With Mitsui, could we have one ISDA master signed by all affilaites or would
we have to do separate masters with a master netting agreement? Your thoughts?
----- Forwarded by Alan Aronowitz/HOU/ECT on 05/31/2001 11:53 AM -----

	Jane McBride@ENRON
	05/30/2001 09:45 PM

		 To: Alan Aronowitz/HOU/ECT@ECT
		 cc:
		 Subject: Re: ISDA(s) with Mitsui Corp.

Thanks for the help Alan.  Moving forward though, if it turns out that London
and/or Singapore are negotiating ISDAs with Mitsui (as we think they are),
what do we do about Mitsui's concern that it doesn't want to have separate
ISDAs with separate Enron entities.

What is Enron's usual approach to this I wonder.  Seems to me that from the
customer's perspective, this makes sense.  I wonder what sort of internal
issues this raises though.

Lets talk tomorrow morning.

Jane

	Alan Aronowitz@ECT
	2001/05/30 23:46

		 To: Nony Flores/HOU/ECT@ECT
		 cc: Edmund Cooper/LON/ECT@ECT, Jane McBride/AP/Enron@Enron, Laurie
Mayer/HOU/ECT@ECT, Matthias Lee/SIN/ECT@ECT, Matthias Lee/SIN/ECT@ECT
		 Subject: Re: ISDA(s) with Mitsui Corp.

I think Matt Lee may be negotiating one with Mitsui, but I'm not absolutely
sure.

Matt: Could you confirm? Thanks.

Alan

	Nony Flores
	05/30/2001 09:44 AM

		 To: Matthias Lee/SIN/ECT@ECT, Edmund Cooper/LON/ECT@ECT
		 cc: Laurie Mayer/HOU/ECT@ECT, Jane McBride/AP/Enron@Enron, Alan
Aronowitz/HOU/ECT@ECT
		 Subject: Re: ISDA(s) with Mitsui Corp.

Matt/Edmund,

Laurie and I are trying to help Jane determine if an ISDA with Mitsui Corp.
has been negotiated by London and Singapore.  Tana Jones has checked the
Financial Trading Agreements database and found no records of an ISDA with
Mitsui.  Do you by any chance no if such agreement has been negotiated and
perhaps is waiting to be entered into the database?  If an ISDA does exist
with Mitsui, would you be so kind to contact Jane directly with details, etc.

Thanks and regards,

Nony
----- Forwarded by Nony Flores/HOU/ECT on 05/30/2001 09:43 AM -----

	Laurie Mayer
	05/30/2001 08:47 AM

		 To: Jane McBride/AP/Enron@Enron
		 cc: Alan Aronowitz/HOU/ECT@ECT, Nony Flores/HOU/ECT@ECT
		 Subject: Re: ISDA(s) with Mitsui Corp.

----- Forwarded by Laurie Mayer/HOU/ECT on 05/30/2001 08:45 AM -----

	Tana Jones
	05/30/2001 08:29 AM

		 To: Laurie Mayer/HOU/ECT@ECT
		 cc:
		 Subject: Re: ISDA(s) with Mitsui Corp.

No ISDA for Mitsui Corp.  Below is the link which should enable you view
access to the Financial Trading Agreement Database.  You can forward this
email with the link to any member of your team and they will then have the
link which will get them access to the database.

Link -->

	Laurie Mayer
	05/30/2001 08:26 AM

		 To: Tana Jones/HOU/ECT@ECT
		 cc: Alan Aronowitz/HOU/ECT@ECT, Nony Flores/HOU/ECT@ECT
		 Subject: ISDA(s) with Mitsui Corp.

Tana, would you be able to check on Mitsui Corp. ISDAs for us?  Thanks.  If I
can access the database please let me know.
Laurie
----- Forwarded by Laurie Mayer/HOU/ECT on 05/30/2001 08:24 AM -----

	Jane McBride@ENRON
	05/29/2001 08:56 PM

		 To: Nony Flores/HOU/ECT@ECT, Laurie Mayer/HOU/ECT@ECT, Alan
Aronowitz/HOU/ECT@ECT
		 cc:
		 Subject: ISDA(s) with Mitsui Corp.

Above company has approached us re an ISDA with them, they have also told us
that they have been negotiating ISDAs with Enron London and Enron Singapore
for some time.

**************

Laurie/Nony,

I wonder if you can find out for me from the data base, what the status is
with Mitsui Corp. ISDAs re all Enron companies?

***************

Alan,

Mitsui Corp has hinted that it doesn't want to have separate ISDAs with
separate Enron entities.  What is Enron's usual approach to this I wonder.
Seems to me that from the customer's perspective, this makes sense.  I wonder
what sort of internal issues this raises though.

**********************

Thanks all.

Jane


Jim -

Please see the attached.  We have also sent a copy to Dilg, Joor, Wolfe and Baird.

 -----Original Message-----
From: 	Aronowitz, Alan
Sent:	Friday, November 02, 2001 4:55 PM
To:	Walls Jr., Rob; Ale, John
Cc:	Tidrow, Norma
Subject:	FW: Project Valor/ECT Strategic Value Corp. (PRIVILEGED & CONFIDENTIAL)
Sensitivity:	Confidential

Rob/John:

In connection with the Section 5.21 (formerly Section 5.21) disclosure, attached are two pieces of information about ECT Strategic Value Corp. (I understand that 100% of the common stock is still owned by ENA) that I have received today from Stephen Douglas and Morris Clark of the ENA Tax Group. Let me know if you need any additional information about this company. ECT Strategic Value Corp.was formed in 1996, and I understand it is still in existence. Steve (office: 713-853-0938/cell: 713-817-5052) would be the best person to talk to further about this potential disclosure issue. Keep in mind that that Liabilities (essentially poor credit quality contract receivables) were transferred to ESVC in 1996.

 -----Original Message-----
From: 	Douglas, Stephen H.
Sent:	Friday, November 02, 2001 2:32 PM
To:	Aronowitz, Alan
Subject:	Project Valor

As discussed.


Thank you.  I could wait until maybe Friday.

I've been meaning to ask you if you have ever used Kim (Nails) to do any
seamstress work.  I left some fabric with her to copy a skirt to go around
my bathroom sink and got it back yesterday.  It's not the worst job I have
ever seen, but I am a little shocked at the work.  I don't mean to be too
critical.  I should have done it myself, but thought if she did it, it would
save me one more little chore.  Oh, well, live and learn!!

----- Original Message -----
From: <Tana.Jones@enron.com>
To: <pyoung@pdq.net>
Sent: Wednesday, May 03, 2000 8:45 AM
Subject: Re: COORD ADMIN

>
> Getchen is in our personnel dept.  She will coordinate filling job
> positions with candidates.  If you just emailed her your resume, you might
> want to give her a few days because she is working on lots of jobs.  I've
> used her before, so you might want to mention my name, say I work in the
> Enron North America Legal Dept.  She is really sweet.
>
>


Jeff - Page me  - 888 916-7186, call me - cell phone 973 714-4630, home phone
614 792-6030.  By the way I made my flight.  That's the good news.  The bad
news is we sat on the runway for 2 f#@king hours because of t-storms in the
east.  Hope your trip went better.  Don't hesitate to reach out for me
today.  On Wednesday I am traveling to Houston for PRC meetings and scheduel
will be tight.
 Steve

Jeff Dasovich on 06/12/2000 05:03:44 PM
To: Steve Montovano/DUB/EES@EES
cc:
Subject:

Greetings:

Great to see you last week.  Hope you got out of there in a reasonable amount
of time.  I'd like to talk to you for a few minutes between now and
close-of-business Wednesday.  Very confidential matter--would like to tap
your insights, get your feedback, and seek a bit of wisdom.  That work in
your schedule?

Best,
Jeff


Member Services
Notice No. 00-72
December 4, 2000

COMMODITY EXCHANGE, INC.

TERMINATION OF TRADING PRIVILEGES

Please be advised that the Exchange has been notified by Spear, Leeds, &
Kellogg that effective immediately, December 1, 2000, they will no longer
guarantee the membership(s) of Lawrence Bilello, Jr. (XXL-6292).

Therefore, in accordance with the Exchange Rule 4.12, the trading privileges
of the aforementioned individual(s) are hereby suspended until such time as a
new primary clearing member guarantee is provided.

In connection therewith, notification of any claims against the
aforementioned individuals arising out of transactions executed on the
Exchange up to the close of business on October 20, 2000, must be submitted
to the Corporate Secretary,s Office within ten (10) days.

__________________________________________________
Please click on the link below to indicate you have received this
email.

"http://208.206.41.61/email/email_log.cfm?useremail=sara.shackleton@enron.com&
refdoc=(MS-72)"

Note: If you click on the above line and nothing happens, please copy
the text between the quotes, open your internet browser,
paste it into the web site address and press Return.


Good Afternoon, Mr. Whalley!

I am the Editor of the ENA Newsletter and we are interested in having you as
a Profile article in our next issue. (Actually, your name was recommended to
me by Mark Frevert and Janet Dietrich.)  The ENSIDE is set for publication in
February and I am setting my interview schedule now. I would love to sit down
and visit with you for about 30 minutes, when it is convenient for you.

Please let me know what you think!  I will call you later and we can discuss
it.

Kathie Grabstald
ENA Public Relations
x 3-9610


Louise:

I have given to your admin a copy of the Cogentrix CA and have bracketed the language that needs your approval.  Legal had originally told me that I needed Detmering and Donahue to sign off.  Detmering has told me that either you or Lavorato need to sign off.  Per my conversation with Donahue, he is o.k. because Kristina Mordaunt has signed off on the language.

We have a little over a week to get a preliminary, non-binding bid in, if the original schedule holds, and we have held off as long as we can signing any language along these lines, but we are now starting to be backed against the wall.  This language represents the best we are going to be able to accomplish in this situation.

Regards,

Charlie


Any questions, please call 3-5962

Randy Janzen


unfortunately I am busy as usual.  Looking forward to the long weekend to get
some much needed rest.  It seems like it is always something up here.

Any plans for easter?

How are things with you?  Baby doing good?  Take care.
PL

From: Cecilia Rodriguez/ENRON@enronXgate on 04/10/2001 07:55 AM
To: Phillip M Love/HOU/ECT@ECT
cc:
Subject:

Hey you,
Just wanted to say hi and see how it was
going.  Busy I'm sure!!!  Anyway, I'll talk
to you later.
C


Given they are a muni, I am fine with this exception.  In practice, we have
experienced situations with certain cp's where we have had to come up with
certain margining exceptions.

WRT amendments, such amendments can be done within the same time period as
well.  I think that we could add that the cp is required to provide a
representation (perhaps an officer's certificate of some sort) stating that
they are going to their Board for posting of the collateral.

We got that provision from another municipality.

Tracy

 -----Original Message-----
From:  St Clair, Carol
Sent: Wednesday, May 16, 2001 7:11 AM
To: Ngo, Tracy
Cc: Rosman, Stewart
Subject: SMUD EEI Master

Tracy:
Are you sure that you are okay with extending the time to deliver collateral
from 3 Business Days to 10 Business Days?  I have never seen us agree to that
long of a time period?  What if Exposures change from the time that we
request collateral and the time that they deliver it to us?  If all they are
doing is posting cash or amending an LC, why would they need 10 Business
Days?  Please call me.

Carol St. Clair
EB 3889
713-853-3989 (Phone)
713-646-3393 (Fax)
carol.st.clair@enron.com


We can consider this a final version for Jose to send to the BOT.

-----Original Message-----
From: Rodriquez, Andy
Sent: Monday, October 29, 2001 4:02 PM
To: Novosel, Sarah; Walton, Steve; Roan, Michael; Perrino, Dave; Maurer,
Luiz; Hueter, Barbara A.; Landwehr, Susan M.; Hoatson, Tom; Nicolay,
Christi L.; Steffes, James D.; Alvarez, Ray; Shelk, John; Yeung,
Charles; Bestard, Jose
Cc: Robertson, Linda; Shapiro, Richard
Subject: RE: RTO Week - FERC Staff Perspectives

Sarah,

I wrote a couple paragraphs on the "standards and practices" section.  Essentially, they reinforce what was in the staff summary and add a little hint of some of the language Charles, Jim, you, and I have been working on re: support of an SSO.

Andy Rodriquez
Regulatory Affairs - Enron Corp.
andy.rodriquez@enron.com
713-345-3771

-----Original Message-----
From: Novosel, Sarah
Sent: Monday, October 29, 2001 2:25 PM
To: Rodriquez, Andy
Subject: RE: RTO Week - FERC Staff Perspectives

Andy:

For some reason, I cannot get email to list your name as a recipient, so I am sending this email to you as a reply to your email.  Anyway, I just sent this note out to the RTO team.  Let me know what you think.

Sarah

-----Original Message-----
From: 	Novosel, Sarah
Sent:	Monday, October 29, 2001 3:21 PM
To:	Walton, Steve; Roan, Michael; Perrino, Dave; Maurer, Luiz; Hueter, Barbara A.; Landwehr, Susan M.; Hoatson, Tom; Nicolay, Christi L.; Steffes, James D.; Alvarez, Ray; Shelk, John
Cc:	Robertson, Linda; Shapiro, Richard
Subject:	RTO Week Comments

Comments on FERC's RTO Week are due on November 3 (Saturday) so we would like to submit comments by the end of this week.  Some of us have briefly discussed the types of comments we may want to submit on behalf of Enron, and the attached list of "Talking Points" are issues that Christi and I put together for Rick during his Washington meetings last week.  These talking points focus on issues that were raised during RTO Week by panelists that we may want to address -- either because the point made was a good point that we want to highlight, or because the point made was wrong and we want to clarify the record.  We will use the talking points as an outline on issues to raise in our comments.

We also want to state up front in the comments that FERC is on the right track and that FERC has done a lot of analysis and studies to determine that "right sized" RTOs are in the public interest (this is in response to the negative comments made by the state commissioners that FERC is taking action that has not been proven to be beneficial to consumers).  We also want to make the point that RTO creation is not about retail access and does not impact whether or not a state offers retail choice.

Also attached is a link to FERC Staff's notes from RTO Week.  I have not reviewed these notes yet, but we may also want to respond to these notes in our comments using the same criteria as above; i.e., on areas where we feel that the point made was a good point that we want to highlight, or because the point made was wrong and we want to clarify the record.

Please review the Talking Points paper and the Staff Notes, and let me know what you think about this strategy.  I am writing the comments and welcome all help and input.

I hope to keep these comments limited (10 pages or so), so we need to stay focused -- raise the issue, make our point, and move on.

Thanks Everyone

Sarah

 http://www.ferc.gov/Electric/RTO/workshops/staffsummary.pdf

-----Original Message-----
From: Rodriquez, Andy
Sent: Monday, October 29, 2001 2:18 PM
To: Novosel, Sarah; Landwehr, Susan M.; Hawkins, Bernadette; Walton,
Steve; Roan, Michael; Perrino, Dave; Maurer, Luiz; Hueter, Barbara A.;
Landwehr, Susan M.; Hoatson, Tom; Alvarez, Ray; Steffes, James D.
Subject: RTO Week - FERC Staff Perspectives

FYI, FERC has posted their perceptions of the results of RTO week.  They look pretty good, for the most part.  We may want to make some comments to support or refute items as the case may be.  The summary is located at the following link:

http://www.ferc.fed.us/Electric/RTO/workshops/staffsummary.pdf

Andy Rodriquez
Regulatory Affairs - Enron Corp.
andy.rodriquez@enron.com
713-345-3771


I spoke to Harry Musikas in NYMEX Compliance this afternoon and he gave me
verbal approval of 500 contracts for COB spot month for the next year,
pending final approval of Bernie Purta (big boss at NYMEX).  We won't get the
letter for about a week to 2 weeks, but I wanted to let you know.  I spoke to
Mike Swerzbin and told him the same thing.  I'll pass on the approval letter
and my revised list as soon as we get his approval letter.


THIS MESSAGE IS FROM THE SECRETARY OF THE BOARD OF TRUSTEES, ARTIS G.
HAMPSHIRE-COWAN, ESQ:

> President Swygert asked that I forward the attached correspondence to your
> attention.  The correspondence, which identifies some of the many signs of
> success at Howard University, is forwarded for your information.
>
>  <<howardite_ltr.doc>>

 - howardite_ltr.doc


planning on going.  which night are you inviting guys for?

also, heard there were some issues about contract negotiations.  don't know
specifics but if you want to discuss give me a call.  might be able to
mediate this a little bit  if you want.

Caroline Abramo@ENRON
03/30/2001 03:37 PM
To: John Arnold/HOU/ECT@ECT, Mike Maggi/Corp/Enron@Enron
cc:
Subject: Guggenheim/Enron Event May 24th

I think you guys need to attend
---------------------- Forwarded by Caroline Abramo/Corp/Enron on 03/30/2001
04:37 PM ---------------------------

	From:  Per Sekse @ ECT                           03/30/2001 12:02 PM

To: Caroline Abramo/Corp/Enron@Enron, Russell Dyk/Corp/Enron@ENRON
cc:

Subject: Guggenheim/Enron Event May 24th

I'm asking for 20 tickets, possibly 40 depending on whether they have spouces
attending. Make a note for the calander. I'm thinking we can use this to get
people like Paul Tudor Jones, Louis Bacon, etc. to attend an Enron function,
while also gving the traders an opportunity to go as well.

Per
---------------------- Forwarded by Per Sekse/NY/ECT on 03/30/2001 02:10 PM
---------------------------
From: Margaret Allen@ENRON on 03/29/2001 02:40 PM CST
To: Michael L Miller/NA/Enron@Enron, Alan Engberg/HOU/ECT@ECT, George
McClellan/HOU/ECT@ECT, Mark Tawney/Enron@EnronXGate, Tim
Battaglia/Enron@EnronXGate, John Arnold/HOU/ECT@ECT, Jean
Mrha/NA/Enron@Enron, Eric Holzer/ENRON@enronXgate, Lauren
Iannarone/NY/ECT@ECT, Kimberly Friddle/NA/Enron@ENRON, Peggy
Mahoney/HOU/EES@EES, Suzanne Rhodes/HOU/EES@EES, Edward Ondarza/Enron
Communications@Enron Communications, Rick
Bergsieker/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Eric Gonzales/LON/ECT@ECT,
per.sekse@enron.com, Christie Patrick/HOU/ECT@ECT, Raymond
Bowen/enron@enronxgate, Jeffrey A Shankman/Enron@EnronXGate, Randal
Maffett/HOU/ECT@ECT
cc: Dennis Vegas/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Yvette
Simpson/Corp/Enron@ENRON, Margaret Allen/Corp/Enron@ENRON
Subject: Guggenheim/Enron Event

Hello all,

Over the last few weeks correspondence has been disseminated to you in
regards to opportunities with the Guggenheim Museum in New York. We need to
get a more accurate head count if we would like to have a private Enron event
at the Frank Gehry Exhibit.  Tentatively, we have May 24th on hold and Frank
Gehry has agreed to be in attendance, which is an added-value. The event
would be a formal dinner with approximately 150-200 people, including Enron
executives and their potential/existing customers.  Again, the attendance
list is created through your requests but Enron Corporate covers the cost of
the event (excluding travel arrangements).

We need to make a firm commitment to the Guggenheim by Monday.  Please let me
know approximately how many people you would like to bring by tomorrow. Feel
free to call me at 39056 or email me if you have any questions.

Thanks, Margaret


Hello Susan - Happy New Year - I hope all is well with you and yours.
The best of luck getting organized.

The Brawner's
15911 Marwick Ct
Houston, Tx 77095

home   281-855-8797
sandra cell  713-594-7369
kenny cell    281-381-7288


Vance,

Deals have been created and entered in Sitara as noted below.  The deal
volumes entered were those listed on the March, 2001 Nomination spreadsheet.

Bob

Vance L Taylor
02/26/2001 05:33 PM
To: Robert Cotten/HOU/ECT@ECT
cc: Julie Meyers/HOU/ECT@ECT, Lisa Hesse/HOU/ECT@ECT, Susan
Smith/HOU/ECT@ECT, Donald P Reinhardt/HOU/ECT@ECT, Melissa
Graves/HOU/ECT@ECT, Brian M Riley/HOU/ECT@ECT
Subject: March "Spot" Purchases

 Bob,

HPLC will be purchasing wellhead gas from the producers listed below for the
production month of March, 2001.  This production will be purchased on a
"spot" basis and deal tickets should be created and entered into sitara based
on the following information:

Counterparty    Meter  Volume Deal #  Price

Whiting Petroleum Corp   6523  200mmbtu/d 634035  100% IF/HSC less $0.95
Coastal Merchant Energy, LP  5923  775mmbtu/d 633154  100% IF/HSC less $0.265
Coastal Merchant Energy, LP  5848  240mmbtu/d 633184     84% IF/HSC
Swift Energy    2630  21mmbtu/d 633380  100% IF/HSC less $1.45
Duke Energy Trading & Marketing 6347  200mmbtu/d 633028     85% IF/HSC
HESCO Gathering Oil Co.  6063  300mmbtu/d 421856  100% IF/HSC less $0.95
Embassy Natural Gas Inc.  6598  180mmbtu/d 643875  100% IF/HSC less $0.95
Vintage Gas Inc.   9603  100mmbtu/d 633427  100% IF/HSC less $0.95
Stone Energy    9696  4500mmbtu/d 634058  100% IF/HSC less $0.20
The Houston Exploration  9696  6500mmbtu/d 634061  100% GD         less $0.235
Amerada Hess (Hess Energy Svcs) 0435  2714mmbtu/d 631403  100% IF/HSC  less
$0.12
Anadarko Petroleum Corp.  0435  1104mmbtu/d 631437  100% IF/HSC less $0.10
Crosstex Energy Services, Ltd.  0435  654mmbtu/d 631504  100% IF/HSC less
$0.12
Tri-Union Development   0435  149mmbtu/d 631737  100% IF/HSC less $0.055
Ranger Oil Company   9871  200mmbtu/d 643862    85% IF/HSC if <300/d
    90% IF/HSC if >300/d

These are Producer Svcs. deals and should be tracked in the IM Wellhead
portfolio... attached to the gathering contract.

Thanks,

vlt
x3-6353


CALENDAR ENTRY:	APPOINTMENT

Description:
	SALLY'S SURPRISE B-DAY! 30c1

Date:		2/15/2001
Time:		2:00 PM - 2:30 PM (Central Standard Time)

Chairperson:	Stacey W White

Detailed Description:


Please amend the existing Master Agreement per terms of this credit worksheet.

Thanks
Brant


Rick - again, to give you an idea of the kind of information these groups are
looking for.    This was prepared by Masha.

Lisa
----- Forwarded by Lisa Yoho/NA/Enron on 04/23/2001 05:42 PM -----

	Maria Arefieva
	04/16/2001 07:37 PM

		 To: Steel Distribution@ENRON
		 cc: Lisa Yoho/NA/Enron@Enron
		 Subject: Antidumping and countervailing duty rates for select countries

Attached is a spreadsheets with duty rates for select countries.  The list
contains duties for hot-rolled, cold-rolled, plate, and corrosion-resistant
products.  The list is by no means exhaustive.  Please contact Lisa Yoho
(5-3837) or Masha Arefieva (3-00613)in regard to the application of duties
for specific products.  The regulatory group will continue to periodically
update the list with products and duties currently in effect.


HERE are the good parts:

CMUA asks FERC to order quick release of bid and other inf to the market
participants; cites Australian rules, England & Wales, and Alberta --
Miracles do happen!

Opposes 5% deviation band for underschedu;ing -- recommends a fixed band with
a minimum of 2 MW for "smaller" SCs
As an alternative -- asks for an 8% band. Does not address the pplication to
generation.

The bad parts:

Thinks the Governor should appoint three of the Board members and the other
three should be appointed by the WSCC Board of Trustees. (the ISO CEO makes
the 7th) Wants the Board to report back after 2 years to see how RTOS might
fit in in CA.

Still wants to return to cost-of-service rates.

Opposes opportunity costs as factor in evaluating bids above $250

Wants costs allocated properly -- in other words re-allocated away from the
munis.


Headed For A Fall ; Companies issued special zero-coupon bonds, assuming they'd never have to pay them off. Now shareholders could be on the hook for a $65 billion tab.
Fortune Magazine, 11/26/01
Manager's Journal: What Enron Did Right
The Wall Street Journal, 11/19/01
J.P. Morgan Wins (by Not Losing as Much)
The Wall Street Journal, 11/19/01
German Bank Is in Talks With Enron To Buy a Unit
The New York Times, 11/19/01
Bond Boom Isn't Likely to Lift Economy As Corporations Swap Old Debt for New
The Wall Street Journal, 11/19/01
Preview / WEEK OF NOV. 19-25 Investors Looking for Answers in Enron Filing
Los Angeles Times, 11/19/01
COMPANIES & FINANCE INTERNATIONAL - Dynegy bid faces long wait.
Financial Times, 11/19/01
Russia Fund Surges Amid Global Woes
The Wall Street Journal, 11/19/01
Wessex Water
The Financial News, 11/19/01
India BSES:Dabhol Pwr Proj Due Diligence Done Jan -Report
Emerging Markets Report, 11/19/01
India Dabhol Pwr: No Termination Notice Until Crt Verdict
Dow Jones International News, 11/19/01
Fears raised on Enron deal: $15.6-billion rescue bid
National Post, 11/19/01
Blackout in the power sector
Business Standard, 11/19/01

Features/Toxic Bonds
Headed For A Fall ; Companies issued special zero-coupon bonds, assuming they'd never have to pay them off. Now shareholders could be on the hook for a $65 billion tab.
Janice Revell

11/26/2001
Fortune Magazine
Time Inc.
131
(Copyright 2001)

It was an irresistible proposition: Borrow billions of dollars, pay no interest, reap millions in tax breaks, and then wait for the debt to simply disappear. That was the promise of zero-coupon convertible bonds, and companies from Enron to Merrill Lynch binged on what seemed like free money.
But, of course, there was a catch: For this scenario to play out, a company's stock price had to rise sharply--and quickly. That's because investors bought the bonds in the hope of converting them into equity--if the stock tanked, the bonds would no longer be worth converting. So to make them more attractive to buyers, companies had to build in an escape hatch: If the stock price failed to rise sufficiently, investors could "put" (that is, sell) the bonds back to the company--in many cases, after just one year.
And that's exactly what's about to happen--to the tune of some $65 billion over the next three years. Stock prices have fallen so far that for at least half of these special hybrids, the prospect of conversion is now absurd. It simply won't happen. So bondholders are looking to get their money back the first chance they can. And because of the put feature, that is possible. Suddenly companies like Tyco, Comcast, and dozens more are on the hook for billions of dollars in debt and interest they thought they'd never have to pay.
That could be very bad news for shareholders of these companies. After all, they're the ones who are going to be picking up the tab when all that debt comes due. Huge chunks of cash will disappear from balance sheets to repay bondholders. Companies without enough cash-- and the majority fall into this camp--are likely to face skyrocketing interest charges when they borrow money anew. That means sharply reduced earnings. Especially at risk are investors in companies with poor credit ratings--prime candidates for killer refinancing costs. Some companies may even be forced to issue stock to pay off the debt, creating significant shareholder dilution, especially at current depressed prices. To make matters worse, this is happening at a time when the economy is barreling downhill and corporate profits are already shrinking. "This is a ticking time bomb," warns Margaret Patel, manager of the Pioneer High Yield Bond fund, a top-performing junk fund.
The seeds of this mess were sown in mid-2000, when the stock market started to falter. Companies in search of capital balked at the thought of selling stock while their share prices were struggling. Zero-coupon convertible bonds presented an attractive alternative because companies didn't have to make cash interest payments on the bonds (hence the name "zero"). Instead issuers offered an up-front discount--for instance, investors would buy a bond for $700 and collect $1,000 when it matured.
Companies also gave investors the right to convert the bonds into a fixed number of common shares. But the bonds were structured so that conversion would make sense only if the stock price rose significantly--in many cases, by more than 50%. With that protective feature (called the conversion premium), zeros took off. Corporate issuers would pay no interest, and once their stock prices had climbed back to acceptable levels, the debt would be swept away into equity. "If the bonds are converted, it's a home run for everybody," says Jonathan Cohen, vice president of convertible-bond analysis at Deutsche Bank.
That four-bagger, of course, depends entirely on the stock price rising. If it doesn't, the bondholders, armed with that handy put feature, can simply sell the bonds back to the company. Great for bondholders, but not so hot for the company or its shareholders. But, hey, what are the odds of that happening? "CFOs and CEOs believe that their stock will just continue to go up," says Cohen. "They don't worry about the bond getting put."
If all this seems a little complicated, that's because it is. A real-life example should help. California-based electric utility Calpine issued $1 billion in zeros in April to refinance existing debt. At the time, the company's stock was trading at about $55 a share--severely undervalued in the opinion of company management. "We really didn't want to sell equity at that point," says Bob Kelly, Calpine's senior vice president of finance. So the company instead opted to sell zeros, setting the conversion premium at a hefty 37%.
Still, with no cash interest payments and a stock price that had to rise significantly to make conversion worthwhile, the bonds weren't exactly a screaming buy for investors. So Calpine added the put feature: Investors could sell the bonds back to the company after one year at the full purchase price, eliminating any downside risk.
Things haven't exactly worked out as management had hoped. The stock has since plummeted to $25, and it now has to triple before conversion makes sense. So it's looking as though Calpine will be liable for the $1 billion in borrowed money when investors get the chance to put the bonds this April. There's also the refinancing cost. According to Kelly, Calpine's borrowing rate could run in the neighborhood of 8.5%--an extra $85 million per year in cash. "Obviously, nobody plans for their stock to go down," Kelly says. "I don't think there was one person around who thought the bond would be put."
Calpine's potential costs are particularly high because its credit rating is straddling junk. "If you are a borderline investment-grade company, a financing of this nature is not necessarily the most appropriate thing in the world," notes Anand Iyer, head of global convertible research at Morgan Stanley. The problem is, there are a slew of companies with far worse credit ratings out there: Jeff Seidel, Credit Suisse First Boston's head of convertible-bond research, estimates that about half of all zeros outstanding fall into the junk category. And others are at risk of having their ratings downgraded before the put date. Today, with junk yielding as much as 5 1/2 percentage points above bonds rated investment grade, refinancing can be a pricey proposition.
Contract manufacturer Solectron is one that could well get hit by the high price of junk. It has $845 million in zeros that it will probably have to buy back this January, and another $4.2 billion coming down the pike over the next couple of years. Because of slower- than-expected sales, the company was recently put on negative credit watch by three rating agencies. And if Solectron's credit is downgraded, the zeros would slide into junk status, a situation that could cost the company--and its shareholders--tens of millions of dollars in refinancing charges.
Refinancing isn't the only worrisome cost associated with these zeros. Companies pay hefty investment banking fees to sell their bonds--up to 3% of the amount raised. If the debt is sold back, many will have spent millions for what essentially amounted to a one-year loan. "They're getting bad advice," claims one banker who didn't want to be named. "Look at the fee the banker earned and look at the kind of financing risk the company got into."
As if those potential consequences were not scary enough, shareholders can also get whacked when the bonds are first issued. That's because some 40% are bought by hedge funds, which short the company's stock (sell borrowed shares with the intention of buying them back at a lower price) at the same time that they buy the bonds. If the stock goes down, the shorts make money from their position. If it goes up, they profit by converting the bond to stock. This hedging strategy almost always causes the stock to plummet, at least for a while. Grocery chain Supervalu, for example, recently lost 10% of its market cap the day it announced it was issuing $185 million in zeros.
Despite all the pitfalls, the love affair with such Pollyanna bonds continues, thanks in large part to the slick tax and accounting loopholes they provide. In fact, the hit on earnings per share can be the lowest of any form of financing. Even better, thanks to a wrinkle in the tax code, companies can rake in huge tax savings by deducting far more interest than they're actually paying. All they have to do is agree to pay small amounts of interest if certain conditions prevail. Verizon Communications, for instance, would pay 0.25% annual interest on its $3 billion in zero bonds if its stock price falls below 60% of the issue's conversion price. In the eyes of the IRS, oddly, that clause enables the company to take a yearly interest deduction, for tax purposes, of 7.5%--the same rate it pays on its regular debt. (Why? Trust us, you don't want to know.) That adds up to an annual deduction of more than $200 million, even if Verizon never shells out a dime in interest. Not surprisingly, more than half of the zeros issued in 2001 contain similar clauses. "It's an incredible deal for them," says Vadim Iosilevich, who runs a hedge fund at Alexandra Investment Management. "Not only are they raising cheap money, they're also doing tax arbitrage."
So despite the enormous risks to shareholders, companies continue to issue zeros at a steady clip: According to ConvertBond.com, seven new issues, totaling $3.5 billion, have been sold since Oct. 1 alone. "I think the power of the tax advantage is going to keep them around," says CSFB's Seidel. Call it greed or just blind optimism that the markets will recover quickly--it doesn't really matter. Either way, it's the shareholders who'll be left paying the bill.
FEEDBACK: jrevell@fortunemail.com
The bill comes due
Companies issued convertible zeros, with put features, when the stock market soured. Now repayment looms.
1999 2000 2001 2002 2003 2004
Amount issued, $5.2 $19.6 $37.5 in billions
Amount puttable, $2.4 $2.6 $4.8 $22.0 $19.1 $24.0 in billions
SOURCE: CONVERTBOND.COM
When zero is a negative number
The danger posed by convertible zero bonds depends on a number of factors, according to Morgan Stanley's ConvertBond.com: the size of the bond, the put date, the company's credit rating and cash on hand, and how far the stock must rise for the bond to convert to equity.
[A]Date of put [B]Amount owed (millions) [C]Cash on hand[2](millions) [D]Stock price as of 11/09/01 [E]% below conversion price
Company Bond rating[1] Our risk assessment [A] [B] [C] [D] [E] Tyco 11/17/01 $3,500 $2,600 $54.00 49% Investment grade Not a problem--for now. The conglomerate has cash to pay for bonds put this November. Another $2.3 billion is puttable in 2003.
Solectron 1/27/02 $845 $2,800 $13.25 155% Investment grade In the danger zone. May be downgraded to junk if results don't improve. Has additional $4.2 billion at risk in 2003 and 2004.
Calpine 4/30/02 $1,000 $1,242 $25.50 180% Inv. grade/Junk Possibly a pricey tab. On the border between investment grade and junk, the energy company faces high refinancing charges.
Pride International 1/16/03 $276 $176 $12.50 148% Junk May need to drill for cash. The oil services company already has a heavy debt load in addition to its zeros.
Western Digital 2/18/03 $126 $201 $4.25 547% Junk Hard drive ahead. The tech outfit has already paid down some of its zeros by issuing stock. More dilution possible.
Brightpoint 3/11/03 $138 $67 $3.25 609% Junk Watch out. This mobile-phone distributor plans to repurchase the bonds and is likely to incur high refinancing charges.
Aspect Commun. 8/10/03 $202 $134 $2.00 1,016% Junk The credit rating of this unprofitable call center company is near the lowest grade of junk. High alert!
Enron[3] 2/7/04 $1,331 $1,000 $8.50 1,413% Investment grade Very risky. Among Enron's myriad woes, its debt is on the verge of being downgraded yet again. It's already behaving like junk.
Verizon 5/15/04 $3,270 $3,000 $50.00 70% Investment grade Verizon faces little risk because of its strong credit rating and the long lead time on its put dates.
Merrill Lynch 5/23/04 $2,541 $20,000 $49.00 124% Investment grade Also not yet a problem. This underwriting leader made sure its own zeros could not be put for three years.
[1]Based on ratings from Moody's and Standard & Poor's; Calpine had a split rating at press time. [2]As of most recently reported financial results. [3]Now expected to merge with Dynegy.
Quote: Contract manufacturer Solectron is one zero-bond issuer that could well get hit hard. Stocks have fallen so far that for at least half of all bonds out there, the prospect of conversion is absurd.

B/W ILLUSTRATION: ILLUSTRATION BY DAVID SUTER
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Manager's Journal: What Enron Did Right
By Samuel Bodily and Robert Bruner

11/19/2001
The Wall Street Journal
A20
(Copyright (c) 2001, Dow Jones & Company, Inc.)

This is a rough era for American business icons. Subject to the vagaries of age (Jack Welch), product failure (Ford/Firestone tires), competition (Lucent, AT&T), technology (Hewlett-Packard and Compaq), and dot-bomb bubbles (CMGI), managers and their firms remind us that being an icon is risky business. The latest example is Enron, whose fall from grace has resulted in a proposed fire sale to Dynegy.
Once considered one of the country's most innovative companies, Enron became a pariah due to lack of transparency about its deals and the odor of conflicts of interest. The journalistic accounts of Enron's struggles drip with schadenfreude, hinting that its innovations and achievements were all a mirage.
We hold no brief regarding the legal or ethical issues under investigation. We agree that more transparency about potential conflicts of interest is needed. High profitability does not justify breaking the law or ethical norms. But no matter how the current issues resolve themselves or what fresh revelations emerge, Enron has created an enormous legacy of good ideas that have enduring value.
-- Deregulation and market competition. Enron envisioned gas and electric power industries in the U.S. where prices are set in an open market of bidding by customers, and where suppliers can freely choose to enter or exit. Enron was the leader in pioneering this business.
Market competition in energy is now the dominant model in the U.S., and is spreading to Europe, Latin America, and Asia. The winners have been consumers, who have paid lower prices, and investors, who have seen competition force the power suppliers to become much more efficient. The contrary experience of California, the poster child of those who would re-regulate the power industry, is an example of not enough deregulation.
-- Innovation and the "de-integration" of power contracts. Under the old regulated model of delivering gas and electricity, customers were offered a one-size-fits-all contract. For many customers, this system was inflexible and inefficient, like telling a small gardener that you can only buy manure by the truckload. Enron pioneered contracts that could be tailored to the exact needs of the customer.
To do this, Enron unbundled the classic power contract into its constituent parts, starting with price and volume, location, time, etc., and offered customers choices on each one. Again, consumers won. Enron's investors did too, because Enron earned the surplus typically reaped by inventors. Arguably, Enron is the embodiment of what economist Joseph Schumpeter called the "process of Creative Destruction." But creative destroyers are not necessarily likable, pleasant folks, which may be part of Enron's problem today.
-- Minimization of transaction costs and frictions. Enron extended the logic of de-integration to other industries. An integrated paper company, for instance, owns forests, mills, pulp factories, and paper plants in what amounts to a very big bet that the paper company can run all those disparate activities better than smaller, specialized firms. Enron argued that integrated firms and industries are riddled with inefficiencies stemming from bureaucracy and the captive nature of "customers" and "suppliers." Enron envisioned creating free markets for components within the integrated chain on the bet that the free-market terms would be better than those of the internal operations. The development of free-market benchmarks for the terms by which divisions of integrated firms do business with each other is very healthy for the economy.
-- Exploiting the optionality in networks. In the old regulated environment, natural gas would be supplied to a customer through a single dedicated pipeline. Enron envisioned a network by which gas could be supplied from a number of possible sources, opening the customer to the benefits of competition, and the supplier to the flexibility of alternative sourcing strategies. Enron benefited from controlling switches on the network, so that they could nimbly route the molecules or electrons from the best source at any moment in time to the best use, and choose when and where to convert molecules to electrons. This policy, picked up by others in the industry, created tremendous value for both customers and suppliers.
-- Rigorous risk assessment. The strategy of tailored contracts could easily have broken the firm in the absence of a clear understanding of the trading risks that the firm assumed, and of very strong internal controls. Enron pioneered risk assessment and control systems that we judge to be among the best anywhere. Particularly with the advent of Enron Online, where Enron made new positions valued at over $4 billion each day, it became essential to have up-to-the-second information on company-wide positions, prices and ability to deliver.
The unexpected bad news from Enron has little to do with trading losses by the firm, but with fears among trading partners about Enron's ability to finance its trading activity. In a world where contracts and trading portfolios are too complex to explain in a sound bite, counterparties look to a thick equity base for assurance. It was the erosion in equity, rather than trading risk, that destroyed the firm.
-- A culture of urgency, innovation and high expectations. Enron's corporate culture was the biggest surprise of all. The Hollywood stereotype of a utility company is bureaucratic, hierarchical, formal, slow, and full of excuses. And the stodgy images of a gas pipeline company -- Enron only 15 years ago -- is even duller and slower. Enron became bumptious, impatient, lean, fast, innovative, and demanding. It bred speed and innovation by giving its professionals unusual freedom to start new businesses, create markets, and transfer within the firm.
Success was rewarded with ample compensation and fast promotion, and an open-office design fostered brainstorming. The firm's organization and culture was by all accounts not a safe haven for those who believe the role of a large corporation is to fulfill entitlements for jobs. This was a lightning rod for the firm's detractors. And yet, it could serve as a model for more hide-bound enterprises to emulate.
Enron was a prolific source of compelling new ideas about the transformation of American business. It created a ruckus in once-quiet corners of the business economy. It rewrote the rules of competition in almost every area in which it did business. It thrived on volatility.
The proposed sale of Enron to Dynegy risks the loss of a major R&D establishment, especially given Dynegy's track record as a second mover following Enron's lead. Beyond what is likely to be a difficult and time-consuming antitrust review, Dynegy's greater challenge will be to find a way to make Enron's spirit of innovation its own. Or so we all should hope, because prosperity depends on the ability of firms to reinvent themselves and remake their industries.
---
Messrs. Bodily and Bruner are professors at the University of Virginia's Graduate School of Business Administration.

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

J.P. Morgan Wins (by Not Losing as Much)
By Susanne Craig
Staff Reporter of The Wall Street Journal

11/19/2001
The Wall Street Journal
C1
(Copyright (c) 2001, Dow Jones & Company, Inc.)

You know things are bad on Wall Street when the winner of a stock-selection contest can't come close to breaking even.
J.P. Morgan Chase & Co.'s portfolio was the only one in The Wall Street Journal's quarterly stock-picking survey to slide less than 10% during the three months ended Sept. 30. The value of its stock basket fell 8.6% during the third quarter.
Just six of the 15 financial firms managed to beat the benchmark Standard & Poor's 500-stock index, which dropped 14.7% during the period. Among the star performers that came to J.P. Morgan's rescue: Northrop Grumman Corp., SBC Communications Inc. and Procter & Gamble Co.
"It has turned into a real stock-picker's market," says J.P. Morgan equity strategist Douglas Cliggott. "In the first half, the market bought cyclical stocks, such as credit cards and brokers, in hopes of a recovery. We don't think those stocks will get interesting until sometime in 2003." Instead, the firm's portfolio is weighted toward health care and consumer staples, as well as cyclical stocks such as energy and farm equipment.
The quarter was among the roughest in years for Wall Street investors. The terrorist attacks of Sept. 11 helped contribute to the stock-market losses, which drove down the value of all portfolios in the survey, though the markets have since recovered to their pre-Sept. 11 levels. The last time the group posted results this bad was during the third quarter of 1998, during the Asian financial crisis.
Goldman Sachs Group Inc. and Credit Suisse Group's Credit Suisse First Boston finished at the bottom of the pack, falling 23.2% and 30.1% respectively. The performance of last-place finisher CSFB was dragged down by losses at companies such as Veritas Software Corp. (down 72.3% in the quarter), Praecis Pharmaceuticals Inc. (down 64.8%) and software provider Amdocs Ltd. (down 51%).
For CSFB, "it was not a good stock-picking quarter, that's for sure," says Al Jackson, the firm's global head of equity research. "It was our tech and telecom . . . and the events of Sept. 11 that hurt us."
Credit Suisse First Boston recently changed the approach to its model portfolio, opting against sector weightings, Mr. Jackson says. This strategy has hurt CSFB in recent quarters, because of the steep slump in areas such as technology and telecom. The firm recently added a number of Old Economy stocks to its portfolio, such as Citigroup Inc., Dow Chemical Co. and Gannett Co. Says Mr. Jackson: "We are going back to our roots and asking what our best ideas are."
Like CSFB, Goldman was hit by a drop in the share price of technology companies, such as Check Point Software Technologies Ltd. (down 56.5% in the quarter). Its portfolio was also dragged down by shares of embattled Enron Corp. (down 44.3%). Morgan Stanley and Royal Bank of Canada's RBC Dain Rauscher, which placed 6th and 12th respectively, also have the energy company on their lists.
In addition to Enron, stocks hard it by the terrorist attacks, such as lodging giant Starwood Hotels & Resorts Worldwide Inc., Walt Disney Co. and airlines such as Skywest Inc., also hurt the portfolio performance of many securities firms.
It is unlikely people will buy any company's entire recommended list at one time. The Journal survey is intended to give investors an idea of how their portfolio would look if they let the professionals do all the picking. Calculations in the quarterly survey, done for the Journal by Zacks Investment Research in Chicago, take into account capital gains or losses, dividends and theoretical commissions of 1% on each trade.
Overall, Edward D. Jones & Co., of St. Louis, emerged with the most consistent results across the board, placing second in the quarter and for the year. Its 85% return over five years is the best of the group and ahead of the total return for the S&P 500 of 62.7%. Perhaps more than any other firm, Edwards Jones takes a buy-and-hold approach to investing, making very few changes to its portfolio from quarter to quarter, or even year to year.
"It's the old story of the tortoise and the hare, and we believe slow and steady wins the race," says David Otto, Edward Jones director of research. "We are really, really proud of the five-year number. We believe in getting rich, slowly."
On a quarterly basis, the portfolio of Prudential Securities Inc., a unit of Prudential Financial, came in second only to J.P. Morgan, falling 11.8%. However, investors sitting with the stocks Prudential recommends haven't done as well in the long run. The value of its basket of stocks has fallen 45.9% in the past year, finishing ahead of only Lehman Brothers Holdings Inc., which posted a one-year loss of 54.9%.
Seven firms managed to beat the S&P 500 index during the past 12 months, which fell 26.6% in the period.
Lehman, which finished last in the survey in the second quarter thanks to its heavy weighting in technology, managed to move up in the rankings this quarter. This primarily stemmed from its annual shuffle of the 10 stocks in its portfolio, known as its "Ten Uncommon Values." This time around, the firm's portfolio slipped 18.4% in the quarter, for an 11th place finish. Just one of its 10 stocks, Washington Mutual Inc., managed to eke out a positive return, of 3.1%. Its biggest quarterly loser: Energy company Mirant Corp., which fell 36.3% in the period.
"It's a portfolio that has done decently since the market troughed," says Jeff Applegate, Lehman's chief market strategist. He says he believes the market hit bottom Sept. 21.
--- Brokerage Houses' Stock-Picking Prowess

Estimated performance of stocks on the recommended lists of 15 major
brokerage houses through Sept. 30. Figures include price changes,
dividends, and hypothetical trading commissions of 1%.

---- Best & Worst Picks ---- ----- Returns ------
Biggest Biggest Latest One- Five-
Gain Loss qtr. Year Year

Raymond James
CACI Intl. +49.7% Skywest -51.1% -14.2% -14.7% +56.8%

Edward Jones
Amr Water Wk +20.5 Celestica -47.1 -11.2 -18.7 +85.1

Merrill Lynch
Triad +20.1 Amer. -34.5 -15.4 -19.8 +64.9
Hospitals Express

UBS Warburg
PepsiCo +9.7 BEA Systems -69.2 -12.9 -19.9 N.A.

J. P. Morgan Sec.
Northrop +26.6 Macrovision -58.5 -8.6 -20.0 N.A.

Bear Stearns
MBNA +19.2 Embraer -60.3 -15.9 -22.2 +50.9

Salomon S.B.
Abbott Labs +8.5 Hewlett- -43.6 -16.0 -25.0 +17.9
Packard

Morgan Stanley DW
Johnson & John +11.2 EMC -59.8 -14.2 -29.0 +33.7

Dain Rauscher
El Paso Energy +17.4 i2 -82.6 -19.6 -32.2 N.A.
Technologies

A.G. Edwards
Verizon +4.4 EMC -59.8 -17.4 -33.4 +34.8

U.S. Bancorp Piper Jaf.
Eli Lilly +9.4 EMC -59.8 -22.0 -39.9 +36.7

Goldman Sachs
Wal-Mart +8.3 Check Pt -56.5 -23.2 -40.6 +60.0
Sftwr

Credit Suisse FB
Johnson & John +11.2 Veritas -72.3 -30.1 -44.9 +38.1

Prudential Sec.
Kraft Foods +12.9 BMC -41.6 -11.8 -45.9 +41.3
Software

Lehman Bros.
Wash. Mutual +3.1 Mirant -36.3 -18.4 -54.9 +29.6

S&P 500 Index
-14.7% -26.6% +62.7%

*In latest quarter; holding period may be less than full quarter

N.A. = not available

Source: Zacks Investment Research

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

Business/Financial Desk; Section C
German Bank Is in Talks With Enron To Buy a Unit
By SUZANNE KAPNER

11/19/2001
The New York Times
Page 2, Column 6
c. 2001 New York Times Company

LONDON, Nov. 18 -- A large German bank is in talks to buy Wessex Water from the Enron Corporation, people close to the discussions said today.
Enron is looking to sell Wessex Water, of Britain, as well as other noncore assets in India and Brazil, after a financial crisis nearly brought its main energy trading business to a halt. That crisis led to Enron's decision earlier this month to be acquired by Dynegy Inc., a much smaller rival.
The German Bank, Westdeutsche Landesbank Girozentrale of Dusseldorf, or WestLB, is among several suitors for Wessex Water, people close to the discussions said. The sale has also attracted the attention of industry rivals like Thames Water, owned by RWE of Germany. But such a combination would most likely incur a long review by regulators, who might either block the merger on antitrust grounds, or exact stiff concessions, industry experts said.
Wessex Water is likely to be sold for more than $:1 billion ($1.4 billion) but less than the $:1.4 billion that Enron paid for it in 1998, analysts said.
''In hindsight, we made some very bad investments in noncore businesses,'' Kenneth L. Lay, Enron's chairman and chief executive, told analysts in a conference call last week. Those investments ''have performed far worse than we ever could have imagined,'' he said, citing the Azurix water business, of which Wessex Water is a part, and energy assets in Brazil and India.
Executives from Enron were not immediately available for comment today. WestLB executives declined to comment.
WestLB has been aggressively pursuing acquisitions in Britain, bidding for British Telecommunications' phone network and the nation's railway tracks controlled by the troubled Railtrack, which is restructuring under government supervision. Neither of those bids has progressed beyond the initial stages.
Last summer, WestLB helped finance the management buyout of the Mid Kent Water Company through Swan Capital, its private equity vehicle.

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

Credit Markets
Bond Boom Isn't Likely to Lift Economy As Corporations Swap Old Debt for New
By Jathon Sapsford
Staff Reporter of The Wall Street Journal

11/19/2001
The Wall Street Journal
C1
(Copyright (c) 2001, Dow Jones & Company, Inc.)

When AT&T last week completed the second-biggest bond sale in history -- capping one of the busiest bond periods in years -- it came as welcome news amid fears of a credit crunch. Here was new money, meaning new spending on plants, equipment and jobs that could help pull the economy out of its slump.
That $10.9 billion AT&T deal, and a slew of similar bond deals from big companies ranging from Boeing and Anheuser-Busch to Kraft Foods and General Motors, may not provide as big of a boost as economists are banking on. That is because corporations, like homeowners, are in the midst of a refinancing boom.
Corporations are hitting the market not just because rates are cheap, but because they often can't get money in other crucial markets. In particular, they are sidestepping the commercial paper market -- short-term corporate IOUs used to finance day-to-day operations, where rates traditionally are lowest -- because investors are unwilling to finance many well-known corporations.
The result has been a huge jump in bond sales, the majority of which are used to reduce existing debt. Since the Sept. 11 terrorist attacks, about $135 billion in investment-grade bonds have been sold, up from about $78 billion in the year-earlier period. Overall issuance this year is likely to set a record, clearing $600 billion, compared with $411 billion in 2000.
"The driving force behind this surge in bond issuance is refinancing short-term commercial paper to long-term debt," says John Lonski, chief economist at Moody's Investors Service, a credit-rating agency.
Usually, rising bond issuance presages economic growth. In 1991, corporations sold a record number of bonds to exploit falling interest rates. But then, companies poured much of the money they raised back into their operations, a flurry of investment that foreshadowed the economic boom of the late 1990s.
This time around, the surge in bond deals won't pump in enough new money to the economy to make a dramatic difference. Though, as in the case of the millions of homeowners who are refinancing their mortgages to lower monthly payments, it could help ease some pressure on stretched corporate-balance sheets and help to fund some of the companies' day-to-day operations.
Not all of the money being raised is to refinance short-term debt, of course, and the string of bond deals shows that many of the nation's biggest borrowers have ready access to funding if they need it.
But most companies are similar to AT&T, which last week provided the biggest refinancing example yet.
Over the next three months, the telecom company was facing $6.5 billion in expiring commercial paper. Under normal conditions, corporations pay off maturing commercial paper by "rolling over" that debt, or issuing new commercial paper to replace the old. But rolling over commercial paper became much harder for AT&T after Moody's cut the company's short-term and long-term credit ratings. Through the bond deal, AT&T raised money at relatively attractive rates while avoiding the difficulties of the commercial-paper market.
Other companies facing downgrades also are scrambling to find alternatives to the commercial-paper market through bonds, loans or revolving credit lines. "The ripple effects of this are being felt throughout the capital markets," says Meredith Coffey, senior vice president at Loan Pricing Corp., a debt-market-analysis company.
For the most extreme cases, the bond markets don't offer refuge. Enron, hammered by a third-quarter loss of $618 million that led to a string of downgrades, drew down $3.3 billion from its emergency bank credit line to repay investors in its commercial paper. It then turned to its banks for an additional $1 billion loan to pay off more commercial-paper investors, thus tiding it over until it could merge with rival Dynegy.
Most investment-grade companies aren't nearly so bad off, and thus have ready access to bond investors. General Motors, for instance, had little trouble selling $6 billion in debt last month, while Ford Motor easily sold bonds totalling $9.4 billion.
But the surge in bond sales masks signs that even investment-grade companies are having trouble convincing investors that they are good for their money.
Take Ford. Standard & Poor's and Moody's downgraded Ford's debt ratings last month to triple-B-plus and single-A-3, respectively. With that rating, Ford is far enough down the spectrum of investment-grade debt that many of the ultraconservative investors in commercial paper won't touch it, meaning that it had to turn to corporate bonds to refinance its debt. Ford concedes that a big reason it is selling bonds was to avoid the trouble in the commercial-paper market.
Boyce Greer, the money-market group leader at Fidelity Investments, says he often stops buying the commercial paper of a corporation at the first sign of eroding profitability -- even before they get downgraded. "You can't wait around for a rating agency [to downgrade a company]," he says.
Moody's has downgraded five times as many corporations as it has raised so far this year. Thus, the market for corporate commercial paper has shrunk to $1.4 trillion at the end of October, down from $1.6 trillion at the end of last year.
---
Friday's Credit Markets
Last week was a brutal time to own Treasurys. The market sold off so sharply as to push yields, which move inversely to prices, almost back up to where they stood before the terrorist attacks. It was the worst bond selloff since 1987, according to economists at Banc One Capital Markets.
Losses were heaviest in issues like the two-year note, the most sensitive to expectations about Federal Reserve policy. Since hitting a record low of 2.30% on Nov. 7, the two-year yield has risen 0.80 percentage point to 3.05%. In the same period, the 30-year bond yield has risen 0.50 percentage point to 5.27%.
At 4 p.m. Friday, the benchmark 10-year Treasury note was down 1 3/32 points from late Thursday, or $10.94 per $1,000 face value, at 100 25/32. Its yield jumped to 4.897% from 4.756% Thursday.
The 30-year Treasury bond's price fell 1 19/32 to 100 25/32 to yield 5.317, up from 5.211% Thursday.
Why the selloff? People in the market cite a shift toward the view that the U.S. economy may finally be on the brink of recovery. That means the Fed may not need to employ many more rate cuts to get growth back on track.
-- Michael S. Derby and Steven Vames

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

Business; Financial Desk
Preview / WEEK OF NOV. 19-25 Investors Looking for Answers in Enron Filing
Bloomberg News

11/19/2001
Los Angeles Times
Home Edition
C-2
Copyright 2001 / The Times Mirror Company

Enron Corp. investors hope the energy trader's third-quarter report to the Securities and Exchange Commission will answer some of the questions that sent its shares tumbling and led to a proposed sale to rival Dynegy Inc.
Enron, which has been criticized for failing to clearly explain how it makes money, may disclose in a filing expected today more on how much is owed by the company and affiliated partnerships, as well as any planned job cuts and other cost-saving moves related to Dynegy's $24-billion buyout.
Enron agreed to sell after its stock plunged 67% in three weeks amid an SEC investigation into partnerships run by Enron executives. Investors worry that new disclosures, such as previously unreported debt, might threaten Enron's credit rating and scuttle the merger, possibly pushing Enron into bankruptcy.
Enron Chairman Kenneth Lay acknowledged last week that failed investments and a loss of investor confidence forced the sale to Dynegy, and he and other executives pledged to be more open with investors.
Enron shares fell 48 cents Friday to close at $9 on the New York Stock Exchange. Dynegy fell $1.53 to $42.47.
Enron's third-quarter earnings report, which had been expected last week, was delayed by the Dynegy talks and a restatement of earnings, Chief Financial Officer Jeffrey McMahon said.
Enron reduced net income for four years by a combined $586 million to include losses from affiliated partnerships.
Today's filing, called a 10-Q, will include a balance sheet summarizing assets and debts. Enron for years has omitted balance sheets, which the SEC requires as part of the 10-Q, from its press releases announcing earnings.

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

COMPANIES & FINANCE INTERNATIONAL - Dynegy bid faces long wait.
By NANCY DUNNE and ANDREW HILL.

11/19/2001
Financial Times
(c) 2001 Financial Times Limited . All Rights Reserved

Dynegy's $9.8bn rescue bid for Enron, the larger rival energy group, poses complex and unprecedented regulatory challenges for the Federal Energy Regulatory Commission (Ferc), which is likely to lead the review of the bid.
Officials from the two Houston-based companies, which announced the deal 10 days ago, estimated the regulatory process would take six to nine months to complete.
But the Ferc review could take longer, according to experts, and approval of the deal is further complicated by such issues as the parallel Securities and Exchange Commission investigation into Enron's finances.
"It's very complicated. It will be very time-consuming," said one person close to the Ferc commissioners. As of Friday, the groups had not yet filed for Ferc approval.
"(The deal) raises issues that have never been considered before by Ferc," said Edward Comer, general counsel to the Edison Electric Institute, the association of US electric utilities.
"It has never considered the merger of two huge marketers, and in the past, marketing wasn't considered as significant a portion of the energy sector as it has become."
A typical deal now takes about 200 days to win Ferc approval. But Mr Comer said approval of the Dynegy bid could take anywhere from six months to two years.
The agency's guidelines prohibit mergers if they give the new company the market power to push prices above competitive levels for "a significant period of time".
It analyses market power by identifying the products sold, the customers and suppliers affected and market concentration.
"Mergers in the past have been considered on the basis of assets," said Patti Harper-Slaboszewicz of Frost & Sullivan, a market research and consulting firm. "The rules were written when the industry was vertically integrated."
Now the question is how ownership of energy trading services will be calculated. It could be difficult to assess if the companies are exerting market power because information on the trading books of companies such as Enron and Dynegy is closely guarded, she said.
The two companies must also win consent from either the Justice Department or the Federal Trade Commission, and from states where the companies have pipelines and provide retail services.
(c) Copyright Financial Times Ltd. All rights reserved.
http://www.ft.com.

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

Fund Track
Russia Fund Surges Amid Global Woes
By Victoria Marcinkowski
Dow Jones Newswires

11/19/2001
The Wall Street Journal
C17
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Everything is relative in the investing world, so with U.S. investors nervous about homeland stocks, European and Asian markets sagging and terrorism worries abounding, Russia's risky markets seem less so these days.
So far this year, Pilgrim Russia Fund, which was bought by ING Groep NV late last year, has been the top-performing regional mutual fund, gaining 53%, according to fund tracker Morningstar Inc. By comparison, the Standard & Poor's 500-stock index has slumped nearly 14%.
Of course, the risks in Russia remain. Despite recent economic gains, the country still is struggling with a weak banking system, inadequate state institutions to enforce contract laws and few businesses run by the "modern" rules of corporate governance, according to Samuel Oubadia the 37-year-old manager of the Russia fund.
"But they are getting more open," Mr. Oubadia said, though Russia's lax financial reporting standards are still one of the main roadblocks for foreign investors. With $49 million in assets, the Pilgrim Russia fund invests between 90% and 95% in Russian stock, with the balance held in cash.
"While the global economy is slowing, Russia is still in an expansion mode," Mr. Oubadia said. After years of economic reforms, consumer spending is up 10% and the former Soviet Union's gross domestic product is expected to grow 3% to 5% next year, more than twice as much as that of the U.S. and Europe.
Two-thirds of the fund's stocks are oil and gas companies, which are still the most liquid stocks in Russia. Utilities, mining, telecommunications companies and breweries make up the rest. "There's no escaping oil and gas if you want to manage a Russia fund," Mr. Oubadia said.
The spike in oil prices earlier this year made the investment in oil worthwhile, propelling earnings growth for Russia's oil and gas companies. Higher oil prices also worked wonders for the Russian economy, which is largely dependent on oil and gas. More recently, however, falling oil prices have threatened the companies' profit growth.
But the fund manager, who is based in The Hague, said he doesn't think people should invest in Russian oil stocks because of their earnings prospects. "You don't invest because of earnings growth -- there will be none for Russian oil companies this year. You invest because of the stocks' low valuation," Mr. Oubadia said, adding that most of the Russian oil companies still trade well below the world-wide average for the sector.
Yukos Oil is one of the fund's largest investments, making up about 12% of the fund's holdings. Surgutneftegaz and Lukoil Holdings also make up more than 5% each of Pilgrim Russia's assets. While Mr. Oubadia said the companies should be able to handle falling oil prices, partly by cutting production, he worries that further price erosion could hamper a fragile Russian stock market that relies so heavily on oil and gas stocks.
"Can Russian markets do well with lower prices for oil?" he asked. "The short answer is yes. But how low will prices drop?" Mr. Oubadia acknowledged that weak oil prices might cause him to shift some investments from oil and gas into other Russian sectors, including telecom stocks and consumer products.
The Russia fund isn't for the timid. In 1998, when the Russian economy collapsed, the fund -- then called Lexington Troika Dialog Russia, lost 83% of its value. A year later, the fund soared 160%. In 2000 the fund finished down almost 18%.
---
JANUS STOCK SHUFFLE: Janus Capital Corp. bulked up on lower-priced value stocks and shed some shares of its long-held technology companies during the third quarter, a new Securities and Exchange Commission filing showed.
The Denver fund firm reported that during the third quarter, it lowered its investments in 14 of the 20 largest holdings it had owned as of June 30. The largest reduction was a 43.6 million-share sale of Nokia Corp. stock. After the sale, Janus still owned a large 183.2 million-share position in the wireless-phone company at the end of the third quarter.
During the quarter, Janus also sold more than half of its stakes in tech companies EMC Corp. and Sun Microsystems Inc. In addition, the fund company, a unit of Stilwell Financial Inc., trimmed its exposure to energy company Enron Corp., selling 1.5 million shares to reduce its overall position to 41.4 million shares at the end of September.
On the buying side, Janus, one of the hottest fund firms of the late 1990s thanks to bets on leading technology stocks, about doubled its position in software company Microsoft Corp. It also boosted its holding in the investment company run by Warren Buffett, Berkshire Hathaway Inc., while starting a small position in Philip Morris Cos., whose dividend-rich stock is usually more popular with price-sensitive "value" managers. Janus has introduced new value portfolios recently, but most of its investors' assets still follow faster-growing companies.
-- Aaron Lucchetti and Todd Goren

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

Wessex Water

11/19/2001
The Financial News
Copyright (C) 2001 The Financial News; Source: World Reporter (TM)

The Sunday Telegraph
The German state-owned bank, WestLB, is in talks to buy Wessex Water from its troubled US parent Enron.
WestLB is thought to be one of a number of financial buyers to have approached Enron with a view to acquiring Wessex, which is valued at more than AGBP1bn (e1.63bn).
Enron, the energy trading group which bought Wessex in 1998 for AGBP1.4bn, is being bought by its much smaller US rival Dynegy after collapsing into financial crisis.
The Independent on Sunday
The water and sewage company Wessex Water is understood to be up for sale following an offer to take over its owner, Enron.
Three years ago, Enron spent AGBP1.4bn on Wessex Water.
But Dynegy is understood to want to concentrate on US and European energy assets and is not interested in non-core assets.
Any hope to regain the same amount of money could be derailed as the industry is put off by regulatory problems, and the company's results have worsened due to imposed price cuts over the past year.

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

India BSES:Dabhol Pwr Proj Due Diligence Done Jan -Report

11/19/2001
Emerging Markets Report
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -(Dow Jones)- India's BSES Ltd. (P.BSX) said Monday due diligence on the 2,184 megawatt Dabhol power project is expected to be completed by January 2002, the Press Trust of India news agency reported.
"The due diligence process will take six-eight weeks after signing of the confidentiality agreement with Enron-promoted Dabhol Power Co.," the report said, quoting BSES' Chairman and Managing Director R.V. Shahi.
The U.S.-based energy company Enron Corp. (ENE) has a controlling 65% stake in the Dabhol power project located in the western Indian state of Maharashtra.
The Maharashtra State Electricity Board, or MSEB, has 15%, while U.S.-based companies General Electric Co. (GE) and Bechtel (X.BTL) each own 10% in DPC.
Enron wants to sell its stake in DPC because of payment defaults by its sole customer, the MSEB, and the Indian federal government's failure to honor payment guarantees.
In August, the U.S. company said it was willing to sell its stake at cost.
BSES would appoint three separate consultants for technical, financial and legal due diligence on the Dabhol project, Shahi said.
After signing the confidentiality agreement, BSES will formally look into the books of DPC, its loans, sponsors and other assets and legal wrangles before deciding on the acquisition price of the company, the report said.
The Dabhol project, at a cost of $2.9 billion, is India's largest single foreign investment to date.
-By Himendra Kumar; Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dowjones.com

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

India Dabhol Pwr: No Termination Notice Until Crt Verdict

11/19/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -(Dow Jones)- Dabhol Power Co. will wait for the Bombay High Court's verdict before sending a final termination notice to its sole customer - the Maharashtra State Electricity Board, a source close to the company told Dow Jones Newswires Monday.
"Nothing is going to happen until Dec. 3. The Bombay High Court has adjourned all proceedings...(and)...DPC will wait for the court's verdict before deciding its future course of action," said the source.
Enron Corp. (ENE) has a controlling 65% stake in the 2,184-megawatt Dabhol power project in the western Indian state of Maharashtra. Enron wants to sell its stake in DPC because of payment defaults by the MSEB and the Indian federal government's failure to honor payment guarantees. In August, the U.S. company said it was willing to sell its equity at cost.
At $2.9 billion, Dabhol is India's largest single foreign investment to date. MSEB has 15%, while U.S.-based companies General Electric Co. (GE) and Bechtel (X.BTL) own 10% each in DPC.
-By Himendra Kumar; Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dowjones.com

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

Financial Post: News
Fears raised on Enron deal: $15.6-billion rescue bid
Andrew Hill and Sheila McNulty
Financial Times

11/19/2001
National Post
National
FP3
(c) National Post 2001. All Rights Reserved.

NEW YORK - Companies that trade with Enron Corp., the Houston, Texas-based energy group, are taking precautions in case Dynegy Inc., also of Houston, withdraws its $15.6-billion rescue bid for its rival, a decision that could trigger a crisis in the energy trading market.
Counter-parties to Enron, which is one of the principal market-makers providing liquidity in the energy market, are seeking to limit their exposure to the group, in spite of reassurances from both Enron and Dynegy that the takeover will go through.
Experts also say the implications of the deal are so complex that the regulatory review could take much longer than the six to nine months company officials have estimated.
Analysts say the 27% spread between the value of Dynegy's offer price and Enron's share price suggests a 65% to 75% chance the bid will succeed. But bankers and energy executives are still worried about systemic risk, both in the energy market and in financial markets, where companies such as Enron use derivatives to offset the risk of energy price fluctuations.
Enron was close to meltdown until Dynegy stepped in with a rescue bid 10 days ago, having persuaded credit rating agencies not to downgrade Enron's debt to below investment grade.
Clauses built into the merger agreement signed with Enron give Dynegy the right to walk away under certain circumstances, although the two companies' officials and advisors differ on how easy it would be for Dynegy to pull out.
While the situation remains uncertain, companies that deal with Enron are reluctant to lock themselves into long-term contracts to buy or sell power, said John Olson, an analyst at Sanders Morris Harris, the investment banking arm of Houston, Texas-based Sanders Morris Harris Group.
Keith Stamm, chief executive of Aquila Inc., the energy marketing and risk-management company, said his company had begun preparing contingency plans in case the deal fell through.

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

Blackout in the power sector
A V Rajwade

11/19/2001
Business Standard
10
Copyright (c) Business Standard

Every foreign company in the Indian power sector wants to exit. Of these, the most controversial has been Enron and its Dabhol Power Company Ltd (DPCL). This apart, the experience of investors in the "reformed" power sector in Orissa is also unhappy. Five years ago, Orissa was the first state to adopt the World Bank-recommended model of separating generation, transmission and distribution of power, and an independent regulator. The Godbole Committee has recently recommended the same for Maharashtra as well.
Clearly, separating the three functions is a complex restructuring. Maybe it helps privatisation, the current fashion on the subject having been set in Thatcherite Britain. While some privatisations in UK have succeeded, the experience has not been consistent all over.
Take UK's rail sector. While privatising, the government in its wisdom decided to separate the ownership of the rail network (Railtrack) and the ownership and operation of trains. The contractual relationship between the various operating companies and Railtrack were governed by a byzantine, bewilderingly complex system of penalties and incentives, to be monitored by an independent regulator.
Such separation had no parallel. Besides, Railtrack suffered from poor management, cost escalation in modernisation of tracks, etc. Several serious accidents occurred and fixing responsibility became difficult. The "reform" did not work, and Railtrack was put back under public control last month.
What are the chances of trifurcation of the power sector in India succeeding? Pretty poor, if the experience of Orissa is any guide. It faithfully separated the three functions, and privatised distribution and part of generation. AES, a foreign company, was 49 per cent investor in a generating company, and 51 per cent in CESCO, a distribution company. As Gajendra Haldea analysed in this paper on August 27, "The policy and regulatory framework was inadequate and myopic."
Distribution losses, a euphemism for power theft, were much larger than the companies had been led to believe at the time of privatisation. CESCO defaulted in paying the dues of GRIDCO, the transmission company, which in turn defaulted to the generating company. Indeed, all CESCO's cash inflows are now escrowed, leaving it no money even to pay salaries. For all practical purposes, the distribution companies seem to be in a difficult situation, perhaps beyond redemption, and the "reform" is a total mess.
The crux of the problem in the power sector is not whether a unified SEB is less efficient than trifurcated companies it is the political unwillingness to charge a price which covers the cost to all consumers. For a while, cross subsidisation worked with commercial consumers subsidising the household and the agricultural segments.
However, as the burden became too large, the commercial sector started moving to captive generation, further worsening SEB finances. An "independent" regulator for power tariffs may not solve the problem. He may fix economic prices but will the state come forward to protect the bill collectors, punish power thiefs, face social unrest if power to recalcitrant consumers is cut off? So long as the answers to these questions are in the negative, as, sadly, they are, the institutional restructuring is no substitute for substantive action. No wonder all foreign investors in the power sector want to get out!
Enron too wants out but it has many more problems in its home country, over and above its dispute with MSEB. It had attracted a lot of adverse publicity for gouging power consumers in California, a state in a power crisis (see World Money, February 2, 2001). The Internet craze also had a hand in Enron's misfortunes. It became an energy trader, established an electronic trading platform, had broadband ambitions, went into a disastrous diversification in water supplies which, if I remember correctly, led to Rebecca Mark's exit. Perhaps it went into too many areas too quickly under Jeffery Skilling, ex-McKinsey, and was notorious for opaque, complex accounts.
To top it all, last month it announced that it will take an extraordinary $1.2 billion charge in its third quarter results for losses in financial activities. Enron's chief financial officer, who was supposed to be in charge of these, has resigned amidst reports that a private equity fund associated with him was involved in them. The SEC is investigating the affair and Enron's share price is down 67 per cent since mid-October. There are some reports that Shell may make a bid for Enron.
After its ratings were downgraded, Enron is desperate for liquidity and anxious to dispose its assets. DPCL was already on the platter; now a sale has become even more urgent. Reportedly, Tatas and BSES are interested; so are the lending institutions. Clearly, if a settlement is to be reached, this is the optimum time.
But one is not very optimistic. For one, Delhi and Mumbai will be involved, and bureaucracies never understand opportunity costs. Our byzantine decision-making processes make timely decisions impossible. Further, if a deal does take place, there will be the inevitable allegations of corruption. It is much safer for the reputation of the concerned ministers in Mumbai and Delhi to allow the drift to continue, to "let the law take its own course", whatever the costs! Sadly, as Jairam Ramesh said in this paper, Indian politicians respond to developments only out of compulsion, not conviction.

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


The following customers are currently covered by Fred Lagrasta's middle market desk primarily for derivative transactions.  In all cases except for Hallwood, ENA Denver has a relationship with these customers that primarily covers their physical business, we would like to expand that business to cover their Derivative business as well.  The list is based on priority.  We would be willing to cover them for their West Gas business only.  Fred could continue to cover their East, Central and Oil/Liquids business.

Xcel Energy (PSCo) and affiliate e Prime.
Devon Energy
Cross Timbers
Hallwood Energy
Forest Oil
Prima
Patina Oil and Gas
Westport


Claudia


Okay,  I'm in for driving together on Friday.  Although I'd love to see my sister and her family in Austin, I decided last night that I'm just too tuckered out to make this weekend any more exhausting than it's already going to be.  So...we just need to figure out what time we're leaving on Friday morning and who wants to drive.  I'm going to map out all of the directions for the weekend today so I cut down on my frustration level in regards to San Antonio.  Absolutely no more getting lost for Susan...zapps my energy.

Talk to you later,
Sue


I am out of the office on Monday for jury duty.  In my absence, Charlotte
Hawkins will be the contact for the Texas Desk
Logistics group.  She will attend any meetings while I am out and is
responsible for our group (we will rotate this backup
role among the seniors of the group).  I  can be paged at  (713) 708-0117.
Thanks,  Pat


Correct Numbers:

Teco Tap       31.876 / HPL Gas Daily ;  44.374 / HPL IFERC

LS HPL LSK IC            20.000 / Enron

Previous Numbers:

Teco Tap       76.250 / HPL IFERC ; 20.000 / Enron

LS HPL LSK IC       20.000 / Enron


Jim,

Greg received a faxed copy of a slide on ENA - Wholesale Power Network from
Kathyn Corbally.  The slide gives a comparison in physical power volumes with
1st Quarter 99 vs. 1st Quarter 2000.  The slides shows a 5% percent increase
and Greg thought that you mentioned that the increase was closer to 20%.

Please advise.

Liz


-----Original Message-----
From: 	"Rodenburg, Eric" <erodenbu@UtiliCorp.com>@ENRON
Sent:	Tuesday, February 19, 2002 8:28 AM
To:	Schoolcraft, Darrell; Spraggins, Gary; Carr, James; Blair, Jean; Wilkens, Jerry; Clapper, Karen; Washington, Kathy; Callans, Nancy; Bryan, Randy; Walden, Shirley
Subject:	SUNFLOWER - NNG - HOURLY - 2002.xls

 - SUNFLOWER - NNG - HOURLY - 2002.xls


-----Original Message-----
From: 	Hermann, Robert
Sent:	Thursday, November 15, 2001 8:33 AM
To:	Derrick Jr., James
Subject:	FW: Baker & Mckenzie

 -----Original Message-----
From: 	Sayers, Rod
Sent:	Thursday, November 15, 2001 6:47 AM
To:	Hermann, Robert
Subject:	Baker & Mckenzie

September 2001 - teleconference with Baker McKenzie Sydney regarding Australian tax treatment of proposed Rio Tinto transaction

September 2000 - Istanbul conference - Baker McKenzie presented on financial instruments (UK and US tax). James MacLachlan and Stuart Lippeles

June 2000 - meeting with John Petersen in London. Topics included public offer for MG plc and in particular the time constraints for making a s338 election before MG plc becomes a CFC. Role of option over MG AG and Directors' shares in this analysis.

October/November 2000 - B&M provided an "opinion" on the ETOL monetization transaction (ETOL I).

Jan - April 2000 - Sutton Bridge disposal (Stuart Lippeles and John Petersen)

Recent lunch with Hassan Khan of London office led to a suggestion for B&M to do a quick review (no fee) of duty exposures.  Work has not been done yet.


This report lists all customers that are going to receive a rejection letter
from credit regarding their EnronOnline application.  If you want this
process delayed so you can contact your customer or follow up with credit on
behalf of your customer, please contact Claudia Clark at x39281 or Karen
O'Day at  x54135.  If they are not contacted, the rejection letter will  be
sent directly to the customer.

PA Company Name:

1)   Bodine Electric Company
2)   Fuel Management Services
3)   Quest Energy LLC
4)   ScissorTail Energy, LLC
5)   MDC Corp.
6)   City of Hamilton
7)   Engage Energy America Corp.
8)   Dominion Telecom Inc.
9)   Natural Gas Supply Assn.
10) Gallo Glass
11) SATRA Resources LLC
12) Courik Management Inc.
13) United Aluminum Corporation
14) Preussag Intl. Steel Corp.
15) Oak Hill Coal Corporation
16) Norsteel Corp.
17) Kentucky Natural Gas Corporation
18) Internet Publishing Group
19) Hunt Oil Company of Canada, Inc.
20) Fair Oil, Ltd by: Fair Oil Company of Texas its sole General Partner
21) Beartech Engineering LTD.

Homer
x57642


Your own personal palm pilot hard at work.  As promised, here's a list of
UT's games this season...color coded for your convenience of course.

Sep 9                UL Lafayette,  12:30pm

Sep 16              at Stanford,   10:15pm

Sep 23              Houston,   TBA

Sep 30              Oklahoma St.,  TBA

Oct 7                 Oklahoma,   3:30pm  (a.k.a. "OU Weekend"...this is a
huge game...the two teams meet halfway at the Cotton Bowl in Dallas)

Oct 14               at Colorado,  TBA

Oct 21               Missouri,   TBA

Oct 28               Baylor,   TBA

Nov 4                at Texas Tech,  2:00pm

Nov 11              at Kansas,   TBA

Nov 24              Texas A&M,   3:30pm  (Thanksgiving Weekend)

 All Times Eastern

* Home games are in burnt orange...what else?


<http://www.excelergy.com/images/colorbar.jpg> <http://www.excelergy.com/>

  January 14, 2002
Happy New Year from Excelergy!

We're writing to keep updated on significant news detailing Excelergy's expanding corporate growth and success. Following a record-setting 2001, Excelergy has continued its strong momentum in 2002 with the signing of two major agreements.

FIRST MEDIA/COMMUNICATIONS CLIENT
  <http://www.excelergy.com/images/spacer.gif>
In an extraordinary validation of the flexibility, scalability and speed of Excelergy's products, Virginia-based S? Entertainment, a broadband video and interactive service provider, officially joined the growing Excelergy client family. In partnership with systems integrator Xperts Inc., Excelergy continues to expand its market reach.

                          <http://www.excelergy.com/images/purple_arrow.gif>   www.excelergy.com/news/jan07-02.html <http://www.excelergy.com/news/jan07-02.html>

While our bedrock vertical will always remain the energy/utility industry, we've now made our first mark in another exciting market!

JOINS MICROSOFT TO DELIVER GROUNDBREAKING WEB SERVICES
  <http://www.excelergy.com/images/spacer.gif>
Excelergy is combining key elements of its open, componentized, native XML technology platform with the Microsoft .NET application development platform, delivering the most advanced Web services available in the energy/utility industry.

                          <http://www.excelergy.com/images/purple_arrow.gif>  www.excelergy.com/news/jan09-02.html <http://www.excelergy.com/news/jan09-02.html>

Though this industry trend is just now being recognized by other companies, Excelergy's products have been delivering XML Web services to our clients for more than two years. Recently, Microsoft has established leadership among its competitors in this area, and our common view strengthens our relationship.

CEO BILL MAHONEY IN THE BOSTON GLOBE
  <http://www.excelergy.com/images/spacer.gif>
Both of these announcements position Excelergy as consistently "ahead of the curve" in delivering the most advanced products and technology to restructuring markets. This kind of leadership is why CEO Bill Mahoney was recently called on byThe Boston Globe  to give his "front row look" at major issues facing companies in the energy industry.

                          <http://www.excelergy.com/images/purple_arrow.gif>  The Boston Globe - 12/23/01 - view PDF file <http://www.excelergy.com/news/images/BostonGlobe-Mahoney-122301.pdf>

Stay connected with us as we have more exciting news planned for the coming weeks. The week of January 22 we'll be announcing details about our record-setting 2001. Until then, we wish you an enjoyable and prosperous 2002!

For questions, comments or more information, contact Jay O'Brien, Senior Manager Marketing Communications, 781-372-5003 or jay.obrien@excelergy.com <mailto:jay.obrien@excelergy.com>.

If you would like to be removed from this list, please respond to this message with a "remove" message in the Subject line.


To All,

Attached to this message is a complete report on issues that are of concern to Enron.

Below is a highlight version of the key issues contained in the report.

FERC Seam Technical Conference report by Frank Afranji - Key message - Western RTOs, act now, act responsibly, if you don't FERC will do it for us and impose the PJM model
OASIS Phase II as reported by Jerry Dempsey - Key message - Western entities need to be more pro-active in attending and providing input to the NERC Electronic Scheduling Collaborative otheriwse they run the risk of NERC imposing standards which are not applicable to western RTO development.
Resource Adequacy - aka - Installed Capacity Markets.  NERC is considering California as an example of how the "Market" has failed to provide adequate generating resources to meet the needs of the region.  There are discussions now taking place to consider development of "Resource Adequacy" standards.
RTO Congestion Management Updates - When citing how DSTAR will align closly with RTO West's physical flow-path congestion management paradigm, Jerry Smith of APS publically corrected Mike Raezer and stated that on "Day-One" the DSTAR PTOs are implementing contract path.
West of Hatway - Rating decrease from 2800 to 2200, reasons and remidies along with possible new RAS requirements.
Path Connectivity Map - Does this idea make sense?  What would you like to see added? (Traders input requested)

If you have any questions, concerns or wish to be removed from the distribution list, please contact me.

Kind Regards,

Dave


Ted

Please find attached mail as distributed  by Enron Metals senior management
today. The authorised trader list has been extended by one person only and
submitted to Rick for approval. The memo lays down the interaction between
the authorised traders and the requirements of central direction of trading
activities for agency trading.

Regards
Andy

---------------------- Forwarded by Andrew Cornfield/LON/ECT on 01/11/2000
13:36 ---------------------------

Michael J Hutchinson@ENRON
01/11/2000 13:33
Sent by: Debbie Foot@ENRON
To: Enron Metals Limited
cc: Michael Farmer/EU/Enron@ENRON, Andrew Cornfield/LON/ECT@ECT, Tim
Poullain-Patterson/LON/ECT@ECT

Subject: Authorised Traders

Enron Corporate policies lay down requirements for trading activities with
respect to authorised traders and agency trading. The attached memo details
these for Enron Metals. All personnel should read the attached memo and if
they have any questions direct them at either of us, or Andrew Cornfield in
Risk Management.

Mike Hutchinson
Mike farmer


Hi  Vince, Krishna & I talked to this student while were at Sycamore
Networks.  He appears to be very qualified for our EBS Analytics group.
Sycamore has a professional services team that provides consulting on network
optimization modeling, etc. They do this to push their products, etc....  One
of the professional in that group highly recommended this student. We are
currently working with the same professional at Sycamore to perform our
intial network design analysis (since the deadline was today!).   I have
arranged for the MIT student's visit to Houston along with the two Standford
students this month. I have handed over the task of arranging such visits to
Elisabeth Grant. She will arrange everything and charge our RC so that we can
allocate to John Griebling later.  Stinson and I think that is the most
effective way of doing this.

Regards,

Ravi.
----- Forwarded by Ravi Thuraisingham/Enron Communications on 02/07/00 01:16
PM -----

	salal@mit.edu
	02/04/00 08:33 AM

		 To: pkrishan@enron.com
		 cc: Ravi Thuraisingham/Enron Communications@Enron Communications,
brett.leida@sycamore.net
		 Subject: Writeups

Hi Krishan, Ravi,

I apologize for the delay in mailing the writeups -- some unforeseen
complications completely shot the last 1-1/2 day. I am attaching PDF
versions of:

 1. The first two chapters of my thesis, which should help
    get a sense of what we are trying to do.
 2. Two more technical modeling writeups for services I am
    attempting to model.

The writeups are, as I mentioned before, works in progress, and
incomplete, and therefore I apologize in advance for confusions
that might arise. I also request that you not circulate these widely
for obvious reasons.

Thanks very much,
Salal

-----------------------------------------------------------------------------
                                Salal Humair
                    Massachvsetts Institvte of Technology
                          Operations Research Center
                             Rooms E40-130, 5-332A
                                x3-3014, x5-9727
-----------------------------------------------------------------------------

 - Expexp.pdf
 - Fedex.pdf
 - Thesis.pdf


Check into reservations.  Thanks.  Jeff
---------------------- Forwarded by Jeffrey A Shankman/HOU/ECT on 12/12/2000
12:49 PM ---------------------------

Caroline Abramo@ENRON
12/12/2000 12:35 PM
To: Jeffrey A Shankman/HOU/ECT@ECT
cc: Per Sekse/NY/ECT@ECT
Subject: holiday party

Hi-
We are having our holiday party on Dec 20 at 6 pm at the Brasserie at 100
East 53rd (53 btwn Park/Lex)- the whole office is going- about 20 people from
ENA, EES, Broadband, Networks- hope you can come.

Rgds,
CA


I am attaching the latest draft of the gas GTC for your review.  Please note
that in discussions with Rolo and Guillermo yesterday that we determined that
we cannot call the gas product "firm" from a regulatory standpoint since we
do not plan to have firm transport and firm gas for all delivery points at
all times.  Additionally, I have started to redraft the damages clauses to
account for the fact that we may be the defaulting party and that certain of
our customers may not be able to purchase replacement gas or fuel on a spot
basis if we decide not to deliver on any given day.  (For that matter we may
not be able to resell gas on a spot basis if the counterparty does not take
on a given day.)  Rather than leave this situation ambiguous in the damages
section we thought it better to address the issue up front.

Julian and I met today on the power GTC and have generated more questions
than answers at the moment.  Julian, Andrea and I will need to work next week
on coming up with the next draft.  The key to the next draft is the
involvement of both Julian and Andrea.  Because of the unique Argentine
issues in drafting the GTC I will not be able to do much more than raise
questions and issues (and trying to clarify commercial positions) as I was
doing today with Julian.  I understand that Andrea may not be able to be in
Houston the beginning of next week but I would recommend that she come back
up Wednesday or Thursday and that perhaps Julian come to Houston Thursday
after his trip to London to help put the documentation to bed.  We are
working on this as fast as we can but there are some open issues that will
effect how the documentation will be drafted.  Julian can fill you in on some
of the details we were working on today.

Mark Taylor and I were on a conference call this morning with outside counsel
discussing how to structure your online products so they conform to the way
the rest of Enron is doing Online business and we should have the relevant
legal risks for Mark's consideration identified by counsel on Wednesday.

Let me know if you have any questions.

Here is the last draft of the product description for gas.

	Michael Guerriero
	10/13/2000 12:33 PM

		 To: Brent Hendry/NA/Enron@Enron, Andrea Calo/SA/Enron@Enron, Julian
Poole/SA/Enron@Enron
		 cc:
		 Subject: Power GTC Status

In that now it is Friday afternoon please brief me on the status of this
document. When should I expect to receive the next draft.

MFG
---------------------- Forwarded by Michael Guerriero/SA/Enron on 10/13/2000
02:36 PM ---------------------------

	From:  Michael Guerriero                           10/12/2000 07:12 AM

To: Brent Hendry/NA/Enron@Enron, Andrea Calo/SA/Enron@Enron, Julian
Poole/SA/Enron@Enron
cc:

Subject: Power GTC Status

I am greatly concerned that the status of the power GTC is going to hold us
up at this point. I am aware you are all working on it today and Monday but
as far as I can see this document is only about 20 % done. Please put the
necessary time and attention into completing this document. I would like to
see a the draft  distributed after Julian and Brent have worked on it today.
I will submit my comments this weekend in advance of the Monday work session
with Andrea.

MFG