too bad we can't put something in the Copperfield newsletter

 -----Original Message-----
From: 	Ragaz2@aol.com@ENRON [mailto:IMCEANOTES-Ragaz2+40aol+2Ecom+40ENRON@ENRON.com]
Sent:	Tuesday, September 18, 2001 12:48 PM
To:	Cskadal@aol.com
Cc:	FRANKZAGAR@kobelcoamerica.com; jtholt@houston.rr.com; Tholt, Jane M.; JayCelia@hal-pc.org; IGovernale@aol.com; margo.Mowbray@occ.treas.gov
Subject:	Fwd: FW: Fw: local (Copperfield area)  business cheering USA terrorism

This is enough for me not to want to eat there ever again.
Esther
In a message dated 9/18/2001 11:14:11 AM Central Daylight Time, Sharon_Dearman@bmc.com writes:
This was sent to me by a friend.  When you read it you'll see why I've
passed this on!
Jane
Hi ladies, just wanted to let you know of something that happened in our own
area on the most terrible Tues. morning ever.  As people were dying in New
York the manager and a female employee at our local IHOP pancake house on
Hwy.6 @ 290 were clapping and celebrating.  The woman behind the cash
register said "I cant wait to go home and celebrate with my family."
This seems so hard to believe doesnt it?  My best friends neighbor was there
and heard as did many others.  Many people walked out as did she.  She
called the FBI and IHOP main office.   Not to mention have now heard the
same story from someone else who was there at the same time.
I am writting this to let you all know.  I will not give my American hard
earned dollars to someone/anyone who would celebrate any American loss of
life.   I would kindly request that all of you let friends and family know
what went on at this restaurant.  When I first heard this it seemed so hard
to believe, that anyone living and especially owning a business and
benefiting from America would feel this way.   My best friend knows this
woman well, this is not an internet hoax.   When I first heard the story I
didn't know what to do, but as it is Sunday morning and I am picturing his
restarant packed with Americans and him taking in all those dollars I have
suddenly become inspired.   Not to mention when I first heard of this it
seems so hard to beleive that anyone would feel this way you tend think
"that just can't be true"  But it is!!
Thanks.
Laura

Return-Path: <Sharon_Dearman@bmc.com>
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From: "Dearman, Sharon" <Sharon_Dearman@bmc.com>
To: "'ragaz2@aol.com'" <ragaz2@aol.com>
Subject: FW: Fw: local (Copperfield area)  business cheering USA terrorism
Date: Tue, 18 Sep 2001 11:13:18 -0500
MIME-Version: 1.0
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Content-Type: multipart/mixed;	boundary="----_=_NextPart_000_01C1405C.D484DAD0"

Not sure how often you eat at IHOP but I think we will find other places to
eat based on this story.

-----Original Message-----
From: Stelmaszek, Colleen
Sent: Tuesday, September 18, 2001 10:07 AM
To: Dearman, Sharon
Subject: FW: Fw: local (Copperfield area) business cheering USA
terrorism

Since you're my neighbor, thought you might want to read this.

-----Original Message-----
From: LAURA HICKMAN [mailto:LAURA.HICKMAN@cfisd.net]
Sent: Tuesday, September 18, 2001 9:30 AM
To: Colleen_Stelmaszek@bmc.com
Cc: CHRISTINA JOHNSON
Subject: Fwd: Fw: local (Copperfield area) business cheering USA
terrorism

Did you hear about this?

Laura Hickman
FIEST Elementary
Houston, Texas
laura.hickman@cfisd.net

From: JONI MCCANTS <JONI.MCCANTS@cfisd.net>
To: ALICE FLOOD <ACF11126.CFADM.ISD@cfisd.net>, HELEN WEIN	 <HVW10423.CF120.DOM-ELE@cfisd.net>, LAURA HICKMAN	 <LAH11201.CF120.DOM-ELE@cfisd.net>, LINDA VONWIESENTHAL	 <LJV10927.CF046.DOM-JUN@cfisd.net>, LANE WELLS	 <LLW10130.CF120.DOM-ELE@cfisd.net>, LINDA YATES	 <LLY11130.CF120.DOM-ELE@cfisd.net>, Steve_McCants@oxy.com
Subject: Fwd: Fw: local (Copperfield area)  business cheering USA terroris	m
Date: Tue, 18 Sep 2001 08:55:20 -0500
MIME-Version: 1.0
X-Mailer: Internet Mail Service (5.5.2653.19)
Content-Type: message/rfc822

Message-ID: <001301c13ef2$853782e0$6401a8c0@swbell.net>
From: plewis@sbcglobal.net
To: vecfam@mail.ev1.net, SWBarth@aol.com, Susan Siceluff
	 <ssice1234@aol.com>, Susan Chisolm <shcjayhawk@mail.com>, Stacy Redmond
	 <redmond_sk@hotmail.com>, Sheila Birmingham <thebs@flash.net>,
	Sharon Leahy <leabooters@aol.com>, Paula Viard <pjwviard@aol.com>,
	Ned & Karen Radjenovich <Nradje5@aol.com>, Mims McCartney
	 <mimsmccartney@hotmail.com>, Michele McKian
	 <screamingmimi@worldnet.att.net>, MARTY A WILLIAMSON <martyw@flash.net>,
	Margie Hartmann <msmhartmann@ev1.net>, Kathy Lardner <jlardner@flash.net>,
	Karen White <kkwhite@ev1.net>, Karen Forde <FordeGang@aol.com>,
	"Johnston, Kim" <kimmchi@worldnet.att.net>, Janet Taylor
	 <JannieJst@aol.com>, Jamie Gaither <jamiejng@aol.com>, Hal/Renee Riordan
	 <riordan1@slb.com>, Gretchen Juergens <gretchiej@aol.com>, Gail Sink
	 <JSink10064@aol.com>, Felicia Jenkins <jynxz@swbell.net>,
	ESBJSTUTZ@aol.com, Emma Pond <emma@snugglecovers.com>, Diane Neumann
	 <WSNeumann@juno.com>, Diadra Nassirian <mdjj21@pdq.net>, Denise Roy
	 <denise.roy@airliquide.com>, Denise Paonessa <SportsMom167@aol.com>,
	Debbie Starling <rdmjstar@aol.com>, David/Dana Parkes <ddzc@aol.com>,
	Dawn Nottebart <dawnn@hammondshomes.com>, Coleen Kapalski
	 <rckapalski@pdq.net>, Cheryle Paluska <cpaluska@houston.rr.com>,
	Cheryl Chodaniecky <Cheryl.Chodaniecky@WesternGeco.com>, Bridget Tyler
	 <btpreach@swbell.net>, Bonnie Roberts <rhchris@rangerinsurance.com>,
	Becky Speller <rjspeller@pdq.net>, barbford <barbford@wt.net>,
	Ann Schroeder <AnnEWink@aol.com>, Ann Liner <Bryne123@aol.com>,
	Andrea Goodhart <andrea.goodhart@interealty.com>
Subject: Fw: local (Copperfield area)  business cheering USA terrorism
Date: Sun, 16 Sep 2001 15:59:39 -0500
MIME-Version: 1.0
X-Mailer: Internet Mail Service (5.5.2653.19)
Content-Type: multipart/mixed;
	boundary="----_=_NextPart_004_01C1405C.D484DAD0"

------_=_NextPart_004_01C1405C.D484DAD0
Content-Type: text/plain

I usually do not forward email to people that have provided me with their
email addresses but I really felt that this was worth passing on.  I
received this email today and it made me really sad.  Even worse, my family
stop for  bite to eat there Friday night when Chili's was packed.  I
wondered why the restaurant was empty..

Anyway, please pass on if you can...

Thanks,
Pam
----- Original Message -----
From: jane miller
To: Winnie@Dcnet2000.Com ; Wendy Clark ; Thomas Miller ; Steve Burke ;
Sharon Barry ; Renada Patterson (E-mail) ; Lisa Prejean ; Lauren Miller ;
Jill Taylor ; Jane & Tom Johnson ; Jan Weitzel ; Jan Ott ; Donna Schmidt ;
Candy McCowan ; Bridget Tyler ; broberts@rangerinsurance.com ; Cheryle
Paluska ; Donna Switzer ; Francis and Rosa Landreneau ; Gail Sink ; Kathy
Howard ; Marcia Paluska ; Marcia Paluska ; Pam Lewis ; Rosa Hmaidan (E-mail)
; Sandi Heintz ; Suzanne Young ; bridget.tyler@worldnet.att.net ; Bonnie
Roberts ; Becky Sims
Sent: Sunday, September 16, 2001 2:45 PM
Subject: local (Copperfield area) business cheering USA terrorism

This was sent to me by a friend.  When you read it you'll see why I've
passed this on!
Jane

Hi ladies, just wanted to let you know of something that happened in our own
area on the most terrible Tues. morning ever.  As people were dying in New
York the manager and a female employee at our local IHOP pancake house on
Hwy.6 @ 290 were clapping and celebrating.  The woman behind the cash
register said "I cant wait to go home and celebrate with my family."

This seems so hard to believe doesnt it?  My best friends neighbor was there
and heard as did many others.  Many people walked out as did she.  She
called the FBI and IHOP main office.   Not to mention have now heard the
same story from someone else who was there at the same time.

I am writting this to let you all know.  I will not give my American hard
earned dollars to someone/anyone who would celebrate any American loss of
life.   I would kindly request that all of you let friends and family know
what went on at this restaurant.  When I first heard this it seemed so hard
to believe, that anyone living and especially owning a business and
benefiting from America would feel this way.   My best friend knows this
woman well, this is not an internet hoax.   When I first heard the story I
didn't know what to do, but as it is Sunday morning and I am picturing his
restarant packed with Americans and him taking in all those dollars I have
suddenly become inspired.   Not to mention when I first heard of this it
seems so hard to beleive that anyone would feel this way you tend think
"that just can't be true"  But it is!!

Thanks.
Laura

------_=_NextPart_004_01C1405C.D484DAD0
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Content-Transfer-Encoding: quoted-printable
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<META content=3D"MSHTML 5.50.4134.100" name=3DGENERATOR>

I usually do not forward email to people t=
hat have=20
provided me with their email addresses but I really felt that this was worth=
=20
passing on.  I received this email today and it made me really sad.&nbs=
p;=20
Even worse, my family stop for  bite to eat there Friday night when Chi=
li's=20
was packed.  I wondered why the restaurant was empty..

Anyway, please pass on if you can...

Thanks,

Pam

----- Original Message -----=20

From: jane miller=20

To: Winnie@Dcnet2000.Com ; Wendy Clark ; Thomas Miller ; Steve Burke ;=
 Sharon B=
arry ; Renada=
 Patterson (E-mail)=20
; Lisa Prejean ; Lauren=20
Miller ; Jill=20
Taylor ; Jane=20
& Tom Johnson ; Jan Weitzel ; Jan Ott ; Donna Schmidt ; Candy McCowan ; Bridget Tyler ;=20
broberts@rangerinsurance.com ; Cheryle=20
Paluska ; Donna=20
Switzer ; Francis and Rosa Landreneau ; Gail Sink ; Kathy=20
Howard ; Marcia Paluska ; Marcia Paluska ;=20
Pam Lew=
is ;=20
Rosa Hmaidan=20
(E-mail) ; Sandi Heintz ; Suzanne Young ;=20
bridget.tyler@worldnet.att.net=20
; Bonnie Roberts ; Becky Sims

Sent: Sunday, September 16, 2001 2:45 PM

Subject: local (Copperfield area) business cheering USA=20
terrorism

This was sent to me by a=20
friend.  When you read it you'll see why I've passed this on!</D=
IV>

Jane

Hi ladies, just wanted to let you know=
 of=20
something that happened in our own area on the most terrible Tues. morning e=
ver.=20
 As people were dying in New York the manager and a female employee at=20=
our=20
local IHOP pancake house on Hwy.6 @ 290 we=
re=20
clapping and celebrating.  The woman behind the cash register said "I c=
ant=20
wait to go home and celebrate with my family."

This seems so=20=
hard=20
to believe doesnt it?  My best friends neighbor was there and heard as=20=
did=20
many others.  Many people walked out as did she.  She called the F=
BI=20
and IHOP main office.   Not to mention have now heard the same sto=
ry=20
from someone else who was there at the same time.

I am writti=
ng=20
this to let you all know.  I will not give my American hard earned doll=
ars=20
to someone/anyone who would celebrate any American loss of life.  &nbsp=
;I=20
would kindly request that all of you let friends and family know what went o=
n at=20
this restaurant.  When I first heard this it seemed so hard to believe,=
=20
that anyone living and especially owning a business and benefiting from Amer=
ica=20
would feel this way.   My best friend knows this woman well, this=20=
is=20
not an internet hoax.   When I first heard the story I didn't know=
=20
what to do, but as it is Sunday morning and I am picturing his restarant pac=
ked=20
with Americans and him taking in all those dollars I have suddenly become=20
inspired.   Not to mention when I first heard of this it seems so=20=
hard=20
to beleive that anyone would feel this way you tend think "that just can't b=
e=20
true"  But it is!!

Thanks.
Laura </HTM=
L>

------_=_NextPart_004_01C1405C.D484DAD0--


please change the counterparty


Thanks.
--------------------------
Ben Jacoby
(713) 853-6173


---------------------- Forwarded by Sara Shackleton/HOU/ECT on 03/24/2000
09:07 AM ---------------------------
To: Lynn Aven/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Sara Shackleton@ECT
cc:
Subject: Business Strucutres

Sorry for the delay. I am attaching two documents the short outline form and
an industrial marketing presentation. Between the two you will ge the bulk of
our work. I do not want to go into all the possible combinations but rather
address the basic structures.

Thanks for the help.

MFG


PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION

Jeff,

Per your request, I am writing a brief note to follow up on our
telephone conversation today.  As we discussed, Enron plans to change
the structure of Enron Telecommunications, Inc. from a regular C
corporation to an LLC.  As we discussed previously, this change in
structure will require the approval of the California Public Utilities
Commission, because it is a change of control under the definitions of
the Public Utilities Code.  You indicated that someone inside Enron was
concerned that, during the course of the CPUC,s review of the request
for transfer of control, the CPUC could get access to the books and tax
returns of ETI,s parent EBS or other Enron entities, which Enron would
find unattractive.  You asked me to discuss whether this was possible.

At a general level, the CPUC in the past has asserted jurisdiction over
entities affiliated with entities regulated by the CPUC.  Depending on
the facts at hand, a variety of provisions in the PU Code grant this
jurisdiction.  However, the CPUC rarely uses its jurisdiction to look
into the books and tax returns of an affiliate of a nondominant
telecommunications carrier, unless the affiliate is the entity seeking
to acquire control of the carrier.  For nondominant telecommunications
carriers, the Commission applies a fairly light regulatory touch,
because such carriers have no market power.  You should also be aware
that there are other provisions in the PU Code that protect carrier's
financial information from public disclosure.

Thus, although it is possible that the Commission would seek to review
the books and/or tax returns of EBS or another Enron entity in
connection with the change to an LLC, it is unlikely.  ETI is a
nondominant carrier, and there is no real change in the ownership of
ETI, because EBS will still be ETI,s owner (i.e., EBS will own an LLC,
rather than a C corporation), nor is there any change in the management
personnel of ETI.

The one wild card is that Enron's name is quite well known to the
Commission because of Enron's presence in the energy market.  While this
logically and legally should make no difference, it could conceivably
trigger increased Commission scrutiny of the transfer of control.

Please let me know if you need more information or want to discuss
further.

SPB


my parents want to go skiing from 12/09 - 12/14 can you take off time then?
the package is probably around $700-900/

Let me know

-e


<http://plpartners.starnetsystems.net/qb/ClickServlet?pid=414468&cid=6750>

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CLICK HERE <http://plpartners.starnetsystems.net/qb/ClickServlet?pid=414468&cid=6750> TO JOIN!

This email is not spam. You have received this message because you have subscribed to a opt in mailing list obtained by ingular.com. To  unsubscribe from this mailing list reply with a blank email by clicking here <mailto:unsubscribe@ingular.com>, or send a blank email to unsubscribe@ingular.com.


Just wanted to reinterate to everyone especially those that may not be here today, I have put on your monitors the procedures that we will use next Tuesday, December 11 regarding the collection of the money for the Reservation and Commodity invoices.  We will be giving you a list Tuesday morning that will show all of the shippers that we sent invoices to on December 3.  Do not call them until we get that list to you.  We would like for you to highlight the shippers that you have called and then return the lists to us.  This will help us to ensure that everyone has been called.

Please note:  If you shipper currently knows our Lock Box number because they send checks, please be sure that you call these folks because we cannot let them use the Lock Box.  They can still send a check in, but they will need to send it to the P.O. Box 1188 for this building.  If possible, give them your room location so that it can come directly to you.  If you have any questions, please let us know.

Thanks,

Richard, Larry and Raetta


Here is more information about  Randy Pais' nomination.

 -----Original Message-----
From: 	Schwartzenburg, John
Sent:	Friday, October 05, 2001 12:35 PM
To:	Pais, Randy; Tweed, Sheila
Subject:	RE: Nomination to be a Civilian Aide to the Secretary of the Army for Texas

Randy, this should be fine. I will get  back to you

 -----Original Message-----
From: 	Pais, Randy
Sent:	Friday, October 05, 2001 9:13 AM
To:	Tweed, Sheila; Schwartzenburg, John
Subject:	Nomination to be a Civilian Aide to the Secretary of the Army for Texas

Sheila/John

In reference to the discussion on Wednesday, I wanted to provide more information concerning the Secretary of the Army's Civilian Aide Program.  As I mentioned last Friday I received a call from Tom White's office indicating his intention to nominate me to be a Civilian Aide for Texas.

This is an honorary position (protocol equivalency of a Major General).  Each state normally has one person serving in the capacity of a civilian advisor to the Secretary of the Army.  Large states like Texas, New York, California, Florida may have two representatives.  Generally the Civilian Aide  may be asked to represent the Secretary at functions within the state or to work with active duty installations, such as Ft Hood, on matters impacting the civilian interface with the Army.  It also could involve activities associated with reserve and national guard components within the state.

It is my understanding it may require being out of the office 6 to 8 days a year in addition to several functions in the evening or on the week end or meetings at the Pentagon or Ft Sam Houston.  I do not believe this would conflict with Enron's interest or work requirements.  In fact may bring some positive recognition to the Company in having a person serve in this capacity.  There is no compensation paid for the service but I understand the Army reimburses for travel related expenses.  It is not a political position but one designated for community/business leaders within a given state.

I trust this will be acceptable to Enron.  Perhaps, it could be viewed somewhat similar to a person being in the National Guard or Army Reserve.

Please let me know if you need any more information.

Randy

Randy

Randall M. Pais
Legal Department
Enron Wholesale Services
Phone: 713-345-2520
Fax:     713-646-6280
randy.pais@enron.com <mailto:randy.pais@enron.com>


Jim, thanks for the invitation.  I should know by Monday if I can make it.  I
hiope that is ok.


Yikes!  That girl's mother sounds like a real problem.  I'm not sure how I
would have handled it.  How's school going?  Any plans for the weekend?

	Alma Martinez@ENRON
	01/26/2001 11:36 AM

		 To: Jeffrey A Shankman/HOU/ECT@ECT
		 cc:
		 Subject: Re:

What happened?

Here's a story...as I was waiting at the bus stop (7:35am) to go to school, a
lady approached me and asked if I'd make sure her daughter got on a certain
bus.  The mother was running late for work and could not wait.  I couldn't
say no...so Nicki (the little girl-10 yrs. old) and I waited for the bus.  It
was now, 8:15 and there was no sign of her bus.

On top of  things, I had quiz at 8am.  Which I then realized I missed.  I
decided that Nicki would just have to wait on her own.  I asked her if she
had any relatives that  would want to know of her whereabouts.  I called her
grandmother and explained things to her.  Pretty strange...aye.

A bus that runs through UofH arrived and I almost got on without her, but I
couldn't do it.  Finally, I told the little girl that she would have to
accompany me to school (8:30am).  There were only 15 minutes left of class.
I stayed for the remainder of the lecture. After class we went back to bus
stop and within minutes her bus arrived.  I told the bus driver where to drop
her off.  I notified her grandmother with the time of the departure.  And I
was relieved when Nicki called to let me know she was home safe.


hey ben whats going on with homecoming?

anyone interested in renting a beach house for a week next summer to get
everyone together?

Ken, how drunk is Theo in that photo?

Trish, you went from Gant to kens wife, whats going on?

_________________________________________________________________________
Get Your Private, Free E-mail from MSN Hotmail at http://www.hotmail.com.

Share information about yourself, create your own public profile at
http://profiles.msn.com.

 - wed.jpg
 - wed1.jpg
 - wed2.jpg
 - wed3.jpg
 - wed4.jpg


When: Thursday, January 17, 2002 8:30 AM-10:00 AM (GMT-06:00) Central Time (US & Canada).
Where: ECS 5112

*~*~*~*~*~*~*~*~*~*


We should change all settlements at Socal to NGI Southern Border, Socal from
Southern California Border average.  This new index excludes KRS fixed priced
trades.  Please let the brokers know about the changes to Socal basis going
forward.  Please change basis and gd swing swaps (fp and index) in EOL.

Also,  Frank and Matt should set up basis and a gd swap (fp and index) for
southern border, PG&E.  This will be the index for PG&E Topock.  This index
will be effective for April 2001.  I will have the physical product out there
as soon as possible.

Let me know when they have been changed.

Mike


Marilyn,

Do we have some documentation from the City that shows the City of Long Beach
with a "Inc." at the end of their name?  I have never seen a city with an
Inc. at the end of their name before, that is a corporate thing, not a
municipal thing...
----- Forwarded by Tana Jones/HOU/ECT on 05/07/2001 04:33 PM -----

	Samuel Schott
	05/03/2001 09:24 AM

		 To: Walter Guidroz/ENRON@enronXgate @ ENRON, Karen Lambert/HOU/ECT@ECT, Tana
Jones/HOU/ECT@ECT, Mark Taylor/HOU/ECT@ECT, Brant
Reves/ENRON@enronXgate@ENRON, Debbie R Brackett/ENRON@enronXgate@ENRON, David
Hardy/LON/ECT@ECT, Lesli Campbell/ENRON@enronXgate@ENRON, Cynthia
Clark/ENRON@enronXgate@ENRON, Enron Europe Global CounterParty/LON/ECT@ECT,
Stephanie Sever/ENRON@enronXgate@ENRON, Tom Moran/ENRON@enronXgate@ENRON,
Claudia Clark/ENRON@enronXgate@ENRON, William S
Bradford/ENRON@enronXgate@ENRON, Lisa Lees/ENRON@enronXgate@ENRON, Juana
Fayett/Corp/Enron@Enron, Jana Morse/Corp/Enron@Enron, Trang Le/HOU/ECT@ECT,
Paul Maley/LON/ECT@ECT, Sonya Clarke/LON/ECT@ECT, Tim Davies/LON/ECT@ECT,
Karen O'Day/ENRON@enronXgate@ENRON, Tanya Rohauer/ENRON@enronXgate@ENRON,
Kelly Lombardi/NA/Enron@Enron, Brian Lindsay/Enron Communications@Enron
Communications@ENRON, EOL Call Center, Bill D Hare/HOU/ECT@ect, Amy
Heffernan/Enron Communications@Enron Communications@ENRON, Molly LaFuze/Enron
Communications@Enron Communications@ENRON, Danny Clark/Enron
Communications@Enron Communications@ENRON, Stephanie Panus/NA/Enron@Enron,
Teresa Mandola/ENRON@enronXgate@ENRON, Bill Kyle/ENRON@enronXgate@ENRON,
Amber Ebow/HOU/ECT@ECT
		 cc:
		 Subject: Re: EOL approvals, 05-02-01 _ GCP Response

Any GCP adjustments will be highlighted in blue.

Best Rgds.

Samuel x3-9890 (GCP Team)
Enron Net Works _ Global Data Management

From: Walter Guidroz/ENRON@enronXgate on 05/02/2001 04:40 PM
To: Karen Lambert/HOU/ECT@ECT, Tana Jones/HOU/ECT@ECT, Samuel
Schott/HOU/ECT@ECT, Mark Taylor/HOU/ECT@ECT, Brant Reves/ENRON@enronXgate,
Debbie R Brackett/ENRON@enronXgate, David Hardy/LON/ECT@ECT, Lesli
Campbell/ENRON@enronXgate, Cynthia Clark/ENRON@enronXgate, Enron Europe
Global CounterParty/LON/ECT@ECT, Stephanie Sever/ENRON@enronXgate, Tom
Moran/ENRON@enronXgate, Claudia Clark/ENRON@enronXgate, William S
Bradford/ENRON@enronXgate, Lisa Lees/ENRON@enronXgate, Juana
Fayett/Corp/Enron@Enron, Jana Morse/Corp/Enron@Enron, Trang Le/HOU/ECT@ECT,
Paul Maley/LON/ECT@ECT, Sonya Clarke/LON/ECT@ECT, Tim Davies/LON/ECT@ECT,
Karen O'Day/ENRON@enronXgate, Tanya Rohauer/ENRON@enronXgate, Kelly
Lombardi/NA/Enron@Enron, Brian Lindsay/Enron Communications@Enron
Communications, EOL Call Center@ECT, Bill D Hare/HOU/ECT@ect, Amy
Heffernan/Enron Communications@Enron Communications, Molly LaFuze/Enron
Communications@Enron Communications, Danny Clark/Enron Communications@Enron
Communications, Stephanie Panus/NA/Enron@Enron, Teresa
Mandola/ENRON@enronXgate, Bill Kyle/ENRON@enronXgate, Amber Ebow/HOU/ECT@ECT
cc:
Subject: EOL approvals, 05-02-01

Please see attached.


----- Forwarded by Rob Walls/NA/Enron on 12/08/2000 08:03 AM -----

	Bruce Lundstrom@ENRON_DEVELOPMENT
	Sent by: Wendi Hoelscher@ENRON_DEVELOPMENT
	12/07/2000 01:28 PM

		 To: Rob Walls/NA/Enron@ENRON
		 cc:
		 Subject: Re:

Rob:

I'm having trouble accessing my email but here is the latest.  There are more
newspaper articles which make me believe that GOM's position is hardening on
reviewing the project.  I met with two of our outside lawyers today.  Atul
recommended that we review the possibility of a challenge based on
unconscionability or void as against public policy.

The lawyers are universally pretty pessimistic regarding the possibility of a
satisfactory outcome for Enron.

I'm meeting with the rest of our India lawyers tomorrow, including Robert
Mathis.

Bruce

From: Rob Walls@ENRON on 12/06/2000 12:19 PM
To: Bruce Lundstrom/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:

Subject:

update?


-----Original Message-----
From: 	Otto, Charles H.
Sent:	Wednesday, September  19, 2001 4:59 PM
To:	Ermis, Frank
Subject:	FW: An Optical Illusion for you.

 -----Original Message-----
From: 	Smith, Mark
Sent:	Wednesday, September 19, 2001 1:26 PM
To:	Otto, Charles H.
Subject:	FW: An Optical Illusion for you.

 -----Original Message-----
From: 	Lafleur, Dave [mailto:Lafleur@rcga.org]
Sent:	Tuesday, September 18, 2001 3:56 PM
To:	Maple Leaf (E-mail); Smith, Mark; Jon Downing (E-mail); Jeff Burdick (J.) (E-mail); Darren Wallace (E-mail); Fellow Habs Fan (E-mail); Bill Karner (E-mail); Carlo Ammendolia (E-mail)
Subject:	FW: An Optical Illusion for you.


Updated Information on
EFCU's "Surviving a Layoff" Workshop

Good News for Bus Riders
The Enron Shuttle will be available to transport downtown employees to and from the Doubletree Post Oak for the January 15 workshop.  The shuttle will leave Andrews St. at 11:30 a.m. and will return immediately following the workshop.  If you would like to reserve a space on the shuttle, please e-mail joy.wagman@enron.com.  Limited spaces are available.

Workshops are Now Combined
We have combined the 10:00 and 12:00 workshops into one 12:00 workshop.  All confirmed attendees for the 10:00 session will be added to the 12:00 list and notified in an additional e-mail as well.

It's Not Too Late
RSVPs for the 12:00 session are still being accepted!  E-mail joy.wagman@enron.com today to reserve your spot.


We have received an executed First Amendment to ISDA Master Agreement, dated
effective March 5, 2001, between EnerVest Energy, L.P. ("EnerVest Energy")
and Enron North America Corp. ("ENA").   This agreement provides for an
amendment to EnerVest Energy's collateral threshold and to incorporate
certain updates to ENA's form of Schedule to the ISDA Master Agreement.

Copies will be distributed.

Cordially,
Susan S. Bailey
Enron North America Corp.
1400 Smith Street, Suite 3806A
Houston, Texas 77002
Phone: (713) 853-4737
Fax: (713) 646-3490
E:mail:  Susan.Bailey@enron.com


I'm working with the "Click Paper.com" legal team toward the migration of the
pulp & paper trades to that website.  In oder to determine whether any of the
counterparties that have actually traded pulp & paper online have amended the
ETA, I need to get a list of the counterparties that have trade pulp & paper
online.  Can someone down there prepare such a list for me?

Thanks!


Tracy:  Just spoke with Michelle Sternberg.  Allegheny does not want to carve out setoff benefit for ENA because it cannot take advantage of the setoff benefit.  I told her that we still wanted the provision for ENA and could continue business under the old Merrill "deemed arrangement" which has whatever setoff provision we negotiated.  She'll speak with Yair.

 -----Original Message-----
From: 	Ngo, Tracy
Sent:	Tuesday, October 16, 2001 2:29 PM
To:	Shackleton, Sara
Subject:	RE: ENRON/ALLEGHENY ISDA

please let me know what the physical power attorney advises...this is news to me.  yes, we need to at minimum setoff our affiliates with the cp.  -Tracy

 -----Original Message-----
From: 	Shackleton, Sara
Sent:	Tuesday, October 16, 2001 12:23 PM
To:	Ngo, Tracy
Cc:	Heard, Marie
Subject:	FW: ENRON/ALLEGHENY ISDA

Tracy:

Let me know what you think.  I'll check with a lawyer from the physical power group.  Also, we should at a minimum, preserve setoff with respect to ENA's affiliates.  Sara

 -----Original Message-----
From: 	"Sternberg, Michelle" <MSternberg@aeglobalmarkets.com>@ENRON
Sent:	Tuesday, October 16, 2001 2:18 PM
To:	Shackleton, Sara
Cc:	Yaish, Yair
Subject:	RE: ENRON/ALLEGHENY ISDA

Sara -

I have spoken with our in-house regulatory specialist and she has informed
me that we cannot agree to include our regulated or non-regulated Affiliates
in Set Off under the Public Utility Holding Company Act without getting
approval from the SEC.

Please advise if we can proceed on the ISDA with carving out Affiliates in
Set Off, as per our original request.

Regards,
Michelle

Allegheny Energy Global Markets
Office of General Counsel
909 Third Avenue, 32nd Floor
New York, New York 10022
(T) 212-224-8718
(F) 212-224-8446/8711

-----Original Message-----
From: Sternberg, Michelle
Sent: Friday, October 12, 2001 3:35 PM
To: 'Sara.Shackleton@enron.com'
Cc: Yaish, Yair
Subject: RE: ENRON/ALLEGHENY ISDA

Sara -

I am checking internally if we can agree to the below.  I will get back to
you in the beginning of next week.

Regards,
Michelle

Allegheny Energy Global Markets
Office of General Counsel
909 Third Avenue, 32nd Floor
New York, New York 10022
(T) 212-224-8718
(F) 212-224-8446/8711

-----Original Message-----
From: Sara.Shackleton@enron.com [mailto:Sara.Shackleton@enron.com]
Sent: Tuesday, October 09, 2001 7:38 PM
To: MSternberg@aeglobalmarkets.com
Cc: Marie.Heard@enron.com
Subject: RE: ENRON/ALLEGHENY ISDA

Michelle:

With respect to your setoff request, we cannot agree to eliminate setoff
for your non-regulated affiliates.  Perhaps you could provide us with the
regulated affiliate(s) for a carve out.  I look forward to hearing from
you.  Regards.

Sara Shackleton
Enron Wholesale Services
1400 Smith Street, EB3801a
Houston, TX  77002
Ph:  (713) 853-5620
Fax: (713) 646-3490

    -----Original Message-----
   From:   "Sternberg, Michelle" <MSternberg@aeglobalmarkets.com>@ENRON

[mailto:IMCEANOTES-+22Sternberg+2C+20Michelle+22+20+3CMSternberg+40aeglobalm
arkets+2Ecom+3E+40ENRON@ENRON.com]

   Sent:   Wednesday, September 26, 2001 11:14 AM
   To:     Shackleton, Sara
   Cc:     Heard, Marie
   Subject:  ENRON/ALLEGHENY ISDA

   Sara -

   As per Marie's instructions, please find attached a blackline
   incorporating
   the changes that will be required to be made in the final form of ISDA
   (modifications to the Notice and Set-Off provisions).  The attached is
   the
   last version that I have but if the changes are acceptable, I would
   suggest
   that you take the changes and incorporate it into your form of agreement
   since it is the final version.

    <<ENRON ISDA.REVISED 9.26.01.doc>>

   Once reviewed, please let me know if the changes are acceptable - at
   which
   point you can forward to me a revised Schedule (without the signature
   page)
   via e-mail and I can have the agreement countersigned and replace the
   Schedule with your revised Schedule.

   Thank you for your patience.

   Regards,
   Michelle

    - ENRON ISDA.REVISED 9.26.01.doc << File: ENRON ISDA.REVISED
   9.26.01.doc >>

**********************************************************************
This e-mail is the property of Enron Corp. and/or its relevant affiliate and
may contain confidential and privileged material for the sole use of the
intended recipient (s). Any review, use, distribution or disclosure by
others is strictly prohibited. If you are not the intended recipient (or
authorized to receive for the recipient), please contact the sender or reply
to Enron Corp. at enron.messaging.administration@enron.com and delete all
copies of the message. This e-mail (and any attachments hereto) are not
intended to be an offer (or an acceptance) and do not create or evidence a
binding and enforceable contract between Enron Corp. (or any of its
affiliates) and the intended recipient or any other party, and may not be
relied on by anyone as the basis of a contract by estoppel or otherwise.
Thank you.
**********************************************************************


Jeff:

Thanks again for all of your help today.  It was a great meeting!

I forgot to tell you as we were walking out.  The price for the Bel Geddes
Skyscraper Cocktail service is $7500.  Based on my preliminary price checks
(so far) it seems fair and certainly less that the boys would charge. What
do you think?  I am of half a mind to call the boys and find out what they
would be asking but I think that it would tip our hand....

cindi

Cindi Strauss
Associate Curator Decorative Arts and Rienzi
Museum of Fine Arts, Houston
P.O. Box 6826
Houston, Texas 77265-6826
713-639-7349
713-639-7399 (fax)
cstrauss@mfah.org


How about commercial folks?

From: Roseann Engeldorf/ENRON@enronXgate on 05/02/2001 02:20 PM
To: Sheila Tweed/HOU/ECT@ECT, Kay Mann/Corp/Enron@Enron, Barbara N
Gray/HOU/ECT@ECT, Dale Rasmussen/HOU/ECT@ECT, Karen E Jones/ENRON@enronXgate,
Ed B Hearn III/HOU/ECT@ECT, Matt Maxwell/Corp/Enron@ENRON, Lance
Schuler-Legal/HOU/ECT@ECT, Barton Clark/HOU/ECT@ECT, Kathleen
Carnahan/NA/Enron@Enron, Jeffrey T Hodge/HOU/ECT@ECT, John
Schwartzenburg/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Ann Elizabeth
White/HOU/ECT@ECT, Scott Dieball/ENRON_DEVELOPMENT@ENRON_DEVELOPMENt, Carlos
Sole/NA/Enron@Enron, Randy Pais/Corp/Enron@Enron, Jordan
Mintz/ENRON@enronXgate, Nora Dobin/Corp/Enron@ENRON, Brian D
Barto/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Larry Bishop/NA/Enron@Enron,
Cheryl Costa/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Jim
Desrochers/NA/Enron@Enron, Richard
Murphy/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, John G
Rigby/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Robert Sevitz/NA/Enron@Enron,
Keegan Farrell/NA/Enron@Enron, Joel Ephross/ENRON@enronXgate, Gareth
Bahlmann/ENRON@enronXgate, Julia H Chin/ENRON@enronXgate, Brenda L
Funk/ENRON@enronXgate
cc: Herman Manis/ENRON@enronXgate, William Fleenor/ENRON@enronXgate, Dina
Snow/Corp/Enron@Enron, Lisa Bills/ENRON@enronXgate, Shirley
Oliver/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT

Subject: Asset Financing - Structured Finance Presentation

We are planning a presentation on certain structure and contracting issues
related to power plant asset financing on Thursday, May 10th.  The
presentation will include lunch from Treebeard's and will begin at 11:30.  We
have scheduled 2.5 hours for the presentation; it may be shorter, depending
on the number of questions.

We plan to include the Portland folks by video-conference.   If you know of
others who would benefit from this presentation, please pass on this
invitation; I have not intended to exclude anyone who may want to attend.  If
there are others at remote locations, please let me or Dina Snow know so that
we can arrange for video-conferencing.  John, I asked Shirley for the names
of your contracts folks and have included them; I still have no information
as to whom else you want to include.  Therefore, please forward this to your
team members as you see fit.

Please RSVP to Dina Snow at X57099 or by e-mail to dina.snow@enron.com by
Tuesday, May 8th.

We will e-mail the conference room location when it is confirmed.

Thanks,

Rose


Here are the pooling points on Transco for ENA Upstream Company LLC.  I
submitted the Global request this morning.  It should be ready for noms this
afternoon.

   FT  IT
Station 30  4197  4220
45   4198  4221
50   4199  4223
62   4200  4224
65   4201  4225
85   4216  4234


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.


-----Original Message-----
From: 	Rybarski, Amanda
Sent:	Tuesday, February 05, 2002 3:10 PM
To:	Hodge, Jeffrey T.; Vickers, Frank; Tycholiz, Barry; Redmond, Brian; Larubbio, Morris; Ward, Kim S (Houston); Miller, Stephanie; Taylor, Craig; Kaiser, Jared; Bryan, Gary; McCaffrey, Deirdre; Frihart, Bryant; Mims, Patrice L.; Curry, Mike; Otto, Charles H.; Gilbert, George N.; Patel, Sheetal; Shipos, Jennifer; Breslau, Craig; Lagrasta, Fred; Buss, Jd
Subject:	FW: Gas Marketing - Legal Team Meeting

Find attached copies of the Master Agreement, GISB and Firm GTC.  Please print and bring to the 9am meeting.

Frank


What did you charge $1,000 for?  I haven't gotten anywhere on my
accomplishments.  Right after I emailed you we discovered some major issues
with the basis report, so it looks like I'll be doing accomplishments
tonight.  I'm still hoping I can come to your game though.  It doesn't start
until 8:45 right?

Bye,
Robin


One of the things you should include in your report to Koenig and Frevert is
our preliminary views on the RTO filings.  Perhaps it's simply that we are
not going to be satisfied until FERC forces nondiscriminatory access and we
will object to every filing and fight every shortcoming.
----- Forwarded by Steven J Kean/NA/Enron on 10/16/2000 09:29 PM -----

	Donna Fulton
	10/12/2000 03:27 PM

		 To: James D Steffes/NA/Enron@Enron
		 cc: Christi L Nicolay/HOU/ECT@ECT, Dan Staines/HOU/ECT@ECT, Daniel
Allegretti/HOU/EES@EES, Janine Migden/DUB/EES@EES, Jeff Brown/NA/Enron@ENRON,
Jeff Dasovich/NA/Enron@ENRON, Joe Connor/NA/Enron@ENRON, Joe
Hartsoe/Corp/Enron@ENRON, Mark Palmer/Corp/Enron@ENRON, Mary
Hain/HOU/ECT@ECT, Paul Kaufman/PDX/ECT@ECT, Richard Ingersoll/HOU/ECT@ECT,
Richard Shapiro/NA/Enron@ENRON, Robin Kittel/HOU/EES@EES, Ron
McNamara/NA/Enron@ENRON, Sarah Novosel/Corp/Enron@ENRON, Steve
Montovano/DUB/EES@EES, Steve Walton/HOU/ECT@ECT, Steven J
Kean/NA/Enron@ENRON, Susan J Mara/SFO/EES@EES, Thane
Twiggs/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Tom Chapman/HOU/ECT@ECT, Tom
Delaney/Corp/Enron@ENRON, Tom Hoatson/HOU/EES@EES
		 Subject: Re: Enron Response to October 15 RTO Filings

I have now sent out the PJM filing to some of you.  If anyone else wants it,
let me know.

SPP is supposed to file tomorrow.  The same law firm is representing them so
I should be able to get a copy.  It may also be on their website tomorrow.


Please make note of the attached overlay for Sullivan Graphics, Inc.  See the
bottom tab "Jan 2001" for details.

Please note that short name changes will be made on Friday, 01/26/01, as
indicated.