enron mentions enron asks citigroup for $ 750 mln loan , people say ( updatel )
bloomberg , 10 / 23 / 01
enron corp . cut to ` reduce ' at edward jones
bloomberg , 10 / 23 / 01
enron cfo : company has sufficient liquidity
dow jones news service , 10 / 23 / 01
enron says shareholders ' ' best interests ' were sought in all ljm dealings
afx news , 10 / 23 / 01
us class action suit filed against enron for misleading statements
afx news , 10 / 23 / 01
word of sec probe puts enron into deep dive : problems mount
national post , 10 / 23 / 01
city - sec inquiry sparks enron share fall .
the daily telegraphm 10 / 23 / 01
shares of enron plummet 21 % energy : sec requests information from company on series of unusual financial deals tied to executive .
los angeles times , 10 / 23 / 01
enron asks citigroup for $ 750 mln loan , people say ( updatel )
2001 - 10 - 23 10 : 11 ( new york )
enron asks citigroup for $ 750 mln loan , people say ( updatel )
( adds comment from cfo fastow in fourth paragraph , enron ' s
short - term borrowing rates in seventh paragraph . )
new york , oct . 23 ( bloomberg ) - - enron corp . , the biggest
energy trader , has asked citigroup inc . to arrange a $ 750 million
loan , ensuring access to credit if the embattled company is cut
off from money markets , say people familiar with the matter .
enron ' s shares and bonds plunged yesterday after the company
said the securities and exchange commission was probing its
finances . the houston - based business , whose stock has fallen 75
percent this year amid concerns about failed investments , depends
on a $ 3 billion commercial paper , or short - term debt , program to
finance day - to - day operations .
earlier this month , moody ' s investors service placed all $ 13
billion of the company ' s long - term debt securities on watch for
possible downgrade . as a second - tier commercial paper borrower ,
any drop in its rating may cut off enron from the commercial paper
market and raise the costs of short - term debt .
` ` we understand that our credit rating is critical to both
the capital markets and our counterparties , ' ' enron ' s chief
financial officer andrew fastow said on a conference call today .
he said enron has $ 3 . 5 billion available on bank credit lines ,
giving it enough cash to operate normally .
enron shares rose as much as 12 . 6 percent during the call to
$ 23 . 25 . they pared the gain to $ 21 . 80 , up $ 1 . 15 .
dan noonan , a spokesman for citigroup ' s citibank na unit ,
declined to comment . mark palmer , a spokesman for enron , declined
to comment .
commercial paper rates
enron was paying 3 . 15 percent to issue commercial paper until
oct . 31 , which is as much as 15 basis points more than companies
with the same ` ` a 2 / p 2 ' ' short - term credit ratings that are not on
credit watch . enron ' s short - term debt is not on review for a
possible downgrade .
enron has previously turned to citigroup for finance and
advice . in 1999 , citigroup ' s salomon smith barney unit advised the
company on its $ 1 . 45 billion acquisition of three natural gas -
fired power plants from cogen technologies inc . citibank , along
with j . p . morgan chase & co . , this year arranged a $ 1 . 75 billion
loan .
earlier this week , an investor sued enron , saying two
partnerships cost the company $ 35 million and fastow ' s leadership
of them was a conflict of interest .
the sec has asked enron about partnerships and affiliated
companies headed by fastow . dismantling some of the partnerships
would cost enron or its shareholders as much as $ 3 billion , ray
niles , a salomon smith barney analyst , wrote in a report to
investors .
enron created partnerships and affiliated companies to buy
and sell assets such as power plants to lower the debt on its
books .
investors said they were concerned that enron may be forced
to dismantle the affiliated companies by paying off the owners in
cash or stock . chief executive ken lay said last week he may have
to ` ` unravel ' ' agreements that created the companies if enron ' s
debt ratings fall too far .
- - mark lake in the new york newsroom ( 212 ) 893 - 5989 or
enron corp . cut to ` reduce ' at edward jones
2001 - 10 - 23 11 : 42 ( new york )
princeton , new jersey , oct . 23 ( bloomberg data ) - - enron corp . ( ene us )
was downgraded to ` ` reduce ' ' from ` ` accumulate ' ' by analyst zach wagner at
edward jones .
- - michael o . donohue in princeton , new jersey , ( + 1 ) 609 - 279 - 3756 .
enron cfo : company has sufficient liquidity
by christina cheddar
of dow jones newswires
10 / 23 / 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 .
enron says shareholders ' ' best interests ' were sought in all ljm dealings
10 / 23 / 2001
afx news
( c ) 2001 by afp - extel news ltd
new york ( afx ) - enron corp said it sought the " best interests " of its shareholders in all its dealings with ljm cayman lp and ljm 2 co - investment lp , two partnerships which were set - up and run until recently by enron chief financial officer andrew fastow .
" the board ( of enron ) was fully aware and kept a real chinese wall between enron and ljm . enron ' s shareholders best interests were sought in all ljm dealings , " said enron chief executive officer kenneth lay , in a conference call with analysts .
the company scheduled the call after enron ' s stock slid 21 pct yesterday , when it revealed the securities and exchange commission asked the company to provide information on certain related - party transactions .
overnight , two class action lawsuits were launched by shareholders against enron and its officers , alleging that operating results were also " materially overstated " as a result of the company failing to timely write - down the value .
in its third - quarter results last week , enron announced a charge of 1 . 01 bln usd , of 1 . 11 usd per share , and an incremental 1 . 2 bln usd reduction in stockholders ' equity , related to the unwinding of investments with the ljm partnerships .
according to the wall street journal , fastow resigned from the partnerships in july , due to growing suspicion over potential conflicts of interests .
during the call , lay said that he , and enron ' s board of directors , have " the highest faith and confidence in ( fastow ) . "
lay also said the company remained confident that its current liquidity position allows it to meet all its obligations , and is confident of the outlook for its corporate rating .
analysts have raised the possibility that , should enron ' s credit rating and stock price continue to fall , the company may be obligated to issue millions of new shares to meet obligations with other entities it deals with .
ng / cml for more information and to contact afx : www . afxnews . com and www . afxpress . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
us class action suit filed against enron for misleading statements
10 / 23 / 2001
afx news
( c ) 2001 by afp - extel news ltd
new york ( afx ) - milberg weiss bershad hynes & lerach llp law firm said it filed a class action lawsuit yesterday against enron corp alleging that it issued misleading statements between jan 18 , 2000 and oct 17 , 2001 , thereby inflating the company ' s share price artificially .
the suit was filed on behalf of enron shareholders between the above period and is pending in the us district court in houston against enron corp , enron ceo kenneth lay , former enron ceo jeffrey skilling , who resigned recently , and enron chief financial officer andrew fastow .
the suit claims that enron issued statements which failed to disclose that the company was experiencing a declining demand for bandwidth and that its efforts to create a trading market for bandwidth failed because many market participants were not creditworthy .
the company ' s operating results were also " materially overstated as result of the company failing to timely write - down the value of its investments with certain limited partnerships " managed by the company ' s cfo . the suit additionally alleges that enron was failing to write - down impaired assets on a timely basis in accordance with gaap .
on oct 16 , enron announced unexpectedly that it was taking third quarter non - recurring charges of 1 . 01 bln after - tax , or 1 . 11 usd per share , which it later revealed was due largely to the unwinding of investments with certain limited partnerships controlled by enron ' s chief financial officer . enron also announced it was cutting shareholder equity by 1 . 2 bln usd .
enron ' s share price consequently fell sharply . during the class period , enron insiders disposed of 73 mln usd of personally - held enron common stock .
holders of enron stock between the class period in question may request appointment as a lead plaintiff no later than dec 21 , milberg weiss said .
yesterday , enron announced that the securities and exchange commission has requested that it provide information regarding certain related party transactions .
jkm / shw for more information and to contact afx : www . afxnews . com and www . afxpress . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
financial post : news
word of sec probe puts enron into deep dive : problems mount
david howard sinkman
reuters
10 / 23 / 2001
national post
national
fp 2
( c ) national post 2001 . all rights reserved .
new york - shares of enron corp . slumped more than 20 % yesterday after it said u . s . regulators are looking into company transactions , another blow to a company whose chief executive resigned in august .
a spokesman for north america ' s biggest buyer and seller of natural gas and electricity declined to discuss an inquiry by the u . s . securities exchange commission , but said it was cooperating .
the sec also declined to outline details of its inquiry .
investor confidence in the company has been rocked by reports from the wall street journal about its relationship with two limited partnerships that were run until recently by enron ' s chief financial officer , andrew fastow .
the company also reported last week its first quarterly loss in more than four years , and took us $ 1 . 01 - billion in charges and writedowns on ill - fated investments .
problems at enron surfaced two months ago when ceo jeff skilling resigned after six months at the helm .
enron shares declined us $ 5 . 49 , or 21 % , to us $ 20 . 56 in afternoon trade on the new york stock exchange yesterday , shaving off almost us $ 4 . 2 - billion of its market capitalization .
the stock , the biggest decliner by percentage loss on the nyse , fell as much as 22 . 8 % yesterday , when it opened at its lowest level since september 1998 .
enron declined to comment on whether the sec ' s inquiry into " certain related - party transactions " involved the partnerships .
" related - party transactions " is the heading used by enron in its 1999 and 2000 annual reports to discuss dealings with its limited partnerships , ljm cayman lp and the larger ljm 2 co - investment lp , which engaged in complex hedging transactions involving company assets worth hundreds of millions of dollars .
mr . fastow severed his ties with the partnerships in june . ljm was set up in june 1999 for energy - related investments , and ljm 2 in december 1999 for energy - and communication - related investments .
the journal reported us $ 35 - million of its third - quarter loss of us $ 638 - million were connected with the limited partnerships
curt launer , an analyst at credit suisse first boston , said investors should question enron ' s use of real value accounting when the value of certain assets , " most notably in telecommunications , " have declined precipitously .
" investors have had several opportunities to question enron ' s credibility and at each of those turns the share price has declined , " launer said .
some analysts , though , cautioned against assuming fire when there might only be smoke .
" this is an inquiry , not an investigation , and i cannot imagine enron ' s attorneys or accountants would allow it do to something illegal , " said merrill lynch analyst donato eassey .
" it ' s easy for the market to kick a company when its down , but these challenges do not last for a solid company , and we think enron is one . "
the price of shares in the company is down 75 % this year .
copyright ? 2000 dow jones & company , inc . all rights reserved .
city - sec inquiry sparks enron share fall .
by simon english .
10 / 23 / 2001
the daily telegraph
p 31
( c ) telegraph group limited , london , 2001
in new york
enron , the american power giant , saw its shares slump by a fifth yesterday after it revealed that the top financial watchdog is delving into firms managed by chief financial officer andrew fastow .
the securities and exchange commission is requesting details of deals between the company and limited partnerships with which mr fastow has , or had , links .
enron chairman kenneth lay said in a statement : " we welcome this request . we will co - operate fully and look forward to the opportunity to put any concern about these transactions to rest . "
questions were raised last week on wall street after the company announced a write - down of more than $ 1 billion due to failed investments in telecoms and other businesses .
the disclosure alarmed investors and sent the already battered shares down 23 pc . yesterday they fell another $ 5 . 30 ( # 3 . 80 ) to $ 20 . 75 in early trading .
according to the annual report the " related party transactions " , as enron describes them , took place in 1999 and 2000 , resulting in losses of $ 16 m and $ 36 m respectively .
mr lay said that auditors approved the deals , but would not give further details of what they were .
they are understood to have been hedging transactions against enron shares and other assets made by partnerships called ljm cayman lp and ljm 2 co - investment jp .
" we believe everything that needed to be considered and done in connection with these transactions was considered and done , " added mr lay .
the relationship between the investment losses and the sec probe is not clear , though the inquiry seems to focus on the partnerships responsible for the hedging transactions .
enron owns teesside power station and wessex water in britain and is the largest trader of natural gas in the us . investors are concerned that the probe and the continued uncertainty about the extent of the problem will harm the company ' s credit rating .
an enron spokesman said mr fastow continues to work and is not under any suspicion .
the sec inquiry is " informal " , says the company . the watchdog contacted enron last wednesday , the day of the results announcement . the sec declined to comment .
enron made a loss of $ 638 m in the third quarter , its first in over four years .
copyright ? 2000 dow jones financial desk
shares of enron plummet 21 % energy : sec requests information from company on series of unusual financial deals tied to executive .
nancy rivera brooks
times staff writer
10 / 23 / 2001
los angeles times
home edition
c - 1
copyright 2001 / the times mirror company
shares of enron corp . set a 52 - week low monday on word that the securities and exchange commission had asked for information about a complex series of financial transactions between the houston - based energy giant and an investment partnership tied to a company executive .
enron , the world ' s largest energy trader , said it had voluntarily provided information on " certain related - party transactions " that had been previously disclosed to the sec .
" we welcome this request , " said kenneth l . lay , enron chairman and chief executive .
" we will cooperate fully with the sec and look forward to the opportunity to put any concern about these transactions to rest , " he said .
the sec request is the latest in a parade of bad news for enron , which has seen investments sour in telecommunications , retail electricity sales and water .
investors have battered the company ' s stock , which once sold for nearly $ 85 a share in the last year , and many have criticized enron ' s stingy meting out of financial information . but several wall street analysts remain upbeat on the stock , noting that the bulk of its businesses continue to thrive despite the growing economic downturn .
in august , enron chief executive jeffrey k . skilling , one of the main architects of the company ' s strategy of shedding physical assets in search of trading profit , stunned wall street by resigning .
skilling cited personal , family - related reasons , but later he acknowledged that the precipitous plunge in the company ' s stock price contributed to his departure .
on monday , enron shares plunged $ 5 . 40 , or nearly 21 % , to close at $ 20 . 65 on the new york stock exchange .
enron ' s stock has lost nearly 40 % of its value in the last week since it reported a surprise third - quarter loss of $ 618 million after $ 1 . 01 billion in charges reflecting the costs of recent failed investments .
but the charge also included $ 35 million related to what enron described only as the " early termination during the third quarter of certain structured finance arrangements with a previously disclosed entity . "
in a conference call with securities analysts about the earnings , the company mentioned that it had repurchased 55 million shares as part of the dissolution of its participation in the transactions .
but investors were stunned when stories last week in the wall street journal detailed that the transactions were with a limited partnership organized by andrew s . fastow , enron ' s chief financial officer , and that enron had whittled $ 1 . 2 billion off its shareholder equity as it repurchased the shares and canceled a $ 1 . 2 - billion note it had received from the partnership . shareholder equity now stands at $ 9 . 5 billion .
the limited partnership , called ljm 2 , and fastow reaped millions of dollars of profit through complex hedging transactions that involved enron assets and stock , the journal reported .
lay said the transactions were reviewed by auditors and lawyers inside and outside the company and that the company board was fully informed .
a shareholder lawsuit charging that enron ' s directors violated their fiduciary duty already has been filed in texas state court .
many companies set up limited partnerships for tax purposes , but it is unusual to allow company executives to run them , analyst say .
investors also are upset by the unusually zealous way that enron has guarded financial information , making it difficult to analyze the company ' s complex web of businesses .
and many are not confident that all the bad news has been released .
analyst m . carol coale , who follows enron and other energy companies for prudential securities in houston , downgraded enron to a " hold " from a " buy " rating monday out of such frustration .
coale said she has been getting misinformation or no information out of enron .
but bob christensen , energy analyst with first albany corp . , said that despite enron ' s recent difficulties , the bulk of the business remains strong .
" i continue to tell investors that 70 % of this company ' s business is growing at a 26 % rate , and that was in the third quarter when this country had a very sharp economic slowdown going on , " he said .
investors are panicking because of a " bad news story that doesn ' t reflect reality , " said jon kyle cartwright , senior energy analyst with the raymond james
copyright ? 2000 dow jones & company , inc . all rights reserved .
enron mentions
enron asks citigroup for $ 750 mln loan , people say ( updatel )
bloomberg , 10 / 23 / 01
enron corp . cut to ` reduce ' at edward jones
bloomberg , 10 / 23 / 01
enron cfo : company has sufficient liquidity
dow jones news service , 10 / 23 / 01
enron says shareholders ' ' best interests ' were sought in all ljm dealings
afx news , 10 / 23 / 01
us class action suit filed against enron for misleading statements
afx news , 10 / 23 / 01
word of sec probe puts enron into deep dive : problems mount
national post , 10 / 23 / 01
city - sec inquiry sparks enron share fall .
the daily telegraphm 10 / 23 / 01
shares of enron plummet 21 % energy : sec requests information from company on series of unusual financial deals tied to executive .
los angeles times , 10 / 23 / 01
enron asks citigroup for $ 750 mln loan , people say ( updatel )
2001 - 10 - 23 10 : 11 ( new york )
enron asks citigroup for $ 750 mln loan , people say ( updatel )
( adds comment from cfo fastow in fourth paragraph , enron ' s
short - term borrowing rates in seventh paragraph . )
new york , oct . 23 ( bloomberg ) - - enron corp . , the biggest
energy trader , has asked citigroup inc . to arrange a $ 750 million
loan , ensuring access to credit if the embattled company is cut
off from money markets , say people familiar with the matter .
enron ' s shares and bonds plunged yesterday after the company
said the securities and exchange commission was probing its
finances . the houston - based business , whose stock has fallen 75
percent this year amid concerns about failed investments , depends
on a $ 3 billion commercial paper , or short - term debt , program to
finance day - to - day operations .
earlier this month , moody ' s investors service placed all $ 13
billion of the company ' s long - term debt securities on watch for
possible downgrade . as a second - tier commercial paper borrower ,
any drop in its rating may cut off enron from the commercial paper
market and raise the costs of short - term debt .
` ` we understand that our credit rating is critical to both
the capital markets and our counterparties , ' ' enron ' s chief
financial officer andrew fastow said on a conference call today .
he said enron has $ 3 . 5 billion available on bank credit lines ,
giving it enough cash to operate normally .
enron shares rose as much as 12 . 6 percent during the call to
$ 23 . 25 . they pared the gain to $ 21 . 80 , up $ 1 . 15 .
dan noonan , a spokesman for citigroup ' s citibank na unit ,
declined to comment . mark palmer , a spokesman for enron , declined
to comment .
commercial paper rates
enron was paying 3 . 15 percent to issue commercial paper until
oct . 31 , which is as much as 15 basis points more than companies
with the same ` ` a 2 / p 2 ' ' short - term credit ratings that are not on
credit watch . enron ' s short - term debt is not on review for a
possible downgrade .
enron has previously turned to citigroup for finance and
advice . in 1999 , citigroup ' s salomon smith barney unit advised the
company on its $ 1 . 45 billion acquisition of three natural gas -
fired power plants from cogen technologies inc . citibank , along
with j . p . morgan chase & co . , this year arranged a $ 1 . 75 billion
loan .
earlier this week , an investor sued enron , saying two
partnerships cost the company $ 35 million and fastow ' s leadership
of them was a conflict of interest .
the sec has asked enron about partnerships and affiliated
companies headed by fastow . dismantling some of the partnerships
would cost enron or its shareholders as much as $ 3 billion , ray
niles , a salomon smith barney analyst , wrote in a report to
investors .
enron created partnerships and affiliated companies to buy
and sell assets such as power plants to lower the debt on its
books .
investors said they were concerned that enron may be forced
to dismantle the affiliated companies by paying off the owners in
cash or stock . chief executive ken lay said last week he may have
to ` ` unravel ' ' agreements that created the companies if enron ' s
debt ratings fall too far .
- - mark lake in the new york newsroom ( 212 ) 893 - 5989 or
enron corp . cut to ` reduce ' at edward jones
2001 - 10 - 23 11 : 42 ( new york )
princeton , new jersey , oct . 23 ( bloomberg data ) - - enron corp . ( ene us )
was downgraded to ` ` reduce ' ' from ` ` accumulate ' ' by analyst zach wagner at
edward jones .
- - michael o . donohue in princeton , new jersey , ( + 1 ) 609 - 279 - 3756 .
enron cfo : company has sufficient liquidity
by christina cheddar
of dow jones newswires
10 / 23 / 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 .
enron says shareholders ' ' best interests ' were sought in all ljm dealings
10 / 23 / 2001
afx news
( c ) 2001 by afp - extel news ltd
new york ( afx ) - enron corp said it sought the " best interests " of its shareholders in all its dealings with ljm cayman lp and ljm 2 co - investment lp , two partnerships which were set - up and run until recently by enron chief financial officer andrew fastow .
" the board ( of enron ) was fully aware and kept a real chinese wall between enron and ljm . enron ' s shareholders best interests were sought in all ljm dealings , " said enron chief executive officer kenneth lay , in a conference call with analysts .
the company scheduled the call after enron ' s stock slid 21 pct yesterday , when it revealed the securities and exchange commission asked the company to provide information on certain related - party transactions .
overnight , two class action lawsuits were launched by shareholders against enron and its officers , alleging that operating results were also " materially overstated " as a result of the company failing to timely write - down the value .
in its third - quarter results last week , enron announced a charge of 1 . 01 bln usd , of 1 . 11 usd per share , and an incremental 1 . 2 bln usd reduction in stockholders ' equity , related to the unwinding of investments with the ljm partnerships .
according to the wall street journal , fastow resigned from the partnerships in july , due to growing suspicion over potential conflicts of interests .
during the call , lay said that he , and enron ' s board of directors , have " the highest faith and confidence in ( fastow ) . "
lay also said the company remained confident that its current liquidity position allows it to meet all its obligations , and is confident of the outlook for its corporate rating .
analysts have raised the possibility that , should enron ' s credit rating and stock price continue to fall , the company may be obligated to issue millions of new shares to meet obligations with other entities it deals with .
ng / cml for more information and to contact afx : www . afxnews . com and www . afxpress . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
us class action suit filed against enron for misleading statements
10 / 23 / 2001
afx news
( c ) 2001 by afp - extel news ltd
new york ( afx ) - milberg weiss bershad hynes & lerach llp law firm said it filed a class action lawsuit yesterday against enron corp alleging that it issued misleading statements between jan 18 , 2000 and oct 17 , 2001 , thereby inflating the company ' s share price artificially .
the suit was filed on behalf of enron shareholders between the above period and is pending in the us district court in houston against enron corp , enron ceo kenneth lay , former enron ceo jeffrey skilling , who resigned recently , and enron chief financial officer andrew fastow .
the suit claims that enron issued statements which failed to disclose that the company was experiencing a declining demand for bandwidth and that its efforts to create a trading market for bandwidth failed because many market participants were not creditworthy .
the company ' s operating results were also " materially overstated as result of the company failing to timely write - down the value of its investments with certain limited partnerships " managed by the company ' s cfo . the suit additionally alleges that enron was failing to write - down impaired assets on a timely basis in accordance with gaap .
on oct 16 , enron announced unexpectedly that it was taking third quarter non - recurring charges of 1 . 01 bln after - tax , or 1 . 11 usd per share , which it later revealed was due largely to the unwinding of investments with certain limited partnerships controlled by enron ' s chief financial officer . enron also announced it was cutting shareholder equity by 1 . 2 bln usd .
enron ' s share price consequently fell sharply . during the class period , enron insiders disposed of 73 mln usd of personally - held enron common stock .
holders of enron stock between the class period in question may request appointment as a lead plaintiff no later than dec 21 , milberg weiss said .
yesterday , enron announced that the securities and exchange commission has requested that it provide information regarding certain related party transactions .
jkm / shw for more information and to contact afx : www . afxnews . com and www . afxpress . com
copyright ? 2000 dow jones & company , inc . all rights reserved .
financial post : news
word of sec probe puts enron into deep dive : problems mount
david howard sinkman
reuters
10 / 23 / 2001
national post
national
fp 2
( c ) national post 2001 . all rights reserved .
new york - shares of enron corp . slumped more than 20 % yesterday after it said u . s . regulators are looking into company transactions , another blow to a company whose chief executive resigned in august .
a spokesman for north america ' s biggest buyer and seller of natural gas and electricity declined to discuss an inquiry by the u . s . securities exchange commission , but said it was cooperating .
the sec also declined to outline details of its inquiry .
investor confidence in the company has been rocked by reports from the wall street journal about its relationship with two limited partnerships that were run until recently by enron ' s chief financial officer , andrew fastow .
the company also reported last week its first quarterly loss in more than four years , and took us $ 1 . 01 - billion in charges and writedowns on ill - fated investments .
problems at enron surfaced two months ago when ceo jeff skilling resigned after six months at the helm .
enron shares declined us $ 5 . 49 , or 21 % , to us $ 20 . 56 in afternoon trade on the new york stock exchange yesterday , shaving off almost us $ 4 . 2 - billion of its market capitalization .
the stock , the biggest decliner by percentage loss on the nyse , fell as much as 22 . 8 % yesterday , when it opened at its lowest level since september 1998 .
enron declined to comment on whether the sec ' s inquiry into " certain related - party transactions " involved the partnerships .
" related - party transactions " is the heading used by enron in its 1999 and 2000 annual reports to discuss dealings with its limited partnerships , ljm cayman lp and the larger ljm 2 co - investment lp , which engaged in complex hedging transactions involving company assets worth hundreds of millions of dollars .
mr . fastow severed his ties with the partnerships in june . ljm was set up in june 1999 for energy - related investments , and ljm 2 in december 1999 for energy - and communication - related investments .
the journal reported us $ 35 - million of its third - quarter loss of us $ 638 - million were connected with the limited partnerships
curt launer , an analyst at credit suisse first boston , said investors should question enron ' s use of real value accounting when the value of certain assets , " most notably in telecommunications , " have declined precipitously .
" investors have had several opportunities to question enron ' s credibility and at each of those turns the share price has declined , " launer said .
some analysts , though , cautioned against assuming fire when there might only be smoke .
" this is an inquiry , not an investigation , and i cannot imagine enron ' s attorneys or accountants would allow it do to something illegal , " said merrill lynch analyst donato eassey .
" it ' s easy for the market to kick a company when its down , but these challenges do not last for a solid company , and we think enron is one . "
the price of shares in the company is down 75 % this year .
copyright ? 2000 dow jones & company , inc . all rights reserved .
city - sec inquiry sparks enron share fall .
by simon english .
10 / 23 / 2001
the daily telegraph
p 31
( c ) telegraph group limited , london , 2001
in new york
enron , the american power giant , saw its shares slump by a fifth yesterday after it revealed that the top financial watchdog is delving into firms managed by chief financial officer andrew fastow .
the securities and exchange commission is requesting details of deals between the company and limited partnerships with which mr fastow has , or had , links .
enron chairman kenneth lay said in a statement : " we welcome this request . we will co - operate fully and look forward to the opportunity to put any concern about these transactions to rest . "
questions were raised last week on wall street after the company announced a write - down of more than $ 1 billion due to failed investments in telecoms and other businesses .
the disclosure alarmed investors and sent the already battered shares down 23 pc . yesterday they fell another $ 5 . 30 ( # 3 . 80 ) to $ 20 . 75 in early trading .
according to the annual report the " related party transactions " , as enron describes them , took place in 1999 and 2000 , resulting in losses of $ 16 m and $ 36 m respectively .
mr lay said that auditors approved the deals , but would not give further details of what they were .
they are understood to have been hedging transactions against enron shares and other assets made by partnerships called ljm cayman lp and ljm 2 co - investment jp .
" we believe everything that needed to be considered and done in connection with these transactions was considered and done , " added mr lay .
the relationship between the investment losses and the sec probe is not clear , though the inquiry seems to focus on the partnerships responsible for the hedging transactions .
enron owns teesside power station and wessex water in britain and is the largest trader of natural gas in the us . investors are concerned that the probe and the continued uncertainty about the extent of the problem will harm the company ' s credit rating .
an enron spokesman said mr fastow continues to work and is not under any suspicion .
the sec inquiry is " informal " , says the company . the watchdog contacted enron last wednesday , the day of the results announcement . the sec declined to comment .
enron made a loss of $ 638 m in the third quarter , its first in over four years .
copyright ? 2000 dow jones financial desk
shares of enron plummet 21 % energy : sec requests information from company on series of unusual financial deals tied to executive .
nancy rivera brooks
times staff writer
10 / 23 / 2001
los angeles times
home edition
c - 1
copyright 2001 / the times mirror company
shares of enron corp . set a 52 - week low monday on word that the securities and exchange commission had asked for information about a complex series of financial transactions between the houston - based energy giant and an investment partnership tied to a company executive .
enron , the world ' s largest energy trader , said it had voluntarily provided information on " certain related - party transactions " that had been previously disclosed to the sec .
" we welcome this request , " said kenneth l . lay , enron chairman and chief executive .
" we will cooperate fully with the sec and look forward to the opportunity to put any concern about these transactions to rest , " he said .
the sec request is the latest in a parade of bad news for enron , which has seen investments sour in telecommunications , retail electricity sales and water .
investors have battered the company ' s stock , which once sold for nearly $ 85 a share in the last year , and many have criticized enron ' s stingy meting out of financial information . but several wall street analysts remain upbeat on the stock , noting that the bulk of its businesses continue to thrive despite the growing economic downturn .
in august , enron chief executive jeffrey k . skilling , one of the main architects of the company ' s strategy of shedding physical assets in search of trading profit , stunned wall street by resigning .
skilling cited personal , family - related reasons , but later he acknowledged that the precipitous plunge in the company ' s stock price contributed to his departure .
on monday , enron shares plunged $ 5 . 40 , or nearly 21 % , to close at $ 20 . 65 on the new york stock exchange .
enron ' s stock has lost nearly 40 % of its value in the last week since it reported a surprise third - quarter loss of $ 618 million after $ 1 . 01 billion in charges reflecting the costs of recent failed investments .
but the charge also included $ 35 million related to what enron described only as the " early termination during the third quarter of certain structured finance arrangements with a previously disclosed entity . "
in a conference call with securities analysts about the earnings , the company mentioned that it had repurchased 55 million shares as part of the dissolution of its participation in the transactions .
but investors were stunned when stories last week in the wall street journal detailed that the transactions were with a limited partnership organized by andrew s . fastow , enron ' s chief financial officer , and that enron had whittled $ 1 . 2 billion off its shareholder equity as it repurchased the shares and canceled a $ 1 . 2 - billion note it had received from the partnership . shareholder equity now stands at $ 9 . 5 billion .
the limited partnership , called ljm 2 , and fastow reaped millions of dollars of profit through complex hedging transactions that involved enron assets and stock , the journal reported .
lay said the transactions were reviewed by auditors and lawyers inside and outside the company and that the company board was fully informed .
a shareholder lawsuit charging that enron ' s directors violated their fiduciary duty already has been filed in texas state court .
many companies set up limited partnerships for tax purposes , but it is unusual to allow company executives to run them , analyst say .
investors also are upset by the unusually zealous way that enron has guarded financial information , making it difficult to analyze the company ' s complex web of businesses .
and many are not confident that all the bad news has been released .
analyst m . carol coale , who follows enron and other energy companies for prudential securities in houston , downgraded enron to a " hold " from a " buy " rating monday out of such frustration .
coale said she has been getting misinformation or no information out of enron .
but bob christensen , energy analyst with first albany corp . , said that despite enron ' s recent difficulties , the bulk of the business remains strong .
" i continue to tell investors that 70 % of this company ' s business is growing at a 26 % rate , and that was in the third quarter when this country had a very sharp economic slowdown going on , " he said .
investors are panicking because of a " bad news story that doesn ' t reflect reality , " said jon kyle cartwright , senior energy analyst with the raymond james
copyright ? 2000 dow jones & company , inc . all rights reserved .