enron corp . ' s shares fell as
much as 28 percent , to their lowest level in more than a decade ,
amid reports that the no . 1 energy trader is struggling to find
investors to help it out of a cash crunch .
shares of enron fell $ 1 . 17 , or 12 percent , to $ 8 . 50 in
midafternoon trading . the shares dropped to $ 7 earlier . at
yesterday ' s close , they had fallen 88 percent this year .
enron will have a hard time raising a large amount of cash in
a short time , said sean egan , managing director of egan - jones
rating co .
` ` it takes time to sell assets , and many shrewd investors
like goldman sachs might find it more profitable to just pluck off
key employees rather than invest in enron , ' ' egan said .
the shares pared some of today ' s losses after cnbc reported
that enron is talking with rival dynegy inc . about options ,
including a merger . both companies are based in houston .
` ` we don ' t comment on market rumors , ' ' dynegy spokesman steve
stengel said .
` ` enron does not comment on speculation on mergers and
acquisitions , ' ' enron spokesman mark palmer said .
berkshire hathaway inc . chairman warren buffett decided
against investing in enron because he wasn ' t willing to sign a
confidentiality agreement that would keep him from trading enron ' s
debt , the new york times reported today , citing an unidentified
person close to the talks .
other companies approached by enron , including clayton
dubilier & rice , the blackstone group and kohlberg kravis roberts
& co . have also shown little interest , the newspaper said .
the u . s . securities and exchange commission is investigating
enron partnerships run by the company ' s former chief financial
officer . the entities bought and sold enron shares and assets ,
with trades costing enron $ 35 million and $ 1 . 2 billion in lost
shareholder equity . enron ousted cfo andrew fastow last month .
rating downgraded
standard & poor ' s today reduced its rating on enron ' s credit -
linked notes , just six days after the ratings company downgraded
enron ' s senior unsecured bonds . s & p cut four enron credit - linked
issues valued at about $ 1 . 36 billion combined to ` ` bbb ' ' from
` ` bbb + ' ' and indicated it may lower the grades again .
fearing that an enron collapse might cripple the natural gas -
derivatives market , oil and gas producer apache corp . said it
backed out of most of its gas hedges , realizing a $ 70 million gain
so far .
` ` we have been unwinding our hedge positions because of
uncertainty created by enron ' s credit problems , ' ' apache spokesman
bill mintz said . the company now has only one position with enron
that it ' s trying to unwind .
the apache news was reported earlier by the times .
` fragile business '
` ` their trading business is a very fragile business , ' ' egan
said . ` ` if partners on either side get concerned , trading volumes
decline , which is what is happening now . ' '
other companies mentioned in reports as possible buyers of
all or part of enron have denied an interest in the idea . general
electric co . chief executive officer jeffrey immelt told cnn today
that ` ` enron ' s really not on our list right now . ' ' bp plc chief
executive john browne said ` ` no ' ' at a press conference in london
yesterday when asked whether the london - based company would be
interested in buying enron or a stake in the company .
among shares of other energy traders , dynegy fell $ 1 . 70 to
$ 34 . 30 . mirant corp . fell 15 cents to $ 25 . 40 . williams cos . fell 4
cents to $ 28 . 97 .
- - margot habiby in houston , ( 713 ) 353 - 4872
enron credit - linked note ratings reduced 6 days late ( update 2 )
2001 - 11 - 07 14 : 46 ( new york )
enron credit - linked note ratings reduced 6 days late ( update 2 )
( adds background and stock price in fourth through sixth
paragraphs . )
new york , nov . 7 ( bloomberg ) - - standard & poor ' s corp .
downgraded notes linked to enron corp . ' s credit quality to match
the no . 1 energy trader ' s credit rating six days after the ratings
company reduced its corporate debt ratings .
s & p said it cut four enron credit - linked notes , valued at
$ 1 . 36 billion , to ` ` bbb ' ' from ` ` bbb + ' ' , and indicated it may
lower the grades again .
` ` this isn ' t an additional downgrade and should have happened
last week , ' ' said todd shipman , a director at the ratings company
that follows the company . last week shipman downgraded enron ' s
long - term ratings to ` ` bbb ' ' from ` ` bbb + , ' ' and left them on watch
for a further downgrade .
enron shares today fell as much as 28 percent , to their
lowest level in more than a decade , amid reports that the no . 1
energy trader is struggling to find investors to help it out of a
cash crunch .
shares of enron fell $ 1 . 17 , or 12 percent , to $ 8 . 50 in mid -
afternoon trading . the shares dropped to $ 7 earlier . at
yesterday ' s close , they had fallen 88 percent this year .
the federal securities and exchange commission is
investigating enron partnerships run by the company ' s former chief
financial officer , andrew fastow , who was ousted last month . the
entities bought and sold enron shares and assets ,
with trades costing enron $ 35 million and $ 1 . 2 billion in lost
shareholder equity .
notes
holders of the credit - linked notes , sold by enron euro cln
trust , enron sterling cln trust , and enron cln trust and trust ii ,
may have received a higher coupon than an enron corporate
obligation offers . the notes , which are obligations of the special
purpose entities , are tied to specific credit events , such as a
bankruptcy or enron ' s failure to pay on obligations .
proceeds from the notes were to be used to acquire the
trusts ' initial investments , and buyers are to be paid interest
from the proceeds of those certain assets , according to an
offering memorandum . the trusts can invest in securities with
short - term ratings of at least ` ` al ' ' from s & p and ` ` pl ' ' from
moody ' s investors service , as long as they mature before the
maturity dates of the notes .
there are four notes , each divided into two offerings , some
offered publicly and some privately sold . all the notes are
scheduled to mature in august 2005 or may 2006 and were sold by a
group of banks led by salomon smith barney , a unit of citigroup .
in the event of an enron credit event , citibank , which acted
as a swap counter - party to the trusts , can take the trusts '
investments in return for enron debt obligations . the enron debt
is then liquidated by the trust , with the proceeds paid to the
investors .
neither enron nor citibank have direct obligations to the
holders of the notes , according to an offering memorandum .
enron ' s credit - linked notes utilize a credit - default swap
that the trusts have with citibank that references enron ' s senior
unsecured debt , so the rating on the credit - linked notes will
reflect the senior unsecured rating , s $ 52
million dollars went to the accountants . the problem here
is an audit committee was not doing its work . if you look
at enron ' s statements - and how many times have we heard
they were confusing ? it ' s the job of the auditing firm to
see to it that it is not confusing . that ' s the real
problem . now , what can you do about it ?
ratigan : tell me .
levitt : i think , actually , the fasb , the independent
standards setter , could put through a rule , which says .
ratigan : and fasb is the federal accounting standards
board . they set the rules .
levitt : yes . located in norwalk , connecticut . they
could say , if a company sets up another legal entity , and
the company retains all the risks and rewards of that
entity , then the public company , that public company that
set up these entities , must consolidate in the p & l , in the
balance sheet , all of these transactions .
now , how does that come about ? i think the sec could
urge the fasb to do this . in 1990 , the present chief
accountant of the sec called for that action to be taken
place , but at that point , the then - chief accountant didn ' t
support the move .
ratigan : and this creates , in your mind , a rallying
call to reiterate that request with more venom and more
passion than before ?
levitt : i don ' t know about venom , but i .
ratigan : but with passion .
levitt : i certainly think that passion - i think this
is clearly a call for better disclosure .
ratigan : fair enough . i will see you next week , ok ?
levitt : good . nice to see you .
ratigan : you , too .
* * * end of transcript * * *
usa : u . s . ferc watching enron ' s impact on energy markets .
11 / 07 / 2001
reuters english news service
( c ) reuters limited 2001 .
washington , nov 7 ( reuters ) - the federal energy regulatory commission is watching what effect enron corp . ' s financial problems may have on interstate electricity and natural gas markets , ferc chairman pat wood said on wednesday .
however , wood said ferc does not have a direct role in the ongoing federal investigation of the company .
" we ' re watching the impact that enron or any other firm would have on the overall workings of the market , but we ' re not intervening where other agencies have jurisdiction , " wood told reporters during a briefing after the agency ' s regular meeting .
enron , the nation ' s largest trader of natural gas and electricity , is under attack for failing to explain off - balance sheet transactions that led to a $ 1 . 2 billion write - down of shareholder equity .
the deals , conducted with partnerships run by ousted chief financial officer andrew fastow , are under investigation by the u . s . securities and exchange commission .
copyright ? 2000 dow jones cites enron uncertainty
by christina cheddar
of dow jones newswires
11 / 07 / 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 : enron shares fall below $ 8 - set new nine - year low .
11 / 07 / 2001
reuters english news service
( c ) reuters limited 2001 .
new york , nov 7 ( reuters ) - shares of enron corp . fell in a new round of selling on wednesday that set new nine - year lows , amid concerns about the energy trading giant ' s ability to raise cash .
the company ' s stock slid $ 1 . 77 , or 18 . 3 percent , to $ 7 . 90 in late morning trading on the new york stock exchange , diving below $ 8 for the first time since february 1992 . the shares are down almost 77 percent since the company released its earnings results on oct . 16 , which set off the recent tumble .
the issues that have plagued the houston - based company over the past three weeks continue to weigh on it , according to jeff dietert , an analyst at simmons and co .
" it ' s a bit of a vicious cycle , " he said . " the stock price declines , credit concerns go up , counterparties attempt to reduce their exposure and the earnings power of the company deteriorates . "
he added that enron needs to " get all its ducks in a row " so that it can meet with the holders of its stocks and bonds to discuss issues such as the company ' s capitalization and plans for strengthening its balance sheet .
enron , the nation ' s largest trader of natural gas and electricity , is under attack for failing to explain off - balance sheet transactions that led to a $ 1 . 2 billion write - down of shareholder equity .
the deals , conducted with partnerships run by ousted chief financial officer andrew fastow , are under investigation by the u . s . securities and exchange commission .
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron ' s stock drops 25 percent
11 / 07 / 2001
associated press newswires
copyright 2001 . the associated press . all rights reserved .
houston ( ap ) - enron corp . ' s stock price continued its free fall wednesday as shares fell 25 percent to a new 10 - year low amid reports the company was having trouble attracting a large investor to allay worries about its financial health and restore confidence .
shares of the largest u . s . natural gas and power marketer dropped dlrs 2 . 41 to dlrs 7 . 26 in midday trading wednesday on the new york stock exchange .
enron has been rebuffed by more than a dozen buyout firms as well as warren buffett ' s berkshire hathaway , the new york times reported wednesday , citing a person close to the talks .
houston - based enron ' s stock is off more than 79 percent since oct . 16 , when the company said shareholder equity had been reduced by dlrs 1 . 2 billion , in part due to partnerships managed by enron ' s former chief financial officer , andrew fastow .
at the same time , reported a dlrs 618 million third quarter loss last month , dragged down by a one - time charge of dlrs 1 . 01 billion attributed to various losses . fastow was ousted a week later .
the company ' s financial stability was further weakened after the securities and exchange commission began an inquiry , which was upgraded to a formal investigation , of the partnerships and possible conflicts of interest resulting from them .
on tuesday , jeff skilling , enron ' s former chief executive officer , testified before the sec in washington d . c .
enron ' s woes have prompted speculation about a possible takeover of the company . some of the potential buyers that have been mentioned include general electric ' s ge capital unit and royal dutch shell .
ge capital has not ruled out an investment , the times said , citing a source close to the talks .
enron has cashed in about dlrs 3 billion in revolving credit it has with various banks to shore up investor confidence .
last week , enron secured dlrs 1 billion in new financing , using some of its natural gas and pipeline assets as collateral .
enron officials said tuesday seeking additional financing is one of the many options the company is exploring to firm up investor and market confidence .
meanwhile , standard & poor ' s corp . on wednesday lowered its ratings on some of enron ' s credit linked notes and placed them on creditwatch . s - and - p said enron ' s plan to repair its damaged balance sheet through asset sales and other means will be insufficient .
moody ' s investors service and fitch inc . have also downgraded the company ' s credit ratings .
last week , enron announced it created a special committee headed by university of texas law school dean william powers to respond to the sec investigation . powers also was elected to enron ' s board of directors .
copyright ? 2000 dow jones & company , inc . all rights reserved .
rabin ( ii ) that the company ' s operating results were materially overstated as a result of the company failing to timely write - down the value of its investments with certain limited partnerships which were managed by the company ' s chief financial officer ; and ( iii ) that enron was failing to write - down impaired assets on a timely basis in accordance with generally accepted accounting principles ( " gaap " ) . during the class period , enron insiders disposed of over $ 73 million of their personally - held enron common stock to unsuspecting investors .
on october 16 , 2001 , enron surprised the market by announcing that the company was taking non - recurring charges of $ 1 . 01 billion after - tax , or ( $ 1 . 11 ) loss per diluted share , in the third quarter of 2001 , the period ending september 30 , 2001 . subsequently , enron revealed that a material portion of the charge was related to the unwinding of investments with certain limited partnerships which were controlled by enron ' s chief financial officer and that the company would be eliminating more than $ 1 billion in shareholder equity as a result of its unwinding of the investments . when this news hit the market , the price of enron common stock dropped significantly .
plaintiff is represented by the law firm of rabin & peckel llp . rabin & peckel llp and its predecessor firms have devoted its practice to shareholder class actions and complex commercial litigation for more than thirty years and have recovered hundreds of millions of dollars for shareholders in class actions throughout the united states . you can learn more information about rabin & peckel at www . rabinlaw . com .
if you purchased enron common stock during the class period described above , you may , no later than december 21 , 2001 , move the court to serve as lead plaintiff . to serve as lead plaintiff , however , you must meet certain legal requirements . you can join this action as a lead plaintiff online at www . rabinlaw . com . if you wish to discuss this action further or have any questions concerning this announcement , or your rights or interests , please contact plaintiff ' s counsel , maurice pesso and eric belfi , rabin & peckel llp , 275 madison avenue , new york , ny 10016 , by telephone at ( 800 ) 497 - 8076 or ( 212 ) 682 - 1818 , by facsimile at ( 212 ) 682 - 1892 , or by e - mail at email @ rabinlaw . com .
contact : rabin & peckel llp maurice pesso / eric belfi , 800 / 497 - 8076 or 212 / 682 - 1818 fax : 212 / 682 - 1892 email @ rabinlaw . com www . rabinlaw . com
12 : 41 est november 7 , 2001
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron ' s power company in india calls off singapore meeting after indian lenders file lawsuit
by satish nandgaonkar
associated press writer
11 / 07 / 2001
associated press newswires
copyright 2001 . the associated press . all rights reserved .
bombay , india ( ap ) - enron corp . ' s indian power unit canceled a meeting with four indian creditors after they filed a lawsuit against the company and three other parties on wednesday to demand that the energy project resume operations .
the two - day meeting was scheduled to begin in singapore on thursday to discuss bids by two indian companies to acquire a stake in the troubled $ 2 . 9 billion dabhol power co .
the lenders - industrial bank of india , industrial finance corporation of india , state bank of india and icici - approached the bombay court to demand that work on the power project in the western indian state of maharashtra resume to ensure adequate cash flows to the project and help its promoters pay dues to the four financial institutions .
dabhol power co . , the state utility maharashtra state electricity board , the government of india and the maharashtra government were the four parties named in the lawsuit .
indian banks and financial institutions , which have invested more than $ 1 . 3 billion in the project , want dabhol to continue work on the project and the mseb to buy the power produced .
the two - day meeting in singapore was scheduled to discuss the bids made by the two indian companies , tatas and the bombay suburban electricity supply , to acquire a stake in dpc . enron had offered to sell the stake in dpc for $ 850 million , at a 30 percent discount , while tatas wanted a 50 percent discount .
on monday , enron began its pullout from the dabhol power project by issuing a notice that it will sell its stake in the project to its sole customer , the maharashtra state electricity board .
the asset transfer notice issued by the dabhol power project to the mseb comes after a prolonged payment dispute with the electricity board .
the dispute forced the houston - based company to shut down the dabhol plant in may .
fairfield , conn . - based general electric co . and bechtel group inc . of the united states each hold 10 percent stakes each in the company .
enron has moved a london court for international arbitration , but says it would prefer a negotiated settlement with the federal government and the maharashtra state government .
the company still prefers a negotiated purchase of the project by the indian government and indian term lending bodies that have funded the equity of foreign sponsors .
copyright ? 2000 dow jones & company , inc . all rights reserved .
usa : el paso says it does not expect enron bankruptcy .
11 / 07 / 2001
reuters english news service
( c ) reuters limited 2001 .
houston , nov 7 ( reuters ) - energy company el paso corp . said on wednesday it does not expect beleaguered competitor enron corp . to file for bankruptcy .
ralph eads , who heads el paso ' s merchant energy business , which includes electricity and natural gas marketing and trading , told analysts at a meeting in houston that the prospect of an enron bankruptcy was " remote " .
el paso has gained some market share from enron in recent weeks as a result of some companies ' reluctance to do business with enron , eads said , but he added that el paso has not scaled back its own business dealings with enron .
eads said el paso does not expect enron ' s problems to result in a " domino effect " that could lead to reduced liquidity in u . s . electricity and natural gas markets , a scenario that has been troubling some analysts and investors recently .
el paso chief executive bill wise told the meeting , which was broadcast over the internet , that el paso might be interested in acquiring some energy assets from enron but was not interested in acquiring an equity stake in the rival company , which is reported to be seeking an injection of new capital .
copyright ? 2000 dow jones & company , inc . all rights reserved .
energy traders are icing out enron
shares trade at 9 - year lows for 2 nd straight day
by lisa sanders ,
cbs . marketwatch . com
last update : 1 : 47 pm et nov . 7 , 2001
new york ( cbs . mw ) - - amid mounting questions about enron ' s liquidity and creditworthiness , players in the energy - trading business have already begun to limit their exposure to the embattled power merchant .
the revelations came wednesday as enron ' s stock ( ene : news , chart , profile ) plunged 24 percent following news that standard & poor ' s cut its ratings for the company ' s credit - linked notes to two notches above junk status .
" everybody ' s trying to balance out their exposure to enron as best they can , " said an energy trader who spoke on condition of anonymity . " that means not doing business or minimizing their business with enron . "
1 of 4 energy trades
traders ' attempts to isolate the company underscore concerns about the stability of the overall energy - trading market , in which enron is involved in 1 out of every 4 trades .
however , some industry watchers are confident that the energy market can survive if houston - based enron were to disappear .
" even though they quote - unquote make the market , the market exists whether enron is there or not , " said phil flynn , senior markets analyst at alaron . com . " those that think this is the end of energy trading have another thing coming . "
enron , its shares trading at levels not seen since 1992 , saw the stock fall $ 2 . 27 to $ 7 . 40 on in afternoon volume of 58 million .
on wednesday , standard & poor ' s , which just last week downgraded enron ' s corporate credit rating , cut the rating on the credit - linked notes of enron credit linked notes trusts to bbb from bbb - plus . s & p also added a " watch negative " designation , meaning the rating agency is poised to issue further downgrades if warranted .
" the creditwatch placements recognize the uncertainties that surround the company and its credit quality in the short run due to the possibility of further anticipated developments in the capital markets , " the rating agency wrote .
wednesday ' s downgrade affects $ 500 million worth of notes , which are derivatives linked to enron ' s senior unsecured debt , now rated bbb .
" the investors are taking the risk of enron credit " by purchasing the securities from the trusts even though these are not issued by enron , " said tom fritz , a standard & poor ' s managing director .
in addition , standard & poor ' s cut to bbb yosemite securities co . series 2000 - a . the obligations use enron ' s corporate rating as a backstop .
the counterparty to yosemite and the credit - linked notes is citibank , fritz said . last week , j . p . morgan joined with salomon smith barney , which along with citibank is a unit of citigroup ( c : news , chart , profile ) , to extend $ 1 billion in new credit to enron to help the company ' s liquidity .
' not business as usual '
" with these downgrades , it ' s not business as usual , " the energy trader said . " we ' re already in the process of losing a counterparty that contributed a good deal of liquidity to the energy - trading market . "
the trader cited calpine ( cpn : news , chart , profile ) , dynegy ( dyn : news , chart , profile ) , and el paso energy ( epg : news , chart , profile ) as energy traders that have a chance to gain market share , but he conceded that enron won ' t be replaced overnight , should it cease to exist .
" energy trading won ' t be destroyed at all , " the trader said . " it will certainly be diminished but not gone . "
what enron ' s absence would do is make it more difficult for lesser creditworthy companies to participate in the market . exchanges such as the new york mercantile exchange and the intercontinental exchange may gain a higher profile .
both of them are trying to establish a clearinghouse for the unregulated market for derivative - energy transactions , as the nymex already does with futures .
in other news , enron is preparing to close most of its asian broadband telecommunications business , part of a global restructuring that comes as the company is seeking a capital infusion of as much as $ 2 billion to help it through a financial crisis . see previous story .
" poor demand for broadband is being exacerbated by falling prices , requiring enron to consider the best options for managing its global broadband business , " according to a recent company memo obtained by cbs . marketwatch . com .
lisa sanders is a dallas - based reporter for cbs . marketwatch . com .
legal group plans suit to void california power contracts
2001 - 11 - 07 14 : 20 ( new york )
legal group plans suit to void california power contracts
escondido , california , nov . 7 ( bloomberg ) - - a conservative
legal foundation said it will file a lawsuit tomorrow to void long -
term contracts california signed with power generators , claiming
they put an unfair burden on taxpayers .
the united states justice foundation intends to sue in
sacramento county superior court , said richard d . ackerman , lead
counsel on the case for the group . the usjf wants a court to
terminate the long - term power contracts and require money already
paid to the generators to be returned to the state .
the usjf proposes a class action to represent california
taxpayers and alleges violations of the state ' s business and open -
meeting laws . ackerman said his group may need to forge new law to
succeed in the case .
` ` you ' re gonna have some serious legal battles that may go to
the appeals level in this case , ' ' ackerman said .
california officials last spring signed about $ 43 billion in
long - term power contracts after two investor - owned utilities
became insolvent . governor gray davis has said the contracts were
needed to bring stability to california ' s energy market . since
then , the cost of power has dropped , leaving california with
contracts to buy electricity above spot - market prices .
enron corp . , southern california edison company , pacific gas
& electric company , green mountain energy , san diego gas &
electric company , reliant energy company , pacificorp power
marketing , inc . , alliance colton llc , and calpine energy company
have electricity contracts with the state , according to a usjf
press release .
the usjf said it sent a letter to california officials giving
them notice of its intent to sue . the group , which calls itself
` ` your conservative voice in the courts ' ' on its web site , is
supported by individual donations , ackerman said .
- - michael b . marois in sacramento ( 916 ) 503 - 1612
enron mentions
s on watch neg
pr newswire , 11 / 07 / 01
dj cnbc ' s faber report : enron / dynegy deal talk
dow jones , 11 / 07 / 01
enron in talks with dynegy that may include merger , cnbc says
bloomberg , 11 / 07 / 01
wsj : dynegy in talks to put about $ 2 b into enron now
dow jones news service , 11 / 07 / 01
enron shares fall on concern about finding investors ( update 2 )
bloomberg , 11 / 07 / 01
enron credit - linked note ratings reduced 6 days late ( update 2 )
bloomberg , 11 / 07 / 01
former sec chairman levitt ( transcript of interview )
bloomberg , 11 / 07 / 01
usa : u . s . ferc watching enron ' s impact on energy markets .
reuters english news service , 11 / 07 / 01
apache unwinds most gas hedges ; cites enron uncertainty
dow jones news service , 11 / 07 / 01
usa : enron shares fall below $ 8 - set new nine - year low .
reuters english news service , 11 / 07 / 01
enron ' s stock drops 25 percent
associated press newswires , 11 / 07 / 01
rabin & peckel llp commences class action against enron corporation and certain of its officers and directors , alleging violations of federal securities laws
business wire , 11 / 07 / 01
enron ' s power company in india calls off singapore meeting after indian lenders file lawsuit
associated press newswires , 11 / 07 / 01
usa : el paso says it does not expect enron bankruptcy .
reuters english news service , 11 / 07 / 01
energy traders are icing out enron
shares trade at 9 - year lows for 2 nd straight day
cbs . marketwatch . com , 11 / 07 / 01
legal group plans suit to void california power contracts
bloomberg , 11 / 07 / 01
s on watch neg
11 / 07 / 2001
pr newswire
( copyright ( c ) 2001 , pr newswire )
new york , nov . 7 / prnewswire / - - standard & poor ' s today lowered its ratings on enron credit linked notes trusts ' credit linked notes and placed them on creditwatch with negative implications ( see list ) .
the lowered ratings reflect the nov . 1 , 2001 rating action taken on enron corp . , which was based on standard & poor ' s belief that enron ' 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 . the creditwatch placements recognize the uncertainties that surround the company and its credit quality in the short run due to the possibility of further unanticipated developments in the capital markets .
these synthetic issues utilize a credit default swap that references enron ' s senior unsecured debt and therefore the rating on the credit - linked notes will reflect the current senior unsecured rating of enron . outstanding ratings lowered and placed on creditwatch negative
enron credit linked notes trust
us $ 500 million credit linked notes
rating
to from
notes bbb / watch neg bbb +
enron credit linked notes trust ii
us $ 500 million credit linked notes
rating
to from
notes bbb / watch neg bbb +
enron euro credit linked notes trust
eur 200 million credit linked notes
rating
to from
notes bbb / watch neg bbb +
enron sterling credit linked notes trust
gbpl 25 million credit linked notes
rating
to from
notes bbb / watch neg bbb +
/ contact : mary ryan , new york , + 1 - 212 - 438 - 2090 , or frank j . trick , new york , + 1 - 212 - 438 - 1108 , both for standard & poor ' s / 11 : 47 est
copyright ? 2000 dow jones & company , inc . all rights reserved .
dj cnbc ' s faber report : enron / dynegy deal talk
2001 - 11 - 07 14 : 56 ( new york )
the following is a transcript of a report aired wednesday by cnbc reporter
david faber :
enron is in discussions with dynegy about a range of options that include a
merger of the two companies .
while such an outcome is only one of a number of options being discussed ,
sources close to the talks tell me such an outcome is being considered .
enron is trying to raise equity capital and restore confidence amid the
complete collapse of its stock price .
today , the houston - based energy trading concern ' s shares have fallen another
25 % , while its bonds , perhaps a better barometer of the market ' s concerns about
credit quality , have shed roughly ten points .
enron will not comment . but sources close to the situation tell me the
company continues to speak with a handful of private equity firms about an
investment . those talks are still in the early stages .
talks with dynegy , a cross - town rival of enron ' s that also markets and trades
energy , have progressed at a faster pace .
dynegy is unlike enron in that it owns more hard assets , many of which came
along with the acquisition of illnova , completed in 2000 .
while many potential acquirers have shied away from enron due to continued
concern about unknown liabilities the company may have , dynegy is very familiar
with its energy trading business .
dynegy is the number two player in the u . s . energy trading market and would
clearly become the dominant player were it to merge with or acquire enron . a
dynegy spokesman declined comment .
while dynegy has off - balance sheet financings that are similar to enron ' s ,
those financings are not guaranteed by the parent .
it is such guarantees that have concerned enron investors along with a series
of questionable investments .
given the massive decline in enron ' s stock price , dynegy now has a market
value that is twice that of enron .
that decline in enron ' s stock price would make any equity infusion heavily
dilutive , if private equity firms were to choose to invest in enron they would
likely do so in the form of a security that converted to equity and paid a
dividend .
still , because enron now has a market value of only $ 5 . 3 billion , the roughly
$ 2 billion it may want represents an enormous percentage of its overall equity
value .
hence , discussion with dynegy may have taken on the form of a merger , rather
than a strategic investment .
enron in talks with dynegy that may include merger , cnbc says
2001 - 11 - 07 13 : 39 ( new york )
houston , nov . 7 ( bloomberg ) - - enron corp . is talking with
rival energy company dynegy inc . about a number of options ,
including merger , to help it raise equity capital and restore
confidence , financial news network cnbc reported .
spokesmen for dynegy and enron declined to comment .
wsj : dynegy in talks to put about $ 2 b into enron now
by robin sidel
11 / 07 / 2001
dow jones news service
( copyright ( c ) 2001 , dow jones the wall street journal ; 212 - 274 - 7991
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron shares fall on concern about finding investors ( update 2 )
2001 - 11 - 07 14 : 06 ( new york )
enron shares fall on concern about finding investors ( update 2 )
( adds cnbc report on talks with dynegy in fifth paragraph . )
houston , nov . 7 ( bloomberg ) - - enron corp . ' s shares fell as
much as 28 percent , to their lowest level in more than a decade ,
amid reports that the no . 1 energy trader is struggling to find
investors to help it out of a cash crunch .
shares of enron fell $ 1 . 17 , or 12 percent , to $ 8 . 50 in
midafternoon trading . the shares dropped to $ 7 earlier . at
yesterday ' s close , they had fallen 88 percent this year .
enron will have a hard time raising a large amount of cash in
a short time , said sean egan , managing director of egan - jones
rating co .
` ` it takes time to sell assets , and many shrewd investors
like goldman sachs might find it more profitable to just pluck off
key employees rather than invest in enron , ' ' egan said .
the shares pared some of today ' s losses after cnbc reported
that enron is talking with rival dynegy inc . about options ,
including a merger . both companies are based in houston .
` ` we don ' t comment on market rumors , ' ' dynegy spokesman steve
stengel said .
` ` enron does not comment on speculation on mergers and
acquisitions , ' ' enron spokesman mark palmer said .
berkshire hathaway inc . chairman warren buffett decided
against investing in enron because he wasn ' t willing to sign a
confidentiality agreement that would keep him from trading enron ' s
debt , the new york times reported today , citing an unidentified
person close to the talks .
other companies approached by enron , including clayton
dubilier & rice , the blackstone group and kohlberg kravis roberts
& co . have also shown little interest , the newspaper said .
the u . s . securities and exchange commission is investigating
enron partnerships run by the company ' s former chief financial
officer . the entities bought and sold enron shares and assets ,
with trades costing enron $ 35 million and $ 1 . 2 billion in lost
shareholder equity . enron ousted cfo andrew fastow last month .
rating downgraded
standard & poor ' s today reduced its rating on enron ' s credit -
linked notes , just six days after the ratings company downgraded
enron ' s senior unsecured bonds . s & p cut four enron credit - linked
issues valued at about $ 1 . 36 billion combined to ` ` bbb ' ' from
` ` bbb + ' ' and indicated it may lower the grades again .
fearing that an enron collapse might cripple the natural gas -
derivatives market , oil and gas producer apache corp . said it
backed out of most of its gas hedges , realizing a $ 70 million gain
so far .
` ` we have been unwinding our hedge positions because of
uncertainty created by enron ' s credit problems , ' ' apache spokesman
bill mintz said . the company now has only one position with enron
that it ' s trying to unwind .
the apache news was reported earlier by the times .
` fragile business '
` ` their trading business is a very fragile business , ' ' egan
said . ` ` if partners on either side get concerned , trading volumes
decline , which is what is happening now . ' '
other companies mentioned in reports as possible buyers of
all or part of enron have denied an interest in the idea . general
electric co . chief executive officer jeffrey immelt told cnn today
that ` ` enron ' s really not on our list right now . ' ' bp plc chief
executive john browne said ` ` no ' ' at a press conference in london
yesterday when asked whether the london - based company would be
interested in buying enron or a stake in the company .
among shares of other energy traders , dynegy fell $ 1 . 70 to
$ 34 . 30 . mirant corp . fell 15 cents to $ 25 . 40 . williams cos . fell 4
cents to $ 28 . 97 .
- - margot habiby in houston , ( 713 ) 353 - 4872
enron credit - linked note ratings reduced 6 days late ( update 2 )
2001 - 11 - 07 14 : 46 ( new york )
enron credit - linked note ratings reduced 6 days late ( update 2 )
( adds background and stock price in fourth through sixth
paragraphs . )
new york , nov . 7 ( bloomberg ) - - standard & poor ' s corp .
downgraded notes linked to enron corp . ' s credit quality to match
the no . 1 energy trader ' s credit rating six days after the ratings
company reduced its corporate debt ratings .
s & p said it cut four enron credit - linked notes , valued at
$ 1 . 36 billion , to ` ` bbb ' ' from ` ` bbb + ' ' , and indicated it may
lower the grades again .
` ` this isn ' t an additional downgrade and should have happened
last week , ' ' said todd shipman , a director at the ratings company
that follows the company . last week shipman downgraded enron ' s
long - term ratings to ` ` bbb ' ' from ` ` bbb + , ' ' and left them on watch
for a further downgrade .
enron shares today fell as much as 28 percent , to their
lowest level in more than a decade , amid reports that the no . 1
energy trader is struggling to find investors to help it out of a
cash crunch .
shares of enron fell $ 1 . 17 , or 12 percent , to $ 8 . 50 in mid -
afternoon trading . the shares dropped to $ 7 earlier . at
yesterday ' s close , they had fallen 88 percent this year .
the federal securities and exchange commission is
investigating enron partnerships run by the company ' s former chief
financial officer , andrew fastow , who was ousted last month . the
entities bought and sold enron shares and assets ,
with trades costing enron $ 35 million and $ 1 . 2 billion in lost
shareholder equity .
notes
holders of the credit - linked notes , sold by enron euro cln
trust , enron sterling cln trust , and enron cln trust and trust ii ,
may have received a higher coupon than an enron corporate
obligation offers . the notes , which are obligations of the special
purpose entities , are tied to specific credit events , such as a
bankruptcy or enron ' s failure to pay on obligations .
proceeds from the notes were to be used to acquire the
trusts ' initial investments , and buyers are to be paid interest
from the proceeds of those certain assets , according to an
offering memorandum . the trusts can invest in securities with
short - term ratings of at least ` ` al ' ' from s & p and ` ` pl ' ' from
moody ' s investors service , as long as they mature before the
maturity dates of the notes .
there are four notes , each divided into two offerings , some
offered publicly and some privately sold . all the notes are
scheduled to mature in august 2005 or may 2006 and were sold by a
group of banks led by salomon smith barney , a unit of citigroup .
in the event of an enron credit event , citibank , which acted
as a swap counter - party to the trusts , can take the trusts '
investments in return for enron debt obligations . the enron debt
is then liquidated by the trust , with the proceeds paid to the
investors .
neither enron nor citibank have direct obligations to the
holders of the notes , according to an offering memorandum .
enron ' s credit - linked notes utilize a credit - default swap
that the trusts have with citibank that references enron ' s senior
unsecured debt , so the rating on the credit - linked notes will
reflect the senior unsecured rating , s $ 52
million dollars went to the accountants . the problem here
is an audit committee was not doing its work . if you look
at enron ' s statements - and how many times have we heard
they were confusing ? it ' s the job of the auditing firm to
see to it that it is not confusing . that ' s the real
problem . now , what can you do about it ?
ratigan : tell me .
levitt : i think , actually , the fasb , the independent
standards setter , could put through a rule , which says .
ratigan : and fasb is the federal accounting standards
board . they set the rules .
levitt : yes . located in norwalk , connecticut . they
could say , if a company sets up another legal entity , and
the company retains all the risks and rewards of that
entity , then the public company , that public company that
set up these entities , must consolidate in the p & l , in the
balance sheet , all of these transactions .
now , how does that come about ? i think the sec could
urge the fasb to do this . in 1990 , the present chief
accountant of the sec called for that action to be taken
place , but at that point , the then - chief accountant didn ' t
support the move .
ratigan : and this creates , in your mind , a rallying
call to reiterate that request with more venom and more
passion than before ?
levitt : i don ' t know about venom , but i .
ratigan : but with passion .
levitt : i certainly think that passion - i think this
is clearly a call for better disclosure .
ratigan : fair enough . i will see you next week , ok ?
levitt : good . nice to see you .
ratigan : you , too .
* * * end of transcript * * *
usa : u . s . ferc watching enron ' s impact on energy markets .
11 / 07 / 2001
reuters english news service
( c ) reuters limited 2001 .
washington , nov 7 ( reuters ) - the federal energy regulatory commission is watching what effect enron corp . ' s financial problems may have on interstate electricity and natural gas markets , ferc chairman pat wood said on wednesday .
however , wood said ferc does not have a direct role in the ongoing federal investigation of the company .
" we ' re watching the impact that enron or any other firm would have on the overall workings of the market , but we ' re not intervening where other agencies have jurisdiction , " wood told reporters during a briefing after the agency ' s regular meeting .
enron , the nation ' s largest trader of natural gas and electricity , is under attack for failing to explain off - balance sheet transactions that led to a $ 1 . 2 billion write - down of shareholder equity .
the deals , conducted with partnerships run by ousted chief financial officer andrew fastow , are under investigation by the u . s . securities and exchange commission .
copyright ? 2000 dow jones cites enron uncertainty
by christina cheddar
of dow jones newswires
11 / 07 / 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 : enron shares fall below $ 8 - set new nine - year low .
11 / 07 / 2001
reuters english news service
( c ) reuters limited 2001 .
new york , nov 7 ( reuters ) - shares of enron corp . fell in a new round of selling on wednesday that set new nine - year lows , amid concerns about the energy trading giant ' s ability to raise cash .
the company ' s stock slid $ 1 . 77 , or 18 . 3 percent , to $ 7 . 90 in late morning trading on the new york stock exchange , diving below $ 8 for the first time since february 1992 . the shares are down almost 77 percent since the company released its earnings results on oct . 16 , which set off the recent tumble .
the issues that have plagued the houston - based company over the past three weeks continue to weigh on it , according to jeff dietert , an analyst at simmons and co .
" it ' s a bit of a vicious cycle , " he said . " the stock price declines , credit concerns go up , counterparties attempt to reduce their exposure and the earnings power of the company deteriorates . "
he added that enron needs to " get all its ducks in a row " so that it can meet with the holders of its stocks and bonds to discuss issues such as the company ' s capitalization and plans for strengthening its balance sheet .
enron , the nation ' s largest trader of natural gas and electricity , is under attack for failing to explain off - balance sheet transactions that led to a $ 1 . 2 billion write - down of shareholder equity .
the deals , conducted with partnerships run by ousted chief financial officer andrew fastow , are under investigation by the u . s . securities and exchange commission .
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron ' s stock drops 25 percent
11 / 07 / 2001
associated press newswires
copyright 2001 . the associated press . all rights reserved .
houston ( ap ) - enron corp . ' s stock price continued its free fall wednesday as shares fell 25 percent to a new 10 - year low amid reports the company was having trouble attracting a large investor to allay worries about its financial health and restore confidence .
shares of the largest u . s . natural gas and power marketer dropped dlrs 2 . 41 to dlrs 7 . 26 in midday trading wednesday on the new york stock exchange .
enron has been rebuffed by more than a dozen buyout firms as well as warren buffett ' s berkshire hathaway , the new york times reported wednesday , citing a person close to the talks .
houston - based enron ' s stock is off more than 79 percent since oct . 16 , when the company said shareholder equity had been reduced by dlrs 1 . 2 billion , in part due to partnerships managed by enron ' s former chief financial officer , andrew fastow .
at the same time , reported a dlrs 618 million third quarter loss last month , dragged down by a one - time charge of dlrs 1 . 01 billion attributed to various losses . fastow was ousted a week later .
the company ' s financial stability was further weakened after the securities and exchange commission began an inquiry , which was upgraded to a formal investigation , of the partnerships and possible conflicts of interest resulting from them .
on tuesday , jeff skilling , enron ' s former chief executive officer , testified before the sec in washington d . c .
enron ' s woes have prompted speculation about a possible takeover of the company . some of the potential buyers that have been mentioned include general electric ' s ge capital unit and royal dutch shell .
ge capital has not ruled out an investment , the times said , citing a source close to the talks .
enron has cashed in about dlrs 3 billion in revolving credit it has with various banks to shore up investor confidence .
last week , enron secured dlrs 1 billion in new financing , using some of its natural gas and pipeline assets as collateral .
enron officials said tuesday seeking additional financing is one of the many options the company is exploring to firm up investor and market confidence .
meanwhile , standard & poor ' s corp . on wednesday lowered its ratings on some of enron ' s credit linked notes and placed them on creditwatch . s - and - p said enron ' s plan to repair its damaged balance sheet through asset sales and other means will be insufficient .
moody ' s investors service and fitch inc . have also downgraded the company ' s credit ratings .
last week , enron announced it created a special committee headed by university of texas law school dean william powers to respond to the sec investigation . powers also was elected to enron ' s board of directors .
copyright ? 2000 dow jones & company , inc . all rights reserved .
rabin ( ii ) that the company ' s operating results were materially overstated as a result of the company failing to timely write - down the value of its investments with certain limited partnerships which were managed by the company ' s chief financial officer ; and ( iii ) that enron was failing to write - down impaired assets on a timely basis in accordance with generally accepted accounting principles ( " gaap " ) . during the class period , enron insiders disposed of over $ 73 million of their personally - held enron common stock to unsuspecting investors .
on october 16 , 2001 , enron surprised the market by announcing that the company was taking non - recurring charges of $ 1 . 01 billion after - tax , or ( $ 1 . 11 ) loss per diluted share , in the third quarter of 2001 , the period ending september 30 , 2001 . subsequently , enron revealed that a material portion of the charge was related to the unwinding of investments with certain limited partnerships which were controlled by enron ' s chief financial officer and that the company would be eliminating more than $ 1 billion in shareholder equity as a result of its unwinding of the investments . when this news hit the market , the price of enron common stock dropped significantly .
plaintiff is represented by the law firm of rabin & peckel llp . rabin & peckel llp and its predecessor firms have devoted its practice to shareholder class actions and complex commercial litigation for more than thirty years and have recovered hundreds of millions of dollars for shareholders in class actions throughout the united states . you can learn more information about rabin & peckel at www . rabinlaw . com .
if you purchased enron common stock during the class period described above , you may , no later than december 21 , 2001 , move the court to serve as lead plaintiff . to serve as lead plaintiff , however , you must meet certain legal requirements . you can join this action as a lead plaintiff online at www . rabinlaw . com . if you wish to discuss this action further or have any questions concerning this announcement , or your rights or interests , please contact plaintiff ' s counsel , maurice pesso and eric belfi , rabin & peckel llp , 275 madison avenue , new york , ny 10016 , by telephone at ( 800 ) 497 - 8076 or ( 212 ) 682 - 1818 , by facsimile at ( 212 ) 682 - 1892 , or by e - mail at email @ rabinlaw . com .
contact : rabin & peckel llp maurice pesso / eric belfi , 800 / 497 - 8076 or 212 / 682 - 1818 fax : 212 / 682 - 1892 email @ rabinlaw . com www . rabinlaw . com
12 : 41 est november 7 , 2001
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron ' s power company in india calls off singapore meeting after indian lenders file lawsuit
by satish nandgaonkar
associated press writer
11 / 07 / 2001
associated press newswires
copyright 2001 . the associated press . all rights reserved .
bombay , india ( ap ) - enron corp . ' s indian power unit canceled a meeting with four indian creditors after they filed a lawsuit against the company and three other parties on wednesday to demand that the energy project resume operations .
the two - day meeting was scheduled to begin in singapore on thursday to discuss bids by two indian companies to acquire a stake in the troubled $ 2 . 9 billion dabhol power co .
the lenders - industrial bank of india , industrial finance corporation of india , state bank of india and icici - approached the bombay court to demand that work on the power project in the western indian state of maharashtra resume to ensure adequate cash flows to the project and help its promoters pay dues to the four financial institutions .
dabhol power co . , the state utility maharashtra state electricity board , the government of india and the maharashtra government were the four parties named in the lawsuit .
indian banks and financial institutions , which have invested more than $ 1 . 3 billion in the project , want dabhol to continue work on the project and the mseb to buy the power produced .
the two - day meeting in singapore was scheduled to discuss the bids made by the two indian companies , tatas and the bombay suburban electricity supply , to acquire a stake in dpc . enron had offered to sell the stake in dpc for $ 850 million , at a 30 percent discount , while tatas wanted a 50 percent discount .
on monday , enron began its pullout from the dabhol power project by issuing a notice that it will sell its stake in the project to its sole customer , the maharashtra state electricity board .
the asset transfer notice issued by the dabhol power project to the mseb comes after a prolonged payment dispute with the electricity board .
the dispute forced the houston - based company to shut down the dabhol plant in may .
fairfield , conn . - based general electric co . and bechtel group inc . of the united states each hold 10 percent stakes each in the company .
enron has moved a london court for international arbitration , but says it would prefer a negotiated settlement with the federal government and the maharashtra state government .
the company still prefers a negotiated purchase of the project by the indian government and indian term lending bodies that have funded the equity of foreign sponsors .
copyright ? 2000 dow jones & company , inc . all rights reserved .
usa : el paso says it does not expect enron bankruptcy .
11 / 07 / 2001
reuters english news service
( c ) reuters limited 2001 .
houston , nov 7 ( reuters ) - energy company el paso corp . said on wednesday it does not expect beleaguered competitor enron corp . to file for bankruptcy .
ralph eads , who heads el paso ' s merchant energy business , which includes electricity and natural gas marketing and trading , told analysts at a meeting in houston that the prospect of an enron bankruptcy was " remote " .
el paso has gained some market share from enron in recent weeks as a result of some companies ' reluctance to do business with enron , eads said , but he added that el paso has not scaled back its own business dealings with enron .
eads said el paso does not expect enron ' s problems to result in a " domino effect " that could lead to reduced liquidity in u . s . electricity and natural gas markets , a scenario that has been troubling some analysts and investors recently .
el paso chief executive bill wise told the meeting , which was broadcast over the internet , that el paso might be interested in acquiring some energy assets from enron but was not interested in acquiring an equity stake in the rival company , which is reported to be seeking an injection of new capital .
copyright ? 2000 dow jones & company , inc . all rights reserved .
energy traders are icing out enron
shares trade at 9 - year lows for 2 nd straight day
by lisa sanders ,
cbs . marketwatch . com
last update : 1 : 47 pm et nov . 7 , 2001
new york ( cbs . mw ) - - amid mounting questions about enron ' s liquidity and creditworthiness , players in the energy - trading business have already begun to limit their exposure to the embattled power merchant .
the revelations came wednesday as enron ' s stock ( ene : news , chart , profile ) plunged 24 percent following news that standard & poor ' s cut its ratings for the company ' s credit - linked notes to two notches above junk status .
" everybody ' s trying to balance out their exposure to enron as best they can , " said an energy trader who spoke on condition of anonymity . " that means not doing business or minimizing their business with enron . "
1 of 4 energy trades
traders ' attempts to isolate the company underscore concerns about the stability of the overall energy - trading market , in which enron is involved in 1 out of every 4 trades .
however , some industry watchers are confident that the energy market can survive if houston - based enron were to disappear .
" even though they quote - unquote make the market , the market exists whether enron is there or not , " said phil flynn , senior markets analyst at alaron . com . " those that think this is the end of energy trading have another thing coming . "
enron , its shares trading at levels not seen since 1992 , saw the stock fall $ 2 . 27 to $ 7 . 40 on in afternoon volume of 58 million .
on wednesday , standard & poor ' s , which just last week downgraded enron ' s corporate credit rating , cut the rating on the credit - linked notes of enron credit linked notes trusts to bbb from bbb - plus . s & p also added a " watch negative " designation , meaning the rating agency is poised to issue further downgrades if warranted .
" the creditwatch placements recognize the uncertainties that surround the company and its credit quality in the short run due to the possibility of further anticipated developments in the capital markets , " the rating agency wrote .
wednesday ' s downgrade affects $ 500 million worth of notes , which are derivatives linked to enron ' s senior unsecured debt , now rated bbb .
" the investors are taking the risk of enron credit " by purchasing the securities from the trusts even though these are not issued by enron , " said tom fritz , a standard & poor ' s managing director .
in addition , standard & poor ' s cut to bbb yosemite securities co . series 2000 - a . the obligations use enron ' s corporate rating as a backstop .
the counterparty to yosemite and the credit - linked notes is citibank , fritz said . last week , j . p . morgan joined with salomon smith barney , which along with citibank is a unit of citigroup ( c : news , chart , profile ) , to extend $ 1 billion in new credit to enron to help the company ' s liquidity .
' not business as usual '
" with these downgrades , it ' s not business as usual , " the energy trader said . " we ' re already in the process of losing a counterparty that contributed a good deal of liquidity to the energy - trading market . "
the trader cited calpine ( cpn : news , chart , profile ) , dynegy ( dyn : news , chart , profile ) , and el paso energy ( epg : news , chart , profile ) as energy traders that have a chance to gain market share , but he conceded that enron won ' t be replaced overnight , should it cease to exist .
" energy trading won ' t be destroyed at all , " the trader said . " it will certainly be diminished but not gone . "
what enron ' s absence would do is make it more difficult for lesser creditworthy companies to participate in the market . exchanges such as the new york mercantile exchange and the intercontinental exchange may gain a higher profile .
both of them are trying to establish a clearinghouse for the unregulated market for derivative - energy transactions , as the nymex already does with futures .
in other news , enron is preparing to close most of its asian broadband telecommunications business , part of a global restructuring that comes as the company is seeking a capital infusion of as much as $ 2 billion to help it through a financial crisis . see previous story .
" poor demand for broadband is being exacerbated by falling prices , requiring enron to consider the best options for managing its global broadband business , " according to a recent company memo obtained by cbs . marketwatch . com .
lisa sanders is a dallas - based reporter for cbs . marketwatch . com .
legal group plans suit to void california power contracts
2001 - 11 - 07 14 : 20 ( new york )
legal group plans suit to void california power contracts
escondido , california , nov . 7 ( bloomberg ) - - a conservative
legal foundation said it will file a lawsuit tomorrow to void long -
term contracts california signed with power generators , claiming
they put an unfair burden on taxpayers .
the united states justice foundation intends to sue in
sacramento county superior court , said richard d . ackerman , lead
counsel on the case for the group . the usjf wants a court to
terminate the long - term power contracts and require money already
paid to the generators to be returned to the state .
the usjf proposes a class action to represent california
taxpayers and alleges violations of the state ' s business and open -
meeting laws . ackerman said his group may need to forge new law to
succeed in the case .
` ` you ' re gonna have some serious legal battles that may go to
the appeals level in this case , ' ' ackerman said .
california officials last spring signed about $ 43 billion in
long - term power contracts after two investor - owned utilities
became insolvent . governor gray davis has said the contracts were
needed to bring stability to california ' s energy market . since
then , the cost of power has dropped , leaving california with
contracts to buy electricity above spot - market prices .
enron corp . , southern california edison company , pacific gas
& electric company , green mountain energy , san diego gas &
electric company , reliant energy company , pacificorp power
marketing , inc . , alliance colton llc , and calpine energy company
have electricity contracts with the state , according to a usjf
press release .
the usjf said it sent a letter to california officials giving
them notice of its intent to sue . the group , which calls itself
` ` your conservative voice in the courts ' ' on its web site , is
supported by individual donations , ackerman said .
- - michael b . marois in sacramento ( 916 ) 503 - 1612