Houston, we have a problem
The Economist, 11/03/01
Enron Gets $1 Billion New Credit Line, But Must Pledge Top Gas-Pipeline Assets
The Wall Street Journal, 11/02/01
Enron's Shares Fall and Debt Rating Is Cut
The New York Times, 11/02/01
The State CalPERS Is Urged to Challenge Enron Finance: The public employee pension fund holds 3 million shares of the energy firm, whose stock has plunged. State senator calls for action.
Los Angeles Times, 11/02/01
Financing Offers Lure Buyers
The Washington Post, 11/02/01
COMPANIES & FINANCE THE AMERICAS: Enron's dominant position is fuelling fears for markets: John Labate and Julie Earle consider the implications of the company's woes:
Financial Times; Nov 2, 2001

COMPANIES & FINANCE THE AMERICAS: Dollars 1bn line of credit secured to pay debt
Financial Times; Nov 2, 2001

WORLD STOCK MARKETS: Wall St buoyed by Microsoft peace talks
Financial Times; Nov 2, 2001
Enron gets $1 billion
Financial Times; Nov 2, 2001
USA: WRAPUP 2-Enron lines up cash to soothe worried Wall Street.
Reuters English News Service, 11/02/01
ENRON CORP.: Credit rating cut again; $1 billion secured
Chicago Tribune, 11/02/01
India ONGC Plans Enron Oil,Gas Field Bid If BG Deal Fails
Dow Jones Energy Service, 11/02/01
Enron May Sell India Dabhol Power Shr At Discount-Lender
Dow Jones International News, 11/02/01
`Buying out Enron's stake in Dabhol unit won't help'
The Times of India, 11/02/01
Dabhol lenders' meet in London cancelled
Business Standard, 11/02/01

USA: Critics question Andersen's handling of Enron.
Reuters English News Service, 11/01/01
Enron: Online Trading Volume Sees Normal Decline Thursday
Dow Jones Energy Service, 11/01/01
Power supplier Enron's stock drops another 14 percent
Associated Press Newswires, 11/01/01
USA: UPDATE 1-S&P cuts Enron ratings, may cut ratings again.
Reuters English News Service, 11/01/01
Enron's Credit Rating Cut After $1 Bln Loan Secured (Update9)
Bloomberg, 11/01/01

USA: Enron U.S. energy trade so far skirts credit woes.
Reuters English News Service, 11/01/01
INDIA PRESS:Dabhol Creditors Meeting In London Called Off
Dow Jones International News, 11/01/01

Finance & Economics
Houston, we have a problem

11/03/2001
The Economist
Copyright (C) 2001 The Economist; Source: World Reporter (TM) - FT McCarthy

The troubles of Enron, a Texan powerhouse in the energy markets, could result in a new financial crisis
JUST last year, visitors to Enron's glittering headquarters in Houston were greeted by a giant banner that proclaimed the firm, "The world's leading energy company". That annoyed Enron's smaller energy-trading rivals, many of which have offices only a stone's throw away in Houston's Energy Alley, but not as much as what came next - a new banner, declaring Enron "The world's leading company". In recent weeks, as the company has been engulfed by a financial crisis, that banner has quietly been removed.
The heady mix of audacity, ambition and arrogance revealed by the banners is as good a guide as any to Enron's remarkable rise and fall. Forged in the 1980s by the merger of two troubled gas-pipeline firms, Enron drove the development of the sophisticated spot-and-derivatives markets in energy that it has come to dominate. Indeed, such is the scale of its operations, and its dealings with many of the world's financial institutions, that some observers see parallels with Long-Term Capital Management (LTCM), the hedge fund that failed in 1998 - and not just because seemingly brilliant financial alchemists have been humbled. Were Enron to go bust - unlikely, but in the current nervous climate, not impossible - might a crisis ensue?
Troubles in California's politically crazed power market, an ill-advised foray into telecoms bandwidth trading and concerns about management badly dented Enron's share price earlier this year, prompting the departure of Jeffrey Skilling, the firm's newish chief executive, in August. Kenneth Lay, an avid free-marketeer, friend of George Bush and visionary chairman of the firm, was obliged to resume hands-on control.
This has not slowed Enron's decline. Day by day, it seems to be sinking deeper into a financial quagmire that is largely of its own creation. Not least thanks to its lack of transparency, the firm's credibility with the markets has eroded to the point that talk of a possible takeover or even bankruptcy is widespread.
Enron's reputation for financial wizardry has been turned from an asset to a liability since its third-quarter results came out in mid-October, showing a $1 billion write-off on water distribution, broadband trading and other investments. Worse, disclosed only in passing by Mr Lay in a conference call with analysts, the firm suffered a $1.2 billion reduction in capital, stemming from a hedging deal with a related private-equity fund called LJM. The charge was due to Enron's forced sale of 55m of its own shares when the partnership was unwound this summer. Almost nobody outside Enron had been aware of the terms of the deal with LJM, a "structured finance vehicle".
Enron's failure to offer details about the risks from other related partnerships have led many to fear the worst about its huge balance sheet. Its shares plunged by 19% on October 30th alone (see chart on next page), before recovering a bit the next day.
Andrew Fastow, who was replaced as chief financial officer on October 24th, was a general partner in LJM. Jeffrey McMahon, his successor, has much to do to restore confidence. Questions abound. Were the trusts run at arm's length? What did Mr Fastow earn from the partnership? Ominously, the Securities and Exchange Commission (SEC) has now launched a formal inquiry.
Moody's, a rating agency, last week cut its rating on the company's debt to barely above "junk" level. Further downgrades might unleash claims from other off-balance-sheet partnerships. Those known about, such as Atlantic Water and Marlin Water, do not seem big enough to bankrupt Enron, but speculation is rife about what other obligations might lurk secretly in other structured vehicles.
A lower credit rating could destroy Enron's core franchise as the leading energy middleman, by scaring away customers and freezing the wholesale energy markets. That might have nasty consequences in other markets. Enron acknowledges that it is a large participant in the derivatives market, holding a portfolio with a notional value of $21 billion. Rightly or wrongly, many traders believe that figure vastly understates Enron's presence. If the firms on the other side of Enron's trades start to fear that payment is not coming, they might curb their other trading, producing a knock-on effect. Where this could end up is a subject of much conjecture.
Utilities that trade energy could be hit. So could the commodity and derivative operations of large commercial and investment banks. The ties are notably tight between Enron and J.P. Morgan Chase, according to Ventana Capital, a research firm. Not only does J.P. Morgan provide innumerable separate credit arrangements for Enron; it also has the largest derivative operation of any bank, as well as a large business trading commodities. There is "no doubt" that Enron is on the other side of many J.P. Morgan trades, says Ventana.
Were Enron to fail, Ventana thinks "it has the potential to cause a major financial crisis", worse, in some ways, than what occurred after LTCM. That merely froze the debt markets temporarily, whereas Enron deals in the building-blocks of the American economy. Imagine gridlock in the markets for gas, timber, coal, metals, fertiliser, bandwidth or indeed any of the products Enron deals in.
As yet, this all seems unlikely. Many big traders were happy to deal with Enron this week, although at shorter maturities and with less complex structures than in the past. Trading on EnronOnline was reportedly strong. Jim Donnell of Duke Energy, a big energy trader, described "a huge dichotomy" between the collapse in confidence in Enron in the equity and credit markets and the "business as usual" attitude taken by big commodity trading firms when considering Enron as a counterparty.
Yet as questions about Enron's credit-standing spread this week, it began to have difficulty making markets in some instruments. Few firms would accept Enron's name as guarantor of a credit derivative. In its core energy markets some big trading counterparties refused the Enron name. On the Intercontinental Exchange (ICE), two houses reportedly specified that they would not take Enron's credit.
The biggest credit exposure appeared to be with banks, whose $3 billion of back-up lines to Enron were drawn down last week. J.P. Morgan arranged an additional $1 billion emergency credit-line this week. This back-up, it is widely assumed, is needed mainly to meet margin calls triggered by the ratings downgrade.
Too big to fail?
Is Enron too big and too important to be allowed to fail? Philip Verleger, an energy economist, thinks that Enron is so central to energy markets that it could not easily be replaced. Enron's rivals mostly disagree, unsurprisingly.
But even Enron's worst enemies do not (yet) expect the firm to die from its current crisis. Most traders seem keen that it should live. "Nobody likes to see a wholesale trader disappear," says one. They admire Enron's armies of traders and their ability to do deals. EnronOnline is one of the Internet's few success stories, assuming its huge trading volumes do indeed generate big profits, as the firm claims.
Enron's, and the financial system's, problems could worsen if doubts grow about its ability to meet its obligations. On the surface it is rich in assets, if not cash. But its lack of transparency leaves uncomfortable room for doubt. In June 2000, The Economist challenged Mr Lay to reply to accusations of arrogance, high-handedness and a propensity to push the limits of the law. His response was revealing. To show that such charges were baseless, he pointed to another firm unfairly maligned by critics: Drexel Burnham Lambert, an investment bank that rose from obscurity to market prominence in the junk-bond boom of the 1980s. Drexel was accused of arrogance, he groused, but it was only being "very innovative and very aggressive". Drexel was not bailed out: Michael Milken, its star, ended up in jail, and Drexel collapsed in a heap of bad debts and ignominy.

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

Enron Gets $1 Billion New Credit Line, But Must Pledge Top Gas-Pipeline Assets
By Rebecca Smith
Staff Reporter of The Wall Street Journal

11/02/2001
The Wall Street Journal
A4
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Enron Corp. secured $1 billion in new credit lines, but had to pledge its best gas-pipeline assets as collateral. The deal did little to appease an important credit-rating agency.
Standard & Poor's Ratings Group lowered its rating on Enron's long-term debt by one notch to triple-B from triple-B-plus and short-term debt to single-A-3 from single-A-2, citing a belief that Enron's planned sale of assets "will be insufficient to restore its long-term credit quality" to historic levels. Moody's Investors Service Inc. had issued debt downgrades earlier this week.
S&P also lowered ratings on the debt of Enron's pipeline systems, Transwestern Pipeline Co. and Northern Natural Gas Co., that were used to collateralize a $1 billion bank borrowing from J.P. Morgan Chase & Co. and Citigroup Inc.'s Salomon Smith Barney unit. Enron said it would use the money from the 364-day credit lines to refinance roughly $250 million in maturing obligations, leaving it $750 million to boost short-term liquidity.
In dropping the pipeline credit ratings by two notches, S&P noted that the assets have become "more strategic to the company," in part because they can be relied upon to consistently make money, unlike many other Enron hard-asset investments.
The pipelines produced $450 million in gas-transport revenue and an $85 million pretax profit in the third quarter on generally rising rates. That compared with revenue of $424 million for Enron's foreign assets that scraped by with a $19 million earnings contribution.
Todd Shipman, credit analyst for S&P, said there have been concerns that Enron might take on too much debt, trying to prove it has enough cash on hand to meet its energy-trading obligations. But he said S&P wasn't worried by the most recent borrowing, because "we don't think it will be a permanent part of the balance sheet." However, he added that the amount of additional debt it can take on top of the $13 billion it now has outstanding is "little to none." With the sharp fall in its stock price, Enron's market capitalization is now around $10 billion.
An Enron spokesman said "it should be a nonissue" because the company has no intention of borrowing more money anytime soon.
In announcing the borrowing plan, Enron's new chief financial officer, Jeff McMahon, said it was a move to "enhance investor confidence." But stock-market investors reacted otherwise and Enron stock gave up most of Wednesday's gain, closing at $11.99, down $1.91, or 14%, in 4 p.m. New York Stock Exchange composite trading. With many Enron bonds trading at two-thirds of their par value, bondholders didn't seem comforted either.
Enron has been in a defensive posture since it announced a third-quarter loss of $618 million two weeks ago, followed by news that it also took a $1.2 billion equity write-down, based partly on transactions involving a handful of its own officers. The company replaced its chief financial officer, Andrew Fastow, after the Securities and Exchange Commission began an inquiry into related-party transactions. Enron on Wednesday disclosed that the inquiry had been elevated to a formal probe.

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

Business/Financial Desk; Section C
Enron's Shares Fall and Debt Rating Is Cut
By RICHARD A. OPPEL Jr.

11/02/2001
The New York Times
Page 11, Column 1
c. 2001 New York Times Company

DALLAS, Nov. 1 -- With investors absorbing news of a formal Securities and Exchange Commission investigation and a downgrading by another large credit-rating agency, shares of the Enron Corporation fell 13.7 percent today, giving back most of the gains from Wednesday's rally.
Late on Wednesday, Enron, the energy-trading giant based in Houston, said the S.E.C. had intensified its inquiry into the company's finances, making it a formal investigation, carrying subpoena power.
And today, Standard & Poor's lowered its rating on Enron's senior debt by one notch, leaving it a few notches above junk bond status. The downgrading came after a similar cut by Moody's Investors Service on Monday. S.& P. left Enron under review for a possible further downgrading.
If Enron's credit rating were dropped below investment grade, it could force the company to issue millions of shares of stock to satisfy debts and prompt other big energy-trading concerns to curtail their business with Enron.
S.& P. said that the company's ''financial flexibility has continued to diminish'' and that it had been unable ''to calm investors that are unsure about the strength of Enron's core energy marketing business.'' But the rating agency also said it thought that ''Enron's liquidity position is adequate to see the company through the current period of uncertainty'' and that, so far, ''most counterparties have maintained their trading activity with Enron.''
This morning, Enron said it had obtained $1 billion in additional financing. The line of credit may help the company convince investors and trading partners that it can weather this crisis. But some industry officials said investors might have reacted negatively because Enron had to pledge assets from two subsidiaries, Northern Natural Gas and Transwestern Pipeline, to secure the credit line.
An Enron spokeswoman said that she did not know what interest rates the credit lines carried and that the company had no plans to seek even more financing deals.
Enron's shares have fallen by more than half in the last two weeks because of the S.E.C. investigation and worries about off-balance-sheet debts and transactions with investment partnerships involving the company's former chief financial officer, Andrew S. Fastow, who was ousted last week. Enron shares fell $1.91 today, to $11.99.
Some analysts are beginning to attribute a swift recent rally in natural gas prices in part to the possibility that a collapse of Enron would roil the commodity markets. Enron dominates natural gas and electricity trading in the United States.
In New York today, natural gas for December delivery fell 0.1 cent, to $3.29 for a million British thermal units. The contract has soared from about $2.70 over the last two weeks as Enron's troubles became public.
''Enron has a massive exposure to both the buy side and the sell side in gas and other commodities,'' said Jay Saunders, oil and gas analyst at Deutsche Banc Alex. Brown, ''and if they're at risk financially, then you're exposed to that so you want to cover that risk. Anybody who has Enron as a counterparty in a trade might be concerned about getting paid.''
Mr. Saunders added that other factors had also lifted prices lately, including falling rates of gas being put in storage for use this winter.

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

California; Metro Desk
The State CalPERS Is Urged to Challenge Enron Finance: The public employee pension fund holds 3 million shares of the energy firm, whose stock has plunged. State senator calls for action.
NANCY VOGEL
TIMES STAFF WRITER

11/02/2001
Los Angeles Times
Home Edition
B-8
Copyright 2001 / The Times Mirror Company

SACRAMENTO -- A state senator has encouraged the managers of California's public employee retirement fund to challenge, perhaps with a lawsuit, the management of Enron Corp., the high-flying energy company whose stock has plummeted more than 80% in the last year.
The California Public Employee Retirement System, the nation's biggest public pension fund, owns roughly 3 million shares of Enron common stock. Enron shares, once valued at nearly $85, fell $1.91 Thursday to $11.99 on the New York Stock Exchange.
Sen. Steve Peace (D-El Cajon) urged management of CalPERS to deal aggressively with the Houston-based company, which is being investigated by the Securities and Exchange Commission for a potential conflict of interest by its former chief financial officer.
Investors have begun complaining of a paucity of information released by Enron about its financial transactions, and the stock has fallen dramatically in response. On Thursday, a major credit agency, Standard & Poor's, lowered its ratings on Enron, dealing the company another financial blow.
"It is clear that the events surrounding Enron have created a serious lack of confidence in the judgment of Enron's management team," Peace wrote Tuesday in a letter to CalPERS Chief Executive James E. Burton. "It is, therefore, incumbent on CalPERS, as trustee of public employees' ownership rights and as founder of the corporate governance movement, to improve Enron's corporate governance to increase share value."
In an interview, Peace said CalPERS should consider a shareholder lawsuit or join with other shareholders to force out Enron's management. CalPERS provides retirement and health benefits to more than 1.2 million state and local public employees and their families.
Enron officials did not respond to a request for comment on Peace's letter. CalPERS officials said they were considering the letter.
Peace has clashed repeatedly with Enron since the early 1990s, when the company was trying to influence the utility regulators and lawmakers forging a plan to turn California's regulated electricity industry into a competitive market. Peace chaired the legislative committee that crafted deregulation legislation.
"Enron wants a market where consumers have limited knowledge, and they want to operate their business where stockholders have the most limited information possible," Peace said in an interview.
Once a natural gas pipeline company, Enron has grown into the world's largest energy trader.
Besides owning Enron stock, CalPERS has joined with the firm to invest in energy development.
In 1993, CalPERS and Enron each contributed $250 million to an investment fund guided by Enron. When CalPERS ended the partnership in 1997 and sold its position to Enron, it earned $125 million, a 23% return, a CalPERS spokesman said. They teamed up again in 1998, with each putting up $500 million for energy industry investments. Enron tapped $150 million of CalPERS' money before CalPERS' commitment to the partnership expired.

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

Financial
Financing Offers Lure Buyers

11/02/2001
The Washington Post
FINAL
E02
Copyright 2001, The Washington Post Co. All Rights Reserved

Thanks to interest-free financing, General Motors and Ford Motor reported sharply higher October auto sales while Chrysler saw a more modest rise. GM reported that it sold 546,093 vehicles last month, a 31 percent increase over October 2000. Ford sold 400,893 vehicles in October, 36 percent more than the same month a year ago. Sales of DaimlerChrysler's Chrysler, Dodge and Jeep brand vehicles were up 5 percent, with just more than 209,000 units sold. GM set an all-time monthly record for truck sales, while sales of Ford's beleaguered Explorer SUV set an October record.
Enron Gets Loan -- at a Price
Enron received a $1 billion loan from J.P. Morgan Chase and Salomon Smith Barney but had to pledge its natural gas pipelines as collateral. Pledging the pipelines signals Enron's desperation to convince shareholders and trading partners that it's creditworthy as the Securities and Exchange Commission investigates partnerships run by its former chief financial officer, investors said. Questions about Enron's dealings with the partnerships have shut it out of commercial-paper markets, where most large corporations go to find low-interest, short-term debt.

http://www.washingtonpost.com
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

COMPANIES & FINANCE THE AMERICAS: Enron's dominant position is fuelling fears for markets: John Labate and Julie Earle consider the implications of the company's woes:
Financial Times; Nov 2, 2001
By JULIE EARLE and JOHN LABATE

Nothing has added to Enron's growth more than its aggressive and dominant position in the trading markets for gas and electricity that the Houston-based company helped to create.
A decade-long series of bold and innovative moves by Enron has not only changed the company but transformed the way US energy companies manage risk and trade energy products from region to region.
On any given day Enron is the principal in about 25 per cent of the online and offline trades in the energy and natural gas markets, according to analysts' estimates.
With an ongoing investigation by US securities regulators into Enron's accounting and disclosure practices, and Enron's market value falling by half in the past two weeks, many are wondering what impact Enron's mounting troubles could have on the trading markets.
Analysts say that in the worst case, long-term scenarios, if Enron's debt is downgraded to junk status or if the company depletes its considerable cash resources, the energy and natural gas markets could be hit in multiple ways.
"If you have something as big as Enron in a space saying they have no more money, you would have real effects and volatility in the market," said Todd Shipman, an analyst at credit rating agency Standard & Poor's.
Few competitors want to see Enron exit the trading markets, however, since it provides so much liquidity to the markets, and fewer expect that to happen.
Many of Enron's energy rivals, including Dynegy, Aquila and Duke Energy, are also trading partners, or counterparties to Enron. As such they may be closely tied to Enron's fate in the short term.
The biggest near-term threat is if there is another change in Enron's credit status.
This week Moody's Investors Service downgraded Enron to two notches above junk status. Further reductions are, for the moment, the main worry among its rivals and trading partners, although Enron debt remains at investment-grade levels.
"Certainly, whenever anybody is downgraded to junk status, their counterparties become concerned about how much credit they will extend," said Gerald Keenan, a partner at PWC Consulting in Chicago.
"Everyone is re-evaluating their credit exposure to Enron but few companies have stopped trading with it.
"It is often the counterparty of choice since it makes markets in areas where there is not a lot of liquidity."
Enron's trading partners are believed so far not to have changed the terms on their existing contracts with Enron.
However, if Enron's financial status worsens, the lack of confidence could have its own negative impact on the energy trading markets.
Existing market hedges between these multiple firms in the markets could begin to unwind, analysts warn, which could add to short-term instability in the energy marketplace.
It is unlikely, however, that energy prices would be hit since terms would quickly be renegotiated and stability return to the trading markets.
Any change in ownership in Enron could bring stability to the trading markets, say analysts.
Copyright: The Financial Times Limited

COMPANIES & FINANCE THE AMERICAS: Dollars 1bn line of credit secured to pay debt
Financial Times; Nov 2, 2001
By ROBERT CLOW and SHEILA MCNULTY

Enron, the troubled US energy trading group, has secured a Dollars 1bn credit line with JP Morgan Chase and Citigroup arm, Salomon Smith Barney.
Enron's management signalled last weekend that it expected to raise more cash to supplement the Dollars 3.3bn it received last week from drawing down its bank lines.
The new loan will be secured against the assets of Enron's Northern Natural Gas company and Transwestern Pipeline. The proceeds will pay down maturing debt and increase short-term funds.
Enron declined to comment on the terms and conditions of the deal, saying it was not yet closed.
On Octoberm, 16 Enron management announced a Dollars 1.01bn charge and a Dollars 1.2bn reduction of shareholders equity as a result of off-balance sheet private equity transactions set up by Andrew Fastow, its former chief financial officer.
Those deals raised questions about whether Mr Fastow was acting in the best interests of Enron's other shareholders, which became the basis for a Securities and Exchange Commission investigation.
If the credit rating agencies downgrade the company's debt further, counterparties might increase the collateral they require to trade with Enron. That could squeeze the embattled company's profit margins still further.
It is not yet clear how the rating agencies will react to Enron borrowing against its pipeline assets. Their stable revenues have been one of the cornerstones of Enron's rating.
In an effort to safeguard its ratings, a senior management delegation told all the rating agencies on Wednesday that it was going to be retreating from risk taking.
"We are going to explore new markets," the company said. "But what we have learned that we can expand into new markets without making large expenditures." www.ft.com/energy
Copyright: The Financial Times Limited

WORLD STOCK MARKETS: Wall St buoyed by Microsoft peace talks
Financial Times; Nov 2, 2001
By MARY CHUNG

US equities overcameearly hesitancy to risedecisively by midday as investors shrugged off grim manufacturing data and focused on Microsoft's tentative agreement to settle its antitrust battle with the government.
The Dow Jones Industrial Average was up 67.59 at 9,142.73 and the S&P 500 index 8.60 at 1,068.38. The Nasdaq Composite rose 23.66 at 1,713.86.
Investors cheered news that the US Justice Department and Microsoft had agreed the outline of a settlement requiring the world's largest software company to give computer manufacturers more freedom in the design of Windows desktops.
Microsoft rose 4 per cent at Dollars 60.54 and gave a boost to the technology sector as shares in Oracle added 2 per cent Dollars 13.79, Cisco climbed 1.4 per cent at Dollars 17.15 and Sun Microsystems gained 4 per cent at Dollars 10.55.
Chip stocks were broadly higher, with the Philadelphia Semiconductor index up 4 per cent. Shares in Intel tacked on 2.2 per cent at Dollars 24.97 and Advanced Micro Devices climbed 6.3 per cent at Dollars 10.46.
The sector was boosted by an industry report showing the third consecutive month of smaller declines for chip sales. Stocks had flirted in negative territory after more disappointing economic data painting a bleak picture for the US economy.
The National Association of Purchasing Management data showing factory activity fell to a nine-year low in October.
The data followed a report from the labour department showing the number of Americans requesting unemployment insurance benefits on an ongoing basis rose to the highest since May 1983.
Subodh Kumar, chief investment strategist at CIBC World Markets, said he was encouraged by the market's ability to bounce back from negative news.
"Even when bad news happens, there's initial weakness then the market bounces back," he said.
However, woes continued for Enron, the embattled energy trading company, which fell 9.4 per cent at Dollars 12.59 after the US Securities and Exchange Commission upgraded its probe into the company's accounting methods to a formal investigation.
United Airlines rose 2 per cent at Dollars 13 in spite of a third-quarter loss of Dollars 1.16bn.
Eastman Kodak rebounded 2 per cent at Dollars 26.07 after seeing heavy losses this week amid an analyst downgrade and a cut in its debt rating by Moody's Investor Service.
Toronto was flat in late morning trade and by midsession the TSE-300 composite index was just 8.30 higher at 6,894.00.
Banks bucked the weaker trend. Bank of Nova Scotia jumped 60 cents to CDollars 44.45 and Bank of Montreal was 33 cents higher at 34.19.
Copyright: The Financial Times Limited

Nov. 2, 2001
Houston Chronicle
Enron gets $1 billion more
Pledging assets, credit downgrade bruise shares
By LAURA GOLDBERG
Copyright 2001 Houston Chronicle
Enron Corp.'s bid to shore up investor confidence by announcing it had lined up $1 billion in credit didn't succeed Thursday.
Shares in Houston's largest company closed down $1.91 at $11.99. And that was before a second rating agency downgraded Enron's credit ratings.
The action by Standard & Poor's wasn't a surprise to Wall Street and isn't likely to help Enron's sagging shares.
Enron, the world's largest energy trader, said Thursday morning it had reached a deal with the investment banking units of Citigroup and J.P. Morgan Chase & Co. for $1 billion in credit lines to be backed by a significant portion of Enron's pipeline assets.
Last week, Enron tapped into a $3.3 billion revolving credit line that wasn't secured by collateral. It banked about $1.1 billion and is using the rest to pay off short-term debt obligations.
Investors reacted Thursday to several pieces of news.
One was Wednesday night's disclosure by Enron that federal securities regulators are formally investigating business dealings between Enron and investment partnerships formerly run by Andrew Fastow, who Enron removed last week as chief financial officer.
Since Enron revealed two financial hits related to the investment partnerships on Oct. 16, Wall Street has raised an expanding number of questions about its financial health. Some investors also saw the fact that Enron's new credit will be asset-backed as negative.
"What it tells you is that now they have to start using the crown jewels as security," said Donald Coxe, chairman of Harris Investment Management, where the Harris Insight Equity Fund owns about 78,000 shares in Enron. "Any royal family which has to pledge the crown and scepter to get a loan in the private markets tends to be about three days from the republicans breaking down the barriers of the palaces."
But Enron spokesman Mark Palmer said using the assets as collateral meant Enron could get the credit negotiated quickly.
"It has to do with speed," he said, adding that Enron sought to reassure outsiders its balance sheet is strong and that it has available cash to support its core energy trading business.
Of the new credit, which is expected to be finalized shortly, $250 million will be used to pay off debt obligation that's about to mature. The rest will be available as cash, Palmer said.
The assets of its Northern Natural Gas Co. and Transwestern Pipeline Co., the collateral Enron pledged could support another $200 million in credit if need be, he said, adding that Enron didn't believe it needed more than $1 billion.
Enron, which transformed itself from a pipeline company to a trader in everything from electricity to paper, still has about 25,000 miles of pipelines. The two assets pledged represent more than 19,000 miles of that.
Monday, Moody's Investors Service downgraded Enron's long-term debt one level to a rating that's still two notches above what are commonly called junk bonds.
Thursday, Standard & Poor's did the equivalent. It is also downgraded Enron's short-term ratings and said it was reviewing the company for potential additional downgrades.
If Enron's credit ratings fall from investment grade to junk status, it will trigger a wave negative consequences, including some that would damage its trading business.
Part of Enron's purpose in setting up new credit is to help it keep an investment-grade rating.
In its report, S&P said it downgraded Enron because it believes the company's plans, including asset sales, won't be enough to warrant the credit rating Enron had. It expressed concerns that Enron could face some permanent erosion of its share of the energy trading market if its main competitors take advantage of its weakened state and could have trouble keeping key personnel.
Carol Coale, a stock analyst with Prudential Securities in Houston, said in a report Thursday that Enron may need to issue 120 million new shares or more "to keep the rating agencies at bay."

USA: WRAPUP 2-Enron lines up cash to soothe worried Wall Street.
By Jeff Franks

11/02/2001
Reuters English News Service
(C) Reuters Limited 2001.

HOUSTON, Nov 1 (Reuters) - Enron Corp., gathering money to soothe a worried Wall Street, lined up $1 billion of new credit on Thursday, then saw its credit rating cut for a second time this week as the nation's largest energy trader struggled to restore investor confidence shaken by questionable financial transactions.
Shares in the Houston-based company, whose dealings are under investigation by the U.S. Securities and Exchange Commission, tumbled $1.91, or 13.7 percent, to $11.99 as the market continued a two-week-long pummeling of the stock.
At issue are off-the-balance sheet deals with limited partnerships, run by then-chief financial officer Andrew Fastow, which contributed to a $1 billion charge against third quarter earnings and a $1.2 billion reduction in shareholder equity announced on Oct. 16. Angry investors say Enron has not fully explained the transactions or whether it faces more liabilities.
The company, taking the tack that an having abundance of money available would ease fears about its financial stability, said on Thursday it got $1 billion in credit lines from J.P. Morgan Chase & Co. and Salomon Smith Barney Inc., the investment banking arm of Citigroup Inc.
The new credit, which comes on top of $3.3 billion in lines that Enron tapped last week, came with the proviso that the company's gas and pipeline assets be put up as collateral, a measure usually reserved for firms with "junk" credit ratings.
ALLAY FEARS
But a grateful Ken Lay, Enron's chairman and chief executive, thanked the two Wall Street institutions for their support and said the credit infusion should help allay investors' fears.
"We very much appreciate the support of two of our long-standing banking partners," he said in a statement. "With more than $1 billion in cash currently on our balance sheet, this additional credit capacity will further solidify Enron's standing as the leading market maker in wholesale energy markets."
The good news was tempered later in the day by Standard & Poor's announcement that it had cut Enron's credit rating and could do so again if the situation worsens.
The rating agency cut Enron's corporate credit and senior unsecured debt ratings to "BBB," two notches above junk status, from "BBB-plus," its subordinated debt rating to "BBB-minus" from "BBB," and its commercial paper rating to "A-3" from "A-2."
It also downgraded ratings for several Enron share trusts.
Downgrades could make it harder for Enron to issue debt and run its day-to-day business as fellow marketers and traders demand more collateral. If the ratings fall to junk, or below investment-grade, Enron could be forced to issue more shares, analysts said.
S&P said it cut the ratings because of questions about whether Enron was taking sufficient action to fully restore its credit quality.
"The company's financial flexibility has continued to diminish. This crisis of investor confidence can be traced ... directly to the company's inability to calm investors that are unsure about the strength of Enron's core energy marketing business and the viability of the company's plan to restore its credit profile," it said.
FULL DISCLOSURE
"A full, frank disclosure and discussion of the business and financial issues facing the company and its plans to address them will be necessary before investors will be able to confidently evaluate the merits of investing in Enron securities," the agency added.
S&P nevertheless said Enron's liquidity position is "adequate" to see the company through its current problems and that Enron was unlikely to see its position as the industry's top energy marketer endangered as long as it operated transparently.
On Monday, Moody's Investors Service cut Enron's long-term debt to "Baa2," also two notches above junk, and warned it may cut that rating and Enron's "Prime-2" commercial paper rating.
Enron was once a Wall Street darling lauded for its ability to create new Internet-based commodity markets that produced soaring profits and a stock price that seemed to defy gravity.
But setbacks in its bandwidth business and overseas investments, plus problems arising from the California power crisis hurt its do-no-wrong image. And in August, former Chief Executive Jeff Skilling shocked the financial world by resigning after just six months on the job, citing personal reasons.
The stock, whose year-high was $84, began to sink, then fell off a cliff after the company's Oct. 16 announcement. That day, shares closed at $33.84.
Trying to shore up its credibility, Enron replaced Fastow last week with another Enron executive, Jeff McMahon.
The company said on Wednesday an SEC "informal inquiry" begun Oct. 22 had become a formal investigation, possibly indicating regulators did not like what they had seen. It elected University of Texas law school dean William Powers to the board of directors and put him in charge of an internal probe into the deals.
Despite all the bad news of recent weeks, Enron said on Thursday its core business of energy trading was going strong.
Enron spokesman Eric Thode said transactions on the Houston-based company's widely watched Internet EnronOnline system were averaging some $3 billion to $4 billion a day, up from a 30-day average of $2.5 billion.
Enron is by far the nation's largest natural gas and electricity trader, with industry analysts estimating it is involved in some 25 percent of daily trade in those markets.

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

Business
THE TICKER
ENRON CORP.: Credit rating cut again; $1 billion secured
Associated Press

11/02/2001
Chicago Tribune
North Sports Final ; N
2
(Copyright 2001 by the Chicago Tribune)

Troubled Enron Corp. said Thursday it has secured $1 billion in new financing, but then saw its credit rating cut for the second time this week and watched its stock price take another dive.
Enron said it got $1 billion in credit lines from J.P. Morgan Chase & Co. and Salomon Smith Barney Inc., but had to put up its natural gas and pipeline assets as collateral.
Standard & Poor's cut its ratings for Enron, downgrading its corporate credit and senior unsecured debt ratings to BBB, two notches above junk status. Earlier this week, Moody's Investors Service downgraded the company's long-term debt.
Enron shares dropped nearly 14 percent, or $1.91 per share, to close at $11.99 on the New York Stock Exchange. After dropping to a nine-year low Tuesday, shares of the nation's largest natural gas and power marketer rose 25 percent Wednesday amid speculation the company was a takeover candidate.
But after the markets closed Wednesday, Enron announced the Securities and Exchange Commission had opened an investigation into possible conflicts of interest. The SEC is apparently looking into dealings Enron had with partnerships led by its former chief financial officer, Andrew Fastow, who was forced out last week.
Late Wednesday, Enron said it created a special committee headed by University of Texas law school dean William Powers to respond to the SEC investigation. Powers also was elected to Enron's board of directors.

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

India ONGC Plans Enron Oil,Gas Field Bid If BG Deal Fails

11/02/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

SINGAPORE -(Dow Jones)- India's state-owned Oil & Natural Gas Corp. (P.ONG) said Friday that it would consider bidding for Enron Corp.'s (ENE) upstream Indian assets if U.K.-based BG Group PLC's (BRG) conditional acquisition of the assets collapses.
BG paid $388 million for Enron's 30% stake in oil and gas fields offshore western India, but the sale is subject to a number of consents and conditions including confirmation from Enron and Gas India's joint venture partners - ONGC and Reliance Industries Ltd. (P.REL) - that BG will inherit field operator status from Enron.
ONGC and Reliance Industries are challenging BG's goal of acquiring Enron's operatorship of the offshore Tapti gas field and the Panna/Mukti oil and gas field. BG have made it clear it would walk away from the deal if it didn't get outright operatorship.
"If BG wants to walk away, we'll come up with a plan. If they (Enron) offer (an opportunity to bid again), yes, then we will think about it," an ONGC spokesman told Dow Jones Newswires, without elaborating further.
Earlier this year, ONGC bid a reported $400 million for Enron's Indian oil and gas assets, only to have its bid rejected. Analysts at the time said Enron was unlikely to settle for anything less than $600 million for its stake in the venture.
ONGC and Reliance Industries jointly hold a 70% stake in the assets.
As reported Thursday, BG said it will extend the negotiation period on the operatorship of the fields for an unspecified period.
However, analysts say BG's bid for operator status will continue to face stiff resistance from ONGC and Reliance.
"We want the operatorship," the ONGC spokesman reiterated.
Enron's upstream oil and gas assets in India hold proven and probable reserves of around 170 million barrels of oil equivalent.
-By Sri Jegarajah, Dow Jones Newswires; 65-415-4066; sri.jegarajah@dowjones.com

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

Enron May Sell India Dabhol Power Shr At Discount-Lender
By Himendra Kumar
Of DOW JONES NEWSWIRES

11/02/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -(Dow Jones)- U.S. energy company Enron Corp. (ENE) may sell its equity in India's 2,184 megawatt Dabhol Power Co. plant at a discount given its financial woes back home, a senior official of the Industrial Development Bank of India (P.IDB) told Dow Jones Newswires.
"There's a possibility of Enron selling its equity in Dabhol real cheap because that company desperately needs cash. Anything below $500 million will be a good price to pay for their Dabhol stake," said the IDBI official.
India's banks and financial institutions have a total exposure of about $1.4 billion in the Dabhol power plant, located in the western India state of Maharashtra. IDBI's own exposure in Dabhol is in excess of 20 billion rupees ($1=INR48.00).
Enron has a controlling 65% equity stake in Dabhol and wants to sell it because of payment defaults by the plant's sole customer - the Maharashtra State Electricity Board - and the Indian federal government's failure to honor payment guarantees. Back in August the U.S. company said it was willing to sell its equity at cost.
Enron India spokesman Jimmy Mogal confirmed that Dabhol Power Co. was currently in talks with the government and Indian financial institutions but declined to say what price Enron was seeking.
"DPC continues to hold discussions with the government of India and Indian financial institutions regarding the sale of foreign sponsor equity in the Dabhol project. It would not be appropriate to elaborate further on the recurring media speculation with respect to the status of these buyout discussions," Mogal said in a faxed reply to questions.
"While we remain hopeful for an amicable resolution of this issue, DPC continues to pursue the available legal remedies under the contract documents in order to protect the interests of DPC's stake holder," he added.
R.K. Pachauri, director of the independent think tank Tata Energy Research Institute, said the time was right for a company to negotiate a bargain from cash-strapped Enron for its Dabhol equity.
"Even $700 million would be a good price. All said and done, Dabhol is a world class project. People now need to get their act together and settle for a deal since the time is fast running out," Pachauri said.
The Houston-based Enron is attempting to persuade banks to provide additional credit to bolster its financial position after a precipitous fall in its share price. Last week, the company tapped its banks for $3.3 billion in credit after it encountered difficulties in raising funds in the commercial paper market.
The IDBI official said Enron's Indian lenders don't see any logic in buying out its equity in Dabhol because they don't want a non-performing asset.
But he said one possible option being talked about was the state-owned company National Thermal Power Corp. (P.NTP) buying Enron's stake.
"The government has to decide fast who will buy this equity. A state-owned company like the National Thermal Power Corp., which has core competence in the power sector, may be asked to buy Enron's stake. Later, NTPC can always resell it at a higher price," the official said.
Local newspapers say India's privately-owned BSES Ltd. (P.BSX) and Tata Power Co. Ltd. (P.TPW) may also be interested in buying out Enron's Dabhol stake.
No Tata Power official was immediately available for comment and a BSES official declined to comment when reached by Dow Jones Newswires.
The IDBI official said he hoped the government will take a decision before Nov. 9 when the Indian Prime Minister Atal Bihari Vajpayee visits the U.S. to attend the U.N. General Assembly meeting in New York.
He said Enron may send a final contract termination notice to MSEB any time after Nov. 19 and then the dispute will have to be settled by the Court of Arbitration in London.
"Should India lose the case, it may have to pay Enron damages ranging anywhere between $4 billion-$5 billion. Enron has a history of not losing any litigation," he warned.
Local media reports over the past two months have said Enron wants $1.00 billion for its stake in Dabhol.
A senior India power ministry official said the government favored an early solution to the Dabhol crisis but added that no decision had been taken yet on who would buy Enron's equity.
"We are committed toward resolving the Dabhol dispute amicably. Talks are on and nothing definite has been decided yet. But I am hopeful, the dispute will end on a happy note, sometime very soon," said the government official.
Dabhol is India's largest single foreign investment. MSEB has 15%, while General Electric Co. (GE) and Bechtel (X.BTL) own 10% each.
-By Himendra Kumar; Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dowjones.com

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

`Buying out Enron's stake in Dabhol unit won't help'

11/02/2001
The Times of India
Copyright (C) 2001 The Times of India; Source: World Reporter (TM)

MUMBAI: Buying out Enron's stake in the Dabhol Power Company (DPC) is no resolution since the tariff will still be unviable, analysts say.
Even as Enron Corp is preparing to sell off its stake in the project to Indian financial institutions, who have lent huge sums to the project, experts say a buy-out would make sense only if the bid for Enron's share of $ 1.3 billion is discounted to under $ 500 million and the loan component is written off by at least $ 500 million, says convenor of the Enron Virodhi Andolan, Pradyumna Kaul.
``The project will continue to be unviable even after buying it at low cost,'' Mr Kaul asserts. ``If LNG is the fuel, the energy price will still be more than Rs 2 per unit, given the fact that oil will be more than 25 per barrel. This will ensure that the unit cost of power will never be less than Rs 3.20,'' he says.
At the moment, Enron is willing to sell power at Rs 3.60 per unit at 90 per cent offtake, he points out. But this is not possible because a high offtake will not be permitted by the Maharashtra Electricity Regulatory Commission in the absence of demand. The MERC has told the state eletricity board to buy costliest power the last. ``And at a low offtake, the plant will be grossly unviable,'' an expert says.
Apart from buying Enron's stake at a low cost, it is necessary to reduce interest rates from Indian FIs, slash customs duty and sales tax on fuel, he says. These are some of the demands that DPC has already placed before the govermment. ``Even if the plant is sold, these factors will hike up the cost,'' he said.
Another alternative is to use the plant for peaking load alone, to be used only during a few hours of the day. This would bring down costs, anti-Enron activist Abhay Mehta said. In practical terms, he said, the only player to benefit from a sale is Enron Corp which is desperately looking to sell its stake.
Such a prospect leaves some grey areas about the future of the judicial inquiry ordered recently by the Democratic Front government. The probe is yet to get under way and the supreme court case against the project is pending hearing.
While officials admit that legally the actions will continue, it will not be as effective as if the company is still in the field. It is also possible to come to a mutually acceptable settlement before Enron exits the country or speed up the actions, they say.
``These repercussions are secondary; the moot point is a speedy solution to the Enron issue,'' says an official.
Mr Mehta says the fact that chief minister Vilasrao Deshmukh has already agreed to an extension for the judicial probe beyond six months, ``if it is found necessary'' suggests that the government ``is not really serious about solving the issue but will rather keep dragging the case till the chickens come home to roost and some political points are scored.''
``The state government's attitude is like that of an ostrich: if you ignore a problem long enough, it will go away,'' he says.

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

Dabhol lenders' meet in London cancelled
Our Bureau MUMBAI

11/02/2001
Business Standard
2
Copyright (c) Business Standard

The meeting of the lenders of the Enron-promoted Dabhol power project scheduled for November 2 and 3 in London has been cancelled.
This was supposed to be the last meeting of the lenders before the November 19 deadline by which the Dabhol Power Company is required to fire its final termination notice.
Sources in the domestic as well as the global lenders consortium confirmed the cancellation of the meeting, but gave conflicting reasons for this. Some domestic lenders maintained that the meeting was postponed because a solution to the Dabhol problem was in sight. "The government is working out a solution to the problem along with the domestic financial institutions," they said.
"It only makes sense to meet after the solution is worked out," said a source in the domestic lenders consortium.
This was sharply contested by a source in the foreign lenders consortium who said that the Industrial Development Bank of India (IDBI) chairman & managing director P P Vohra and ICICI chief executive officer K V Kamath were to attend the meeting, but their last minute engagements resulted in the cancellation of the meeting.

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

USA: Critics question Andersen's handling of Enron.
By Kevin Drawbaugh

11/01/2001
Reuters English News Service
(C) Reuters Limited 2001.

WASHINGTON, Nov 1 (Reuters) - Andersen, a top accounting firm, should have done more as auditor for energy giant Enron Corp. to alert investors to certain partnerships tied to the company that are now being investigated by U.S. authorities, accounting experts said on Thursday.
As the Houston-based energy trading group dealt with a deepening crisis, critics of its auditor Andersen said the accountants should have pushed harder for more and clearer disclosure of the partnerships' potential for conflicts of interest and financial risk to Enron.
"Not only is the disclosure seemingly inadequate as to where it's put, it's inadequate as to the attention that's paid to it. Then thirdly, it's almost unintelligible," said Mark Cheffers, who heads Massachusetts-based accounting consultancy AccountingMalpractice.com, in an interview.
Enron, whose share price slumped again on Thursday, said on Wednesday that it was being investigated by the Securities and Exchange Commission, the top U.S. financial markets regulator. An SEC spokesman declined to comment.
Enron last month ousted its chief financial officer Andrew Fastow, who was instrumental in setting up and managing certain outside partnerships that have been linked to the SEC probe.
Enron's ties to the partnerships were disclosed in Enron reports to the SEC and investors. Andersen, based in Chicago, audited those reports and approved them as fair and complete.
Asked about criticisms of the job the firm did, Andersen spokesman Patrick Dorton said: "We are committed to quality auditing and protecting the investor interest. Knowledgeable parties are looking at these matters. We're not going to respond to speculative commentary."
Enron disclosed in its March 2001 proxy statement that in the year 2000 it paid Andersen $25 million in auditor fees, as well as $27 million in fees for various other work.
Enron - a former natural gas pipeline group that transformed itself into the nation's largest energy trader - saw its stock close down on Thursday near an eight-year low, having lost two-thirds of its value since mid-October.
Investors began dumping Enron shares after reports of off-the-balance sheet transactions involving two limited partnerships run by Fastow, who was replaced last week by another Enron executive, Jeff McMahon.
FASTOW'S DUAL ROLE SEEN AT HEART OF CONTROVERSY
How Fastow could have balanced his duties as Enron CFO with his role as head of the partnerships - which regularly did business with Enron - is the key question, sources said.
The partnerships - called LJM2 Co-Investment LP and LJM Cayman LP - were set up expressly to do huge volumes of highly complex financial transactions wi???stow's employer. The transactions were disclosed to Enron investors in annual 10K filings and pr???2000 and 2001.
But Andersen should have done more to put the disclosures in plain English and highlight their potential for possible conflicts and risk to Enron's finances, said critics.
Enron last month said it was taking a $1 billion charge against earnings, as well as cutting shareholder equity by $1.2 billion due to transactions with the Fastow-led entities.
"A firm of Andersen's magnitude and reputation should always be aware of such possibilities. They should be able to presuppose the what-ifs in any condition," said Jay Nisberg, an accounting consultant based in Ridgefield, Connecticut.
An Enron spokeswoman said Andersen knew about the LJM partnerships. "We made them aware of our transactions with the partnerships and they reviewed them to the extent they deemed necessary," said Enron spokeswoman Karen Denne.
Even investors in the partnerships, which by most accounts were tremendously profitable, questioned how they were set up, with Enron employee Fastow at their head.
One early investor in LJM2 was the Arkansas Teacher Retirement System, a pension fund with $8 billion in assets. zz zz.

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

Enron: Online Trading Volume Sees Normal Decline Thursday

11/01/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW YORK -(Dow Jones)- Enron Corp.'s (ENE) electronic trading system, EnronOnline.com, saw a little more than 6,600 transactions Thursday, down from Wednesday's 7,100 transactions, Enron spokesman Eric Thode said.
The decline is typical of a reduction in energy trading activity at the beginning of the month, said Thode, who added that EnronOnline volume Oct. 1 was 5,200 deals. As in the past two weeks, the volume of transactions Thursday exceeded the 30-day average volume of about 5,600 daily transactions.
"All companies were transacting that we would expect to be transacting," Thode said.
On Thursday, energy traders said EnronOnline, on which Enron is the counterparty for all deals, was less active. At one key western electricity hub, Palo Verde, Ariz., EnronOnline's bid to buy power for delivery in December was $34.35 a megawatt-hour, compared with the best bid of $34.50 a megawatt-hour on the IntercontinentalExchange, a competing Internet-based trading system. EOL's offer to sell the same contract was 35 cents higher. EOL's bid-offer spreads were also wider for Northeast power and western gas at midday Thursday, though they were competitive for Northeast gas.
Generally, EOL presents tighter spreads in its key markets than the spreads found either on competing electronic systems or in the phone-broker market. Those aggressive bids have helped propel volumes on EOL since its inception in November 1999.
"Spreads fluctuate based on the markets. Every company has different perceptions," Thode said when asked about the narrower spreads on EOL.
"The power market for the past two weeks has been fairly quiet. There's been little volatility. Gas markets fairly volatile, and the increased volumes have come from primarily natural gas markets," Thode said.
-By Mark Golden, Dow Jones Newswires; 201-938-4604; mark.golden@dowjones.com

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

Power supplier Enron's stock drops another 14 percent
By MARK BABINECK
Associated Press Writer

11/01/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

HOUSTON (AP) - Troubled Enron Corp. said Thursday it has secured $1 billion in new financing, using its natural gas and pipeline assets as collateral. But its stock price took another dive after rising a day earlier on takeover speculation.
In trading Thursday on the New York Stock Exchange, Enron shares fell nearly 14 percent, or $1.91 a share, to $11.99.
After dropping to a nine-year low on Tuesday, shares of the nation's largest natural gas and power marketer rose 25 percent Wednesday amid speculation the Houston-based company was a takeover candidate.
But after the stock market closed for the day, Enron, an important supplier to power-starved California, announced the Securities and Exchange Commission had opened a formal investigation into possible conflicts of interest.
The SEC is apparently looking into dealings Enron had with partnerships led by its former chief financial officer, Andrew Fastow, who was forced out last month as investors fled because of questions about the arrangements.
While referring to the latest SEC news as "noise," Merrill Lynch analyst Donato J. Eassey said it would subdue Enron's stock price.
"We believe the timing and directional uncertainty of this new development will at best cap Enron's stock price in the mid-teens while increasing overall volatility," Eassey said in a note Thursday.
Late Wednesday, Enron said it created a special committee headed by University of Texas law school dean William Powers to respond to the SEC investigation. Powers also was elected to Enron's board of directors.
"I have asked the board to take this action to address fully and forthrightly investors' questions and concerns," said Enron chairman and chief executive Kenneth L. Lay. "We will also make every appropriate public disclosure during the course of the SEC's investigation."
However, Duane Grubert, an analyst with Sanford C. Bernstein and Co. in New York, said Enron still has much to do to restore investor confidence.
"With (stock) values this low, you've got two camps of investors: guys that hate Enron and guys that want to be cautiously attracted to Enron," Grubert said. "It's led to the trading range being irrationally low and shares being oversold. It's not something the company wants."
Enron's stock has skidded since the company reported a $638 million third quarter loss just over two weeks ago, dragged down by a one-time charge of $1.01 billion attributed to various losses. Some of these losses have been tied to partnerships managed by Fastow, who was ousted last week.
Earlier this week, Moody's Investors Service downgraded the company's long-term debt and warned of possible further downgrades.
On Tuesday, shares hit a nine-year low of $11.16. With such a depressed stock price, the Wall Street Journal reported that Enron was being eyed as a possible takeover target.
Potential buyers include General Electric's GE Capital unit, Warren Buffett's Berkshire Hathaway and Royal Dutch Shell, the Journal said.
---
On the Net:
http://www.enron.com

AP Photo XNYR310 of Oct. 29
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

USA: UPDATE 1-S&P cuts Enron ratings, may cut ratings again.

11/01/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, Nov 1 (Reuters) - Standard & Poor's on Thursday cut its ratings for embattled energy trader Enron Corp. and warned it may cut the ratings again because of what it described as "uncertainties" surrounding the company and the possibility it may face further problems in the capital markets.
Houston-based Enron said on Wednesday it is being probed by the Securities and Exchange Commission.
Downgrades could make it tougher for Enron to issue debt and run its day-to-day business as fellow marketers and traders demand more collateral. If the ratings fall to junk, or below investment-grade, Enron could be forced to issue more shares.
S&P cut Enron's corporate credit and senior unsecured debt ratings to "BBB," two notches above junk status, from "BBB-plus," its subordinated debt rating to "BBB-minus" from "BBB," and its commercial paper rating to "A-3" from "A-2."
The rating agency also downgraded ratings for several Enron share trusts.
S&P warned it may cut all of these ratings again. A downgrade to the commercial paper rating would take that rating to junk status. All leading U.S. rating agencies, including S&P, generally rate all of a company's senior unsecured debt and commercial paper either investment-grade or junk.
S&P nevertheless said Enron's liquidity position is "adequate" to see the company through its current problems.
So long as Enron provides market participants with their usual liquidity and price transparency, it said, "it is unlikely that any significant long-term damage to Enron's franchise as the premier energy marketer will be sustained."
The S&P analyst who covers Enron was not immediately available for further comment.
On Monday, Moody's Investors Service cut Enron's long-term debt to "Baa2," also two notches above junk, and warned it may cut that rating and Enron's "Prime-2" commercial paper rating.
Enron shares closed Thursday on the New York Stock Exchange at $11.99, down $1.91, or 13.7 percent. They have fallen 65 percent since Oct. 16, when Enron said it would take $1.01 billion in charges for certain investments. The shares hit a nine-year low on Tuesday.
"CRISIS OF INVESTOR CONFIDENCE"
S&P said Enron's plan to sell assets and use other means to repair its "damaged balance sheet" will be "insufficient" to restore its historical "BBB-plus" ratings.
"This crisis of investor confidence can be traced ... directly to the company's inability to calm investors that are unsure about the strength of Enron's core energy marketing business and the viability of the company's plan to restore its credit profile," it said.
"A full, frank disclosure and discussion of the business and financial issues facing the company and its plans to address them will be necessary before investors will be able to confidently evaluate the merits of investing in Enron securities," S&P added.
Enron said on Thursday it obtained $1 billion in secured credit lines in a bid to help support day-to-day trading operations and bolster investor confidence.
"We are moving aggressively to strengthen our balance sheet and maintain our investment grade credit rating," said Jeffrey McMahon, who last week became Enron's new chief financial officer, in a statement issued on Thursday.

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

Enron's Credit Rating Cut After $1 Bln Loan Secured (Update9)
2001-11-01 18:27 (New York)

Enron's Credit Rating Cut After $1 Bln Loan Secured (Update9)

     (Adds company comment in 17th to 19th paragraphs.)

     Houston, Nov. 1 (Bloomberg) -- Enron Corp., the largest
energy trader, received a $1 billion loan from J.P. Morgan Chase &
Co. and Salomon Smith Barney Inc. after agreeing to use the
company's natural-gas pipelines as collateral.

     Enron shares fell 14 percent a day after the U.S. Securities
and Exchange Commission began formally investigating partnerships
run by its former chief financial officer. Pledging the pipelines
signals Enron's desperation to convince shareholders and trading
partners that it's creditworthy, investors said.

     ``It's not reassuring, it's worrisome,'' said Donald Coxe,
manager of the Harris Insight Equity Fund, which owns about 78,000
Enron shares. ``If they had to secure the loan, obviously the
lenders don't think they can rely on Enron's financial
statements.''

     Standard & Poor's said after U.S. markets closed that it cut
Enron's long-term credit rating to ``BBB,'' the second-lowest
investment grade, from ``BBB+.'' Its short-term debt rating was
cut to ``A-3,'' one grade above junk status, from ``A-2.'

     The SEC is investigating partnerships run by former CFO
Andrew Fastow that bought and sold Enron shares and assets. Those
trades cost Enron $35 million and $1.2 billion in lost shareholder
equity. Questions about Enron's dealings with the partnerships
have shut it out of commercial-paper markets, where most large
corporations go to find low-interest, short-term debt.

     Last Friday, Enron tapped a $3 billion credit line to pay off
$2.2 billion in commercial paper it has outstanding. Proceeds from
the $1 billion secured loan will go for debt payments and to
supplement cash reserves, Enron said.

                        Business With Enron

     To get the $1 billion loan, Enron pledged assets of its
Northern Natural Gas Co. and Transwestern Pipeline Co., which own
gas pipeline systems that combined are about 19,000 miles long and
can deliver as much as 6 billion cubic feet of gas a day.

     Enron, based in Houston, got its start as a natural gas-
pipeline operator. Over the past decade, the company has shed
assets such as pipelines and power plants and focused on trading
electricity, gas, wood pulp and other commodities.

     Enron now accounts for about a quarter of U.S. power and gas
trades. The company still has about 25,000 miles of gas pipeline.

     Mortgaging those lines is ``maybe not such a good signal,''
said Roger Hamilton, who manages John Hancock Value funds, which
owns 600,000 Enron shares. ``It shows they can't convince banks
with anything but secured assets.''

     Shares of Enron fell $1.91 to $11.99. Earlier, they dropped
to $11.70. The stock has fallen 86 percent this year.

     Enron's 6.4 percent coupon notes due in 2006 fell about 3
cents today to be bid at 74 cents on the dollar and offered at 77
cents, traders said. Until last week, the notes were trading near
par value.

                           Credit Rating

     Enron must have investment-grade credit to borrow enough to
settle its transactions daily. Energy companies including Exelon
Corp. and Northeast Utilities have restricted business with Enron
as the company sought new sources of credit.

     On Monday, Moody's Investors Service lowered Enron's long-
term credit rating to ``Baa2'' from ``Baa1,'' two notches above
junk status. It also placed the company's ``P-2'' rating for
commercial paper on review for possible downgrade.

     Standard & Poor's said in downgrading Enron's credit rating
today that the company has enough liquidity to see it through the
``current period of uncertainty.'' Still, S&P said, Enron's
``financial flexibility has continued to diminish'' because of its
``inability to calm investors that are unsure about the strength
of Enron's core energy marketing business.''

                         Repayment Trigger

     Falling below investment grade would trigger early repayment
terms for $3.3 billion in bonds held by affiliated companies such
as the ones created by Fastow. A lower credit rating also reduces
the amount of cash that Enron can raise to back its trading
business.

     ``There are still two levels before those triggers go into
effect,'' Enron spokeswoman Karen Denne said. The announcement of
today's $1 billion loan is ``the latest step in an orderly plan to
strengthen our balance sheet,'' she said. Denne outlined three
steps, which include the credit line and a draw-down of $3 billion
in unsecured credit, which was announced last week.

     The final step is $2.1 billion in asset sales, which the
company outlined on a conference call last week. Enron said it
expects to close on $600 million in sales before year's end.

     The sales include Enron's Azurix North America water business
to American Water Works Inc. for $149.8 million, Enron's Puerto
Rican power-plant company EcoElectrica Holdings Ltd. to Mirant
Corp. and Enron's stake in Brazilian natural-gas distributor Cia.
Distribuidora de Gas do Rio de Janeiro to state-owned Brazilian
oil company Petroleo Brasileiro SA, or Petrobras. The latter two
transactions are valued at $250 million each, Enron spokesman Mark
Palmer said.

     S&P said today it doesn't think the asset sales and Enron's
other plans will be enough to restore Enron's credit quality to
the ``BBB+'' level it had since 1995.

                        Investor Confidence

     The financing is to ``enhance market and investor
confidence,'' Enron Chief Financial Officer Jeffrey McMahon said
in a statement.

     Enron can borrow another $200 million by bringing other banks
into the loan, Denne said. ``We don't have any plans to do so at
this point,'' she said.

     ``We are moving aggressively to strengthen our balance sheet
and maintain our investment grade credit rating,'' McMahon said.

     McMahon, then head of Enron's industrial markets group, was
named CFO last week. Fastow was ousted in an attempt to restore
investor confidence.

     ``It seems until we know more about the SEC investigation,
it's going to be a difficult time for the stock,'' said Tara
Gately, an energy analyst at Loomis Sayles & Co., which sold most
of its Enron shares early last year.

     J.P. Morgan is advising Enron on the sale of part of Azurix.
Salomon Smith Barney is the investment-banking arm of Citigroup
Inc.

--Russell Hubbard in the Princeton newsroom, 609-750-4651

USA: Enron U.S. energy trade so far skirts credit woes.
By Joseph Silha

11/01/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW YORK, Nov 1 (Reuters) - Enron Corp., whose shares slumped again on Thursday amid investors' concerns over a credit crunch, has yet to see that fear seriously dent its dealings with other giants of the U.S. gas and power markets.
"Trading volumes in our core wholesale businesses remain extremely strong. Every day this week, volume on EnronOnline has exceeded our rolling 30-day average. We are not seeing people hesitate to do business with us," Enron spokesman Eric Thode said.
Enron is by far the nation's largest natural gas and electricity trader, with industry analysts estimating it is involved in some 25 percent of daily trade in those markets.
The company recently became the target of a Securities and Exchange Commission investigation into financial dealings with partnerships headed by Enron's former chief financial officer.
Thode said transactions on the Houston-based company's widely watched Internet EnronOnline system were averaging some $3 billion to $4 billion a day, up from a 30-day average of $2.5 billion.
BUSINESS AS USUAL?
While Enron's dominance of the industry has long been a sore spot with competitors, many of its biggest trading partners said it was business as usual, despite an 80 percent plunge in the company's share price since January.
But the drain on the company's capital has not gone unnoticed, prompting increased caution among traders but few fears the company will exit the North American energy market.
"Enron has come under closer scrutiny, but we haven't changed our policy about dealing with the company. This is a one time event. It's a hurricane, but it doesn't mean the weather next year will be bad. Enron will handle this problem," Al Butkus, vice president at UtiliCorp United, said.
Butkus noted Enron's problems stem from how the company financed the purchase of some assets, not from its trading operations.
Charlotte, N.C.-based Duke Energy, another large trading partner, also has not curbed its business with Enron.
"We have a credit process for our counterparties which tells us how much collateral is required. That could come into play if there were further problems with Enron's credit, but we haven't seen that yet," Duke Energy spokesman Terry Francisco said.
Traders at Reliant Energy, Williams Cos., Dynegy and El Paso Corp all said they continue to deal with Enron but were closely monitoring the situation.
CREDIT SQUEEZE
Despite the current calm among energy traders, analysts cautioned Enron's shrinking capitalization could still squeeze its cash supply and hamper its ability to do business.
Questions about some off-balance sheet deals with two partnerships helped pummel the company's stock this week to its lowest level since 1992, shrinking market capitalization to less than $9 billion from more than $60 billion in January.
Most of Enron's power and gas deals are in the unregulated over-the-counter (OTC) market, so no one outside of the company knows what trades are on their books.
But Enron, the biggest market maker in energy products, has consistently preached a balanced or hedged book.
"Some people may be scaling back their dealings with Enron, but I think you can rely on Enron to do what they should do in risk management practices," Ed Krapels, director at Massachusetts-based Energy Security Analysis Inc told Reuters.
"I think at the end of the day, their book was balanced enough and they should be able to weather the storm."
But Krapels cautioned that further deterioration in Enron's share price and credit standing might force the company to post larger cash deposits with its counterparties and ultimately restrict trading operations.
Earlier today, Merrill Lynch lowered its rating on Enron's stock to "neutral" from "accumulate".
Enron's shares ended down $1.91, or 13.7 percent, at $11.99.

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

INDIA PRESS:Dabhol Creditors Meeting In London Called Off

11/01/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -(Dow Jones)- A meeting among creditors of India's Dabhol Power Co. in London, originally scheduled for Friday and Saturday, has been cancelled, reports the Business Standard.
According to some domestic lenders, the meeting was canceled because a solution to the Dabhol's problems was in sight, the newspaper reports.
"The government is working out a solution to the problem along with the domestic financial institutions. It only makes sense to meet after the solution is worked out," the report quoted a source in the domestic lenders' consortium as saying.
However, a source in the foreign lenders' consortium said last-minute engagements of leading executives in Industrial Development Bank Of India and ICICI resulted in the cancellation of the meeting.
Dabhol, a $2.9 billion, 2,184-megawatt power project located in the western Indian state of Maharashtra, is a unit of U.S. energy company Enron Corp. (ENE).
The project ran into trouble after Dabhol's sole buyer, Maharashtra State Electricity Board, refused to purchase power from the plant, saying the company's tariffs were "exorbitant and unaffordable." Enron has threatened to sell its controlling 65% stake in Dabhol following a long-standing payment dispute with MSEB and India's federal government for its failure to honor a payment guarantee.
Dabhol is India's largest foreign investment to date. Newspaper Web site: www.business-standard.com

-By Himendra Kumar; Dow Jones Newswires; Dow Jones Newswires; 91-11-461-9426; Himendra.Kumar@Dowjones.com

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


Jorge:

(1)  Yes, I did verbally approve the Merrill Lynch "Other Provisions" section
of the rate swap (10/26/00 deal).

(2)  Yes, I received your Fax of 11/21/00 from Bank of Montreal with your
email to the bank.  The language which you sent to the Bank of Montreal
("BOM") was to be based on the Merrill Lynch "Other Provisions" section of
the above rate swap.  In that regard,
 (i)  you inadvertently left out a phrase when you retyped the Merrill Lynch
language.  However, BOM's subsequent revision is acceptable.
 (ii)  it is not clear to me whether ALL of Paragraph 3 in the original BOM
confirm is being replaced.  Your message to BOM seems to imply that it is
fully
        replaced (which is what we want).  You should definitely verify that
this is the case in your latest BOM confirm.

(3)  Yes, the Termination Agreement format from Deutsche Bank AG looks fine.
Just be sure that all transaction references are correct.

Sorry for the delay.  I am trying to identify another lawyer to back me up.

Sara

	Jorge A Garcia@ENRON
	11/27/2000 08:57 AM

		 To: Sara Shackleton/HOU/ECT@ECT
		 cc: Laurel Adams/HOU/ECT@ECT
		 Subject: Legal Opinion

Good Morning Sara,

Hope you had a nice holiday weekend! I wanted to follow up regarding several
issues.

1) Please provide me with your e-mail authorization wherein you verbally
approved the "Right to Terminate" language for the Merrill Lynch Interest
Rate Swap Confirmation.

2) I faxed you Bank of Montreal's response to the "Right to Terminate"
language on Friday for the Interest Rate Swap that was originally traded on
11/3/00.. Please advise with your opinion. I have another trade with the
identical language from 11/14/00 that I am faxing to you this morning. We
received it at 5:37pm Friday afternoon.

3) Please advise your opinion on the Termination Agreement for the Default
Swap with Deutsche Bank dated 10/12/00.

Looking forward to your response.

Regards,

Jorge


I killed deal 233231.  The contract number was incorrect.


Yes.

 -----Original Message-----
From: 	Brackett, Debbie R.
Sent:	Thursday, January 10, 2002 8:38 AM
To:	Keiser, Kam
Cc:	Albrecht, Kristin
Subject:	FW: Non-terminated deals

Just for gas?

 -----Original Message-----
From: 	Keiser, Kam
Sent:	Thursday, January 10, 2002 7:50 AM
To:	Brackett, Debbie R.
Subject:	Non-terminated deals

Debbie,

The credit committee needs to get some information from us that I could use your help with.  Can I get a dump of the non-terminated deals into excel and I will format it from there.  The information they need to see are the counterparty name, cash flows (MTM value) and positions.
As always, they need it by 11:00 this morning so if you could let me know if this is something your group could provide me with I would appreciate it.

Thanks

Kam

x3-5781


Gerald,  I made a slight simplification to the Capacity Allocation
Agreement.  Please send me redlines from the originals for the Admin Services
Agreement and the Capacity Allocation Agreement.  After reviewing with Lee
we'll need to get our Cheif Executive Officer to sign.  I'm thinking we'll
need complete sets of the agreements since they are exhibits to the LLC.

 - LCCAA.DOC


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If you have any questions, or need help with your online services, please feel free to call me at 713-853-2407.

Thank You,

Hank Emery


Dear Enron Employees:

I'm sorry to report that a third Enron employee has died in the hospital as a result of injuries from yesterday's explosion and fire at Teesside Power Station.  To lose another employee is a devastating blow to all of us.  A fourth employee remains in the hospital and is in stable condition.  Please keep these employees and their families in your thoughts and prayers.  We will release their names as soon as all family members and relatives have been notified.

I'm in the U.K. now and will be visiting with the employees and families who've been affected by this tragic accident.  I will also visit the site and will meet with authorities in order to determine the cause of the explosion.  I will keep you posted on any new developments.


Mark, Brian, and Steve,
	Further to my conversation two weeks ago with Mark, I would like to schedule a visit to Denver 11/19-20.  As a reminder, Business Controls is looking at the security posture of Enron facilities worldwide.  Currently, we are focusing our resources on domestic sites.  At the moment, I am planning for one of our IT specialists to travel from Portland to assist me with reviewing IT back-up procedures, recovery, and continuity issues.  If I could impose on you to provide some information about the office, it would greatly help in our planning.
	In particular, could you briefly describe the office(s); physical location, which floor, how large, how many employees, and any other Enron subsidiaries or offices in Denver.  Additionally, would you be our point of contact, or can you designate someone?  Thank you in advance for your attention to this matter.

Mark C. Ringwelski
Systems and Architecture
Business Controls
Enron Corporation
Phone: 713/345-4625
Cell:     713/875-1869
FAX:    713/646-8838


We sold Steve a package of 10,000 at the Nipsco city gate.

Thanks for your help!


I have hard coded all volmes, prices and revenues related to merchant sales.
A blend of Hennwood and our desk curves were used to price the merchant or
excess sales.  I am also using a 9% discount rate which is what FPL had in
the model they sent over to us.  We may want to take this out entirely and
let them do their own.

Be prepared the model that I had to work with was 14 Mbs and a big mess.  I
have cut it down to around 4 Mbs but the cash flow sheet is confusing
at best.  It is manageable and should be sufficient.  Give me a call with any
questions.


Sam:

Don't you have a new address by now?  I remember you said that you were
moving into a plush high-rise overlooking the great southern city of Atlanta,
home of the Peach Bowl!   Please email me and let me know.

A belated thanks for the birthday card.  I had a fabulous birthday in Napa
Valley at Auberge d'Soleil with my little sister and friends.  We drank
wonderful wines and dined in great restaurants - and had great weather.

Hope you're doing well.

Have you started any new business ventures?  Maybe taken Wendy's to Amelia
Island Plantation?  Or better yet, purchased the water rights to Palm Springs?

I'm just hangin' in Houston, same old job, etc.  I joined my two friends
Monty and Keith for our annual birthday celebration at Galatoire's about two
weeks ago.  It's always great fun.   I think I get to plan a reunion of
Gordon, Arata et al ex-pats.  There are about thirty of us scattered around
the country.

My regards to Beverly and Helen.

Sara


Shelly, we can do that but check with Cindy when she returns next week.


That would work for me.  And presumably Rory and Co. could come then, too?

	Nancy Sellers <Nancy.Sellers@RobertMondavi.com>
	12/12/2000 10:06 AM

		 To: "'Eldon Sellers'" <Eldon@interx.net>, Cameron <cameron@perfect.com>,
Jeff Dasovich <Jeff_Dasovich@enron.com>, "Prentice @ Berkeley"
<PSellers@haas.berkeley.edu>, Prentice Sellers <PSellers@pacbell.net>, Scott
Laughlin <scottwl@hotmail.com>
		 cc:
		 Subject: I was thinking

If you can all spend the night of the 23rd here - we could have our
"Christmas" together on the morning of the 24th??

Nancy
(707) 251-4870 (phone)
(707) 265-5446 (fax)
"Plus je bois, mieux je chante"


Dear Vincent,

I encourage you to attend CBI's Safety and Security in the Electric Power Industry, March 25-26, 2002, Renaissance Houston Hotel, Houston TX.  You will hear a special keynote presentation from Representative Jeff Morris of the Washington Sate Legislature and Chair of the House Telecommunications, Technology and Energy Committee speak on the ongoing legislation to protect the electric power industry.  Also, hear from Supervisory Special Agent Geoffrey Binney, National Infrastruction Protection Center, Federal Bureau of Investigation and many more Top Security Experts.  Utility Companies Save $400 if you register by February 1, 2002.  Click here to see the full agenda and speaker sessions. http://www.cbinet.com/events/PB231/index.html

Best Regards,

Kathryn Hingston
Conference Director
The Center for Business Intelligence
k.hingston@cbinet.com

******************************************************************************************************************
To be removed from future mailings, please REPLY to this message and copy "REMOVE 0000639675" to the subject line.  This will enable us to remove you from our database.
Thank you
0000639675


what is your address?  I will send what I have collected!

Eric

DASPARADO@aol.com on 02/01/2000 02:24:44 PM
To: Eric Bass/HOU/ECT@ECT
cc:
Subject: FFL

Jason was telling me you had a check for me?  Was wondering when your giving
the payouts, need money man, rents coming up fast;)

Scott


Suzanne Brown@ECT
12/11/2000 04:08 PM
To: Laurie Miller/Corp/Enron@Enron
cc:

Subject: Re: Correlation Analysis

Laurie, can you help witt this? thanks.

From: Steven J Kean@ENRON on 12/11/2000 09:43 AM
To: Suzanne Brown/HOU/ECT@ECT
cc:
Subject: Re: Correlation Analysis

It's a little hard to tell precise numbers from the charts so I need a "call
out" number from the charts ... specifically,what happened to microsoft's
turnover rate for how much stock decline -- eg did it go up 33% (from 9% to
12%) for "x" decline in the stock price?

	Suzanne Brown@ECT
	12/07/2000 11:39 AM

		 To: Steven J Kean/NA/Enron@Enron, Cindy Olson/Corp/Enron@ENRON
		 cc:
		 Subject: Correlation Analysis


so not even remotely funny.


El Paso is planning on giving the 238,000mmbtus back to HPL at Moss Bluff.
This is scheduled to start on Thursday Oct. 26th.  El Paso still has not
indicated
the daily volume yet.  More details will follow.   Thanks,  Pat


Saturday lunch it is then! I look forward to seeing you at 1pm at our usual
place right?  Do you want to go somewhere different. It doesn't matter to
me.  I am flexible.


Peter,

Enron Compressor Services paid ENA $658,118 for the June 2002 - May 2022
$3.35 Put Swaption.

Thanks,

Errol McLaughlin, X5-8274


Ruth Concannon told me we want to try and sell the parked gas on Sonat.  This is what we have found out over the last 2 days.

ENA no longer has the ability to do nominations on Sonat's scheduling Christina Sanchez (ENA Scheduler) believes that under normal conditions, we can sell the parked gas on Sonat without doing any nominations.  The party we sell the gas to would nominate the gas away from a specific PAL meter and reference our PAL contract as the upstream contract.  Today I spoke with Tammi Depaolis at Sequent - she is interested in buying the gas and she might prepay for it.  I need to know;

1.  What volume to sell, I assume we are talking about 188,949 dth on deal #1222, which means we ignore the loaned volume of 96,000 dth on deal #1424.
2.  What period do I sell the gas for?  All out by March 31st subject to the operational conditions on the pipeline?  Or base load in April?  I prefer all out by March 31st but I would like to ask the pipeline if that's ok?
3.  How many bids do I need to get?  I called Sequent because I know they are active on Sonat.
4.  This may not matter but did Sonat ever pay us for the gas ENA sold them in January 2002 (see items in red down below).

Tammi will probably check with the pipeline to see if its ok to take our gas.  I don't want to sell gas to someone then find out the pipeline will not let them take it.

All of my previous notes are shown below in blue.

Summary:  Sonat has netted our Parked Gas Balance with our Loaned Gas Balance and filed a motion with the courts to retain the remaining Parked Gas Balance, 92,949 dth per my conversation with Sonat, to offset $879,030.42 ENA owes Sonat for the purchase of gas in October 2001.  According to Sonat, the payment was due November 26, 2001 but ENA did not pay.  Sonat's motion is set to be reviewed by the court on March 6th.

2/19/02  History  - Per Dave Dyer (205-326-2007) at Sonat
ENA has 2 Park & Loan (PAL) contracts with Sonat.  All PAL's with Sonat are under master contract PAL1001.  Sonat assigns a deal number to each deal under this contract.

Deal #1424 - ENA borrowed a total of 96,000 dth from Nov 3rd-5th and has not paid this back.  ENA still owes Sonat 96,000 dth.  The terms of the deal were to payback Sonat anytime with 3 days notice on any 3 days on 2002,   SONAT ONLY CHARGED ENA $96.00 FOR THIS DEAL, because Sonat needed to get gas off the system.

Deal #1222 - ENA parked 309,192 dth in August to come out in Jan 2002.  Sonat let ENA withdraw 42,951 on 11/29/01 leaving a balance of 266,241 dth.  In Jan 2002, ENA withdrew 8,588 dth per day for the 1st-9th.  That left a balance of 188,949 dth.  On Jan 8th, 2002, Sonat sent a letter stating that Sonat will hold on to the remaining to balance to offset 1) the Loaned gas on deal #1424 (96,000 dth) and 2) to offset dollars ENA has not paid Sonat for gas Sonat sold to ENA in October 2001.  According to Sonat, the remaining balance on this deal is 92,949 dth = [309,192 parked in Aug - 42,951 w/d in Nov - 77,292 w/d in Jan - 92,000 balance on #1424].  According to Sonat's letter, Sonat has filed the appropriate motion for court approval for the offsets.  According to Dave, ENA is being billed $.00305 x daily balance in this account.  ENA should have paid some bigger amount when the gas was parked in August.

Other items;
ENA purchased system supply from Sonat in October 2001.  ENA purchased 286,998 at an average price of $3.063 = $879,030.42.  According to Sonat, ENA did not pay for this before Enron declared bankruptcy.  ENA also sold Sonat gas - 16,000 dth day at $2.885 (sitara #1172076) in January 2002 and 10,000 dth day at $2.955 in May 2002 (sitara #1172087).  ENA used 77,292 dth of the parked gas on deal #1222 to supply the 16,000 dth before Sonat stopped ENA from withdrawing from the park.  ENA defaulted on 418,708 dth of the Sonat deal in January.

Sonat's in house legal counsel is Patti Frances (205-325-7696).  I left a message for Patti to call me.

2/20/02
Patti Frances returned my call.  Patti said the motion is currently set to be reviewed by the court on March 6th.  I asked Patti if there were any penalties for not performing on the Jan 2002 sale to Sonat and if Sonat was going to pay for the 77,292 dth (8,588 dth per day for Jan 1st - 9th) that ENA did supply.  Patti said she didn't think there were penalties but she would verify that and see if they were going to pay.  I also asked her if Sonat is still honoring the ENA sale to Sonat in May 2002 and if Sonat would pay ENA if ENA performed.  She will check on it and call me back.

2/25/02
Per Kay Mann - Mark Ellenberg is the legal counsel assigned to this contract.
1:10 PM.  Left a follow-up message for Patti Frances regarding our conversation on 2/20/02.

3/11/02
Per Ruth - Mark Ellenberg wants us to try and pull the gas out of the Sonat Pal.  Christina Sanchez (ENA Scheduler) will find out 1) if we still have access to Sonat's EBB and 2) if we can nominate the gas out of the PAL's.

3/13/02
Per Christina - ENA's ID's and passwords have been cancelled.  Christina called Barbara Gilbert (205-325-7310), ENA's account rep at Sonat - Barbara said she would talk about this issue with Sonat's legal counsel and see if its ok to set up ENA with an ID.  Christina also believes we could sell the gas without doing any nominations.  The party we sell the gas to would use a specific PAL's meter and reference our PAL contract as the upstream.
3:30 PM  Tammi Depaolis (832-397-1728) at Sequent is interested in buying this gas and she might prepay to get it.  She will see if they can take the gas without ENA doing a nomination.  I need to verify the volume parked and when I want Sonat to take it out.
3:40 PM  Barbara is waiting to hear from Sonat's legal department.


Hi Helyette,

Congratulations on your papers.

The purchase contract is in the last stage of approvals
(it's circulating through different parts of the company
where it has to be signed). I think we should be able to execute
the contract  in the first few days of December.

I shall let you know as soon as our internal process is completed.

Vince

GemanIX@aol.com on 11/29/2000 02:26:12 PM
To: VKaminski@aol.com
cc: VKamins@enron.com
Subject: Software

Dear Vince,
I guess time has been flying for you by since our brilliant show
in Paris.In my case,it is the same:I got 3 papers accepted in THE
3 major Journals in Finance(Journal of Business,Journal of Finance
and Journal of Financial Economics).We should write a piece!
Our software seems to be quite satisfactory for the oil people.My
lawyer had added a paragraph to Karla's document:since she had
mentioned the right for Enron to check at any time the code source
etc,he wanted to request Enron to pay his fees in the case D-G
disappeared.In any case,if you are still interested,we are ready to
use your escrow account to make things simpler.Moreover,I am
striking an agreement with a software company ,13years with
people from Polytechnique+finance,to be our hot line(with us paying
royalties,of course).This would complement my 2 associates.
Looking forward to hearing from you
Helyette


Due to Rose being out of town, I thought I would respond to a question
concerning giving notice to WestLB, and the preparation of the assignment and
assumption agreement.

The giving of written notice to WestLB may result in the equipment being
subject to the notice coming on the balance sheet.  If there is a subsequent
problem in closing, the equipment is tainted.  I believe Enron has
coordinated this with WestLB, so that the notice period can be shortened
until there is a certainty of closing.

A&K has prepared the assignment and assumption agreements in the past, and I
will go out on a limb and suggest that they conform their form for this
transaction.

We will have a couple of changes in the GE consent and assignment agreement,
based on changes requested by WestLB in connection with the TurboPark
transaction.    I'll make the changes.

Hope this information is helpful.

Kay


I will do the planning for this company.  I assume Jennifer Lev's group will do the accounting as it is an ETS company.  Please let me know if you decide anything different.

Thanks
---------------------- Forwarded by Tracy Geaccone/GPGFIN/Enron on 02/20/2001 10:37 AM ---------------------------

Rod Hayslett

02/20/2001 07:00 AM
To:	James Saunders/FGT/Enron@ENRON, Tracy Geaccone/GPGFIN/Enron@ENRON
cc:

Subject:	ETS Group - New Formation

FYI
---------------------- Forwarded by Rod Hayslett/FGT/Enron on 02/20/2001 07:02 AM ---------------------------
From:	Lillian Bailey/ENRON@enronXgate on 02/18/2001 03:00 PM
To:	Cynthia Barrow/HR/Corp/Enron@ENRON, James L Bouillion/HOU/ECT@ECT, William E Brown/ET&S/Enron@ENRON, Teresa Callahan/ENRON@enronXgate, Kate Cole/ENRON@enronXgate, Hardie Davis/ENRON@enronXgate, James Derrick/ENRON@enronXgate, Robert Guthrie/Corp/Enron@ENRON, Rod Hayslett/FGT/Enron@ENRON, Geneva Holland/ENRON@enronXgate, Stan Horton/Houston/Eott@Eott, Sylvia Hu/ENRON@enronXgate, Frazier King/FGT/Enron@ENRON, Wanda LaBaume/Enron Communications@Enron Communications, Johnson Leo/GPGFIN/Enron@ENRON, Jerry Thomas Moore/Corp/Enron@ENRON, Michael Moran/ET&S/Enron@ENRON, Mary Perkins/ENRON@enronXgate, Lynda Pham/Corp/Enron@ENRON, Janice Priddy/HR/Corp/Enron@ENRON, Greek Rice/Corp/Enron@ENRON, SAP Master Data@Enron, Kerrie Smith/Corp/Enron@ENRON, Greg Whiting/Corp/Enron@ENRON, Robert Wilcott/Corp/Enron@ENRON
cc:	Sharon Butcher/Corp/Enron@ENRON, Susan Scott/ET&S/Enron@ENRON

Subject:	ETS Group - New Formation

Mavrix Transportation Trading Corp.

This corporation was incorporated in Delaware on January 10, 2001.  Particulars are:

	Parent Company:	Enron Transportation Services Company - 100%

	Business:	Management of natural gas pipeline capacity.

	Shares:	Authorized - 10,000 Common,
			$1.00 par value, Issued - 1,000

	Directors and Officers:	See Attachment

	Employees:	Yes

	Foreign Qualifications:	Texas

	Company No.:	1439-MTTC

Please circulate this information to all interested parties within your group.

For more information, see attached Corporate Data Sheet.

PLEASE NOTE:
	Bill Brown  - copy of evidence being sent by interoffice mail
	Robert Guthrie - please apply for FEIN
	Treasury - banking resolutions adopted 1/10/2001
	Sylvia Hu - Minute Book and two seals have been ordered

Lillian R. Bailey
Administrator
Corporate Services
EB4804A
Phone 713/853-3577
Fax 713/646-8007
lillian.bailey@enron.com


2/1/00

Please mark your calendar to join the following meeting listed below:

Date:  Thursday, February  3, 2000
Time:  11:30-12:30 (Luncheon)
Location: EB37C1

* Lunch will be provided

If you have any questions,please contact me or  Rita Wynne  x3-7694

Many Thanks
Pamela Chambers
x3-9680