USA: Enron CEO sold $1.2 mln in Compaq shares.
Reuters English News Service, 11/09/01
'Arbs' Sit Out Possible Dynergy-Enron Deal, For Now
Dow Jones News Service, 11/09/01
POWER POINTS: Does Dynegy Know What It's Getting Into?
Dow Jones Energy Service, 11/09/01
USA: UPDATE 1-Enron's rating cut, woes finally hit trading floor.
Reuters English News Service, 11/09/01
USA: U.S. stocks crawl higher but profit warnings weigh.
Reuters English News Service, 11/09/01
UK: UK power prices gain, take strength from gas.
Reuters English News Service, 11/09/01
Play of the Day: Dynegy Close To Buying Beleaguered Enron
CNNfn: Halftime Report, 11/09/01
Indian court restrains Enron from serving termination notice over power project
Associated Press Newswires, 11/09/01
Source: Dynegy close to deal to buy Enron
Associated Press Newswires, 11/09/01
USA: UPDATE 1-Enron, Dynegy shares jump on talk deal is near.
Reuters English News Service, 11/09/01
Indian Court Bars Enron From Terminating Power Project
Dow Jones International News, 11/09/01
USA: Enron faces lawsuits seeking class action status.
Reuters English News Service, 11/09/01
USA: ANALYSIS-Enron seen test of U.S. SEC's course under Pitt.
Reuters English News Service, 11/09/01
USA: Dynegy close to complete deal to buy Enron-WSJ.
Reuters English News Service, 11/09/01
Can Bandwidth Market Survive Without Independent Enron?
Dow Jones Energy Service, 11/09/01
INDIA: Enron's Dabhol suffers legal setback in Indian row.
Reuters English News Service, 11/09/01
Dynegy Nears Deal to Buy Enron in $7 Billion Stock Transaction
Dow Jones Business News, 11/09/01
USA: UPDATE1-Moody's cuts Enron's ratings, may cut again.
Reuters English News Service, 11/09/01

Enron long-term ratings cut to Baa3 from Baa2 - Moody's
AFX News, 11/09/01
Enron, Dynergy very close to deal - CNBC
AFX News, 11/09/01
Easton`s Call: Returns are No More
CNNfn: Market Coverage - Morning, 11/09/01
USA: Enron shares slip on debt downgrade concerns.
Reuters English News Service, 11/09/01
Moody's Diaz on Enron Credit Downgrade and Outlook: Comment
Bloomberg, 11/09/01

Commerzbank Analyst Meade on Possible Buyout of Enron: Comment
Bloomberg, 11/09/01

Kent Income Fund's Mitchell Stapley on Enron Bonds: Comment
Bloomberg, 11/09/01

Harris Investment's Coxe on Possible Buyout of Enron: Comment
Bloomberg, 11/09/01

Strong American Utilities Fund's Vuchetich on Dynegy: Comment
Bloomberg, 11/09/01

Dynegy bid for Enron said to be possible bail-out deal
Houston Business Journal, 11/09/01

Dynegy May Acquire Enron for $22 Bln in Stock, Debt (Update6)
Bloomberg, 11/09/01

TransCanada PipeLines CEO on Dynegy and Enron Talks: Comment
Bloomberg, 11/09/01

USA: Enron CEO sold $1.2 mln in Compaq shares.

11/09/2001
Reuters English News Service
(C) Reuters Limited 2001.
WASHINGTON, Nov 9 (Reuters) - Enron Corp. Chairman and Chief Executive Kenneth Lay, who sits on the board of Compaq Computer Corp. , sold $1.2 million in Compaq stock last month, a regulatory filing on Friday said.
Lay sold 124,596 common shares of Compaq on Oct. 29 for $9.25 a share, according to a filing with the Securities and Exchange Commission. He was left with 340,724 shares after the transaction, the filing added.
Compaq shares were down 25 cents to $7.74 in afternoon trading on the New York Stock Exchange.
Compaq, whose proposed $19.5 billion merger with Hewlett-Packard Co. looks to be in doubt following opposition from the Hewlett and Packard families, did not immediately return a call seeking comment on Lay's sale.
News of the transaction comes as Lay's company, Enron, the embattled energy marketing and trading giant, is on the verge of a bailout by a smaller rival, Dynegy Inc.
Enron has trimmed its earnings by $591 million, or 22 percent, from 1997 to 2000, and increased its debt by $628 million, or 6 percent, in a bookkeeping revision aimed at calming a firestorm that has engulfed the company in recent weeks.
Enron stock and credit ratings have plunged following disclosures of off-the-balance sheet deals now under investigation by the Securities and Exchange Commission for possible conflict of interest.
The deals contributed to a $1 billion third-quarter charge and $1.2 billion reduction in shareholder equity.
Enron shares were up 54 cents to $8.95 in afternoon trading on the NYSE. An announcement of a possible Dynegy acquisition is expected later on Friday.

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

'Arbs' Sit Out Possible Dynergy-Enron Deal, For Now
By Janet Whitman
Of DOW JONES NEWSWIRES

11/09/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)
NEW YORK -(Dow Jones)- It's been a brutal year in the risk arbitrage business, and that has many arbitrageurs, also known as takeover traders, steering clear of bets on Dynergy Inc.'s (DYN) possible takeover of Enron Corp. (ENE).
Some of their reluctance stems from the fact that the looming deal reported by Dow Jones Newswires has yet to be confirmed by the two Houston energy trading companies.
More worrisome, however, is the possibility that Enron - already crippled by an equity probe and a restatement of four years of earnings - may have even deeper woes to report.
"Unless Enron is providing significantly more disclosure to the buyer than to the rest of the world, I don't see how a buyer could get comfortable." said an arbitrageur with a New York hedge fund.
What worries takeover traders is the likelihood that any agreement would likely have extensive material adverse change, or MAC, clauses, providing plenty of room for Dynergy to exit the deal should more problems arise at Enron.
"As an investor, it's hard for me to own something when I don't know what it is," said the arbitrageur of Enron. "I take some comfort that someone is stepping up the plate, but that's not enough for me."
Another arbitrageur added, "If it gets announced, it's a deal with a lot of issues, starting with who bears the risk if Enron has a lot of lawsuits because of alleged accounting fraud."
According to the Wall Street Journal, Dynergy will swap nearly 0.27 of a share of its stock for each share of Enron. Also under the deal, ChevronTexaco Corp. (CVX), which owns 26% of Dynergy, will make an immediate cash injection of $1.5 billion into the deal, and then add another billion on closing.
Shares of Dynergy jumped more than 10% in heavy trading, bolstered by the idea that the company is picking up Enron for a steal. Its shares traded recently at $39.61, up $3.06 a share.
An acquirer's shares typically fall after a deal has been announced, in part because arbitrageurs sell the shares short, while going long the target. In this case, however, arbitrageurs are largely on the sidelines, which is perhaps alleviating some of the downside pressure on Dynergy.
Enron, meanwhile, traded about 4% higher recently, swapping hands at $8.77 a share in heavy volume. The stock was buoyed by the reported bid from Dynergy as well as a new credit rating from Moody's. The firm downgraded Enron's rating a notch to just above speculative, not as bad as the junk rating some had feared.

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

POWER POINTS: Does Dynegy Know What It's Getting Into?
By Mark Golden

11/09/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)
A Dow Jones Newswires Column

NEW YORK -(Dow Jones)- If I were an executive with Dynegy Inc. (DYN), I would want to know who was buying up my stock Thursday and Friday, encouraging me that Enron is a steal at $9.50 a share.
After all, the market's initial reaction to the Dynegy/Enron Corp. (ENE) talks was negative. Dynegy's share price fell 9% to $33 on the Wednesday, the day that Dynegy was negotiating a possible acquisition of Enron were disclosed by CNBC. But Dynegy's stock rebounded sharply Thursday to recover that loss and then some, and it's up another $3 to near $40 Friday.
Is this a case of average investors approving Dynegy's "steal" of formerly formidable Enron? Or were Wall Street banks, holding a lot of Enron debt, trying to encourage Dynegy to do a deal? About 75% of the 12 million Dynegy shares bought Thursday were purchased in a few hundred large blocks.
Some usually talkative Wall Street bank sources refuse to say a word about Enron or Dynegy, even off the record. Wall Street may be biting its collective lip in the hopes that Dynegy signs the contracts to buy Enron and brings in a critical injection of cash. That cash would come from ChevronTexaco Corp. (CVX), which owns about a quarter of Dynegy. According to the Wall Street Journal, the terms of the deal call for ChevronTexaco to inject $1.5 billion immediately and another $1 billion into the combined companies if the deal goes through.
Wall Street holds billions in Enron debt, which Dynegy is fully aware of. But Dynegy might be getting more than it's bargaining for, particularly regarding Enron's numerous obligations to deliver its own shares in the future at minimum values.
SEC Probe Complicates Deals Based On Stock

Any company that acquires Enron may have to make good on those commitments to issue stock pegged to values much higher than $9.50 a share, or perhaps to make up the difference in cash.
In a publicly disclosed example, an Enron off-balance-sheet financial affiliate - Whitewing Associates - owns 250,000 shares of Enron convertible preferred stock, which are good upon conversion in January 2003 for 50 million shares of Enron common stock at a guaranteed minimum value of $48.55 a share.
Enron's stock is currently trading below $9 a share. According to the terms of Whitewing's convertible preferred holding, Enron would have to deliver far more shares at current prices - 1,080 - for each of the 250,000 convertibles.
But Enron can't issue new stock now because it's under investigation by the U.S. Securities and Exchange Commission, so it would be obliged to come up with the $40-per-share difference in cash. Since Enron owns 50% of Whitewing, it could tear up most of the convertibles, but not all of them. A rough estimate is that Enron - or Dynegy - would still owe the dozens of mutual funds that invested in Whitewing around $500 million cash.
Dynegy is surely familiar with that deal, but highly leveraged Enron has similar share-settled arrangements floating around that haven't been so fully disclosed. The lesser-known deals are similarly troublesome due to the combination of Enron's stock-price crash and its inability to issue lots of new stock to make up the difference.
Another Enron-related partnership, the Marlin Water Trust II, is part of Enron's disastrous venture into water companies through its Azurix affiliate and the later refinancing of huge losses related to the water investments. Enron has marked down the value of its direct holdings in Azurix, but not the assets of Marlin, even though Marlin's primary asset is supposed to be its half of Azurix.
Prominent Enron short-seller Richard Grubman of Highfields Capital Management has asked Enron why Marlin's assets are still valued at $1 billion, when 50% of Azurix would seem to be a worth a fraction of that amount. Enron has declined to answer Grubman's question fully.
Is Wall Street Short?

Fitch credit rating agency said this July that Marlin's debt is ultimately supported by "an equity commitment from Enron in the form of mandatorily convertible preferred stock." Neither the number of shares nor the guaranteed minimum value for those shares has been disclosed. If Enron can't deliver those shares, it is obliged to make up the difference in cash, Fitch said.
"In the event that the issuance of the preferred stock yields less than the amount required to redeem the senior notes, Enron is required to deliver additional shares," Fitch said. "If Enron cannot or does not deliver on this obligation, then the amount of the deficiency becomes a payment obligation of Enron, representing a general unsecured claim."
In another partnership, disclosed in Enron's 2000 annual report but not named, Enron invested "the right to receive up to 18 million shares of outstanding Enron common stock in March 2003 (subject to certain conditions)."
Do those conditions include a share value much higher than $9.50? Did Enron prudently purchase puts on its own stock from Wall Street to cover some of its positions? As part of that same deal, Enron paid $123 million to purchase unspecified options on 21.7 million shares of its common stock.
Because these deals are done through private placements of debt, Enron doesn't have to answer questions, and it has declined to do so. Dynegy also refused to answer questions on the issue.
One Wall Street equity derivatives trading manager indicated that all the banks have found themselves "unexpectedly short in-the-money puts" on Enron. Unexpectedly, perhaps, not just because Enron stock has fallen so far, but because the SEC investigation prevents Enron from issuing additional shares.
Wall Street has been sweating for weeks, and millions don't make Wall Street sweat. Billions do, and the concern has to do with liabilities beyond Enron's fully disclosed traditional debt. The banks have told Enron they don't expect to get clobbered on a technicality that wouldn't have arisen without the SEC investigation Enron brought on itself, a person at a bank involved in the talks said. Enron agreed in principle, but the negotiations to make Wall Street whole were put on hold for the Dynegy talks.
If Dynegy buys Enron, it may be stepping into the middle of those arrangements, letting Wall Street off the hook.
Dynegy competitor El Paso Corp. (EPG) and ChevronTexaco rival Royal Dutch/Shell (RD) reportedly took a look at acquiring Enron last week and passed. Is Dynegy smarter than El Paso? Is Chevron smarter than Shell?
True Dynegy believers better hope so.
-By Mark Golden, Dow Jones Newswires; 201-938-4604; mark.golden@dowjones.com

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

USA: UPDATE 1-Enron's rating cut, woes finally hit trading floor.
By Janet McGurty

11/09/2001
Reuters English News Service
(C) Reuters Limited 2001.
NEW YORK, Nov 9 (Reuters) - Enron Corp., on the verge of a bailout by rival Dynegy Inc., on Friday had its credit ratings cut to a notch above junk status and some energy traders became increasingly leery of dealing with the company.
Moody's Investors Service cut Enron's long-and short-term ratings, affecting about $13 billion in debt, and warned the company's rating could be cut again to junk status on continued loss of investor confidence, impairing its ability to operate.
A significant amount of debt coming due in the near term, and the potential for increased margin requirements from its counterparties in wholesale trading operation also puts further pressure on Enron, the ratings agency said.
"The company may not be able to retain investment-grade characteristics," Moody's said.
Enron's trading partners began to cast a more watchful eye on their relationship with their energy trading behemoth, which has seen almost $19 billion slashed from its market worth in the past month on mounting investor concerns.
"Our people are definitely looking at our dealings with Enron after the downgrade ... We need to make sure our bills will be paid," one Texas-based spot trader said, adding his company was still conducting business with Enron.
The stock, which has plummeted 89 percent this year, moved into the black on Friday after Enron confirmed talks regarding the acquisition of Enron by Dynegy are continuing.
An announcement, which is expected later Friday, is expected to include a $1.5 billion injection of capital for Enron from ChevronTexaco Corp., the No. 2 U.S. oil company, and 26.5 percent holder of Dynegy.
Shares of Enron rose 40 cents, or 4.8 percent, to $8.81 in afternoon trade on the New York Stock Exchange, and Dynegy gained $2.92, or 8 percent, to $39.42. The stock was the most actively traded on the NYSE.
RESTATED RESULTS
In recent weeks Enron's stock has plunged amid investor unease about disclosures of off-balance sheet deals involving its former chief financial officer. The deals are now under investigation by the Securities and Exchange Commission for possible conflict of interest.
"People just don't want to deal with them anymore," said one trader, who heads the trading desk of one of the world's largest oil companies.
On Thursday, Enron acknowledged it erred on past earnings reports and restated financial results going back to 1997. The restated earnings cut net income by $591 million over the period, or 22 percent, and increased its debt by $628 million, pulling some of its partnerships onto the balance sheet.
Enron also fired its treasurer and a general counsel of one of its divisions on Thursday.
Until now, Enron's trading operations appeared relatively sheltered from its financial troubles, especially in the daily markets contracts.
Trading volumes on EnronOnline, the leading Internet-based trading system for electricity, actually increased over the rolling 30-day period.
At the beginning of the week, EnronOnline dollar volumes averaged between $2.6 billion and $2.8 billion, compared with a 30-day rolling average of $2.6 billion, according to Eric Thode, a spokesman for EnronOnline.
The number of transactions posted on the site averaged over 6,500 on Monday, well above the 5,800 average for the past 30 days.
TRADING UNDER PRESSURE
But Friday, trading volume appeared to wane slightly, according to one industry watcher
"I've been watching the Enron board all morning and it hardly lit up at all," said one trader in the U.S. Northeast. The board lights up each time a transaction is made for delivery to a particular point.
The hardest hit of Enron's energy trading operations appear to be natural gas trades and both natural gas and electricity forward contracts, which are trades for delivery from one month to five years ahead.
"Starting today we are no longer doing forward deals with Enron on the gas side. We are still doing day-ahead deals though," one Southeast dealer said.
He added he was unsure if his company was still trading forwards, or long-term deals, on the electricity side.
"People are becoming much more cautious about entering into long-term energy deals with Enron, especially the one-to five-year delivery contract for gas or electricity," said one major Midwestern power trader.
While many major traders watch online volumes and transactions, many bypass the system and make their deals over the telephone directly with Enron.
Earlier this week. major natural gas producer Apache Corp. said it unwound most of its natural gas hedges due to concerns about increasing risks in the energy derivatives market as a result of Enron's recent problems.

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

USA: U.S. stocks crawl higher but profit warnings weigh.
By Elizabeth Lazarowitz

11/09/2001
Reuters English News Service
(C) Reuters Limited 2001.
NEW YORK, Nov 9 (Reuters) - Stocks ticked higher in early afternoon trading on Friday as investors took a positive view of the latest economic news, but profit warnings from household names like H.J. Heinz & Co. and The Walt Disney Co. put a cap on their enthusiasm.
Energy and oil services stocks helped carry the market higher, getting a boost after Russia's prime minister indicated Russian companies will join the Organization of Exporting Petroleum Countries, the oil cartel, in cutting production to lift oil prices.
The market's ability to make up virtually all of the losses it made in the wake of the Sept. 11 attacks on New York and Washington has given investors courage, despite the dismal condition of corporate earnings, said said Nat Paull, portfolio manager at New Amsterdam Partners.
"The current profit profit picture, I think everybody knows, is pretty weak, but the focus is turning to 2002, and that definitely is going to be a rebound year," Paull added.
The market surged this week on a slew of interest-rate cuts in Europe and the United States, but Wall Street is still torn over whether the moves are enough to patch up the bruised global economy, traders said.
The Dow Jones industrial average rose 13.69 points, or 0.14 percent, at 9,601.21, and the broader Standard & Poor's 500 Index edged up 2.49 points, or 0.22 percent, to 1,121.03.
The technology-laced Nasdaq Composite rose 5.22 points, or 0.29 percent, to 1,832.99.
Stocks got a fleeting boost on news Afghan that anti-Taliban forces entered the northern city of Mazar-i-Sharif, marking an advance in the war against the group suspected of masterminding the Sept. 11 attacks on the United States.
Oil stocks were higher, including Amerada Hess, which gained $2.44 to $61.59, and Conoco Inc., up $1.29 at $26.81.
The latest earnings news kept Wall Street's tone subdued, however, after entertainment giant Walt Disney and food manufacturer Heinz warned profits would likely be lower than expected.
Disney, which said it was suffering from weak advertising and low ratings at its ABC TV network and lower attendance at its theme parks, all worsened after Sept. 11. Disney reversed an early loss and climbed 7 cents to $18.91.
Heinz slumped $3.14 to $39.56 after cutting its earnings forecast, citing a slowdown in its food service business as a result of lower demand from restaurants.
Traders said they expect volume to lighten after 2:00 p.m. 1900 GMT, when the bond market closes early in observance of the Veteran's Day holiday on Monday.
The Nasdaq has surged this week following aggressive rate cuts by the European Central Bank, the Bank of England and the U.S. Federal Reserve. The hope is that lower borrowing rates will prompt companies to spend and expand, in turn expanding global economies and corporate earnings.
But dismal corporate outlooks and mixed economic news stunted the market's gain.
A report showing plunging U.S. wholesale prices weighed on stocks as investors began to question whether the drop will soon hurt earnings.
The Producer Price Index had the sharpest drop on record in October as a slowing global economy sapped energy prices and American carmakers offered cut-rate financing to lure buyers into showrooms after Sept. 11 attacks.
"People may be worried about deflation," said James Volk, co-director of institutional trading at D.A. Davidson and Co. in Portland, Oregon.
Still, a consumer confidence indicator offered a bright note after sentiment strengthened in early November.
Expectations and current conditions rose to 83.5 from 82.7 in October, according to the University of Michigan's index. Analysts had forecast the index to fall to 78.7.
Enron Corp. was most active on the New York Stock Exchange for the 10th session of the past 13.
The stock initially fell after Moody's Investors Service cut Enron's short-term and long-term rating because of a steep loss of investor confidence. Then it rose 56 cents to $8.97 as news trickled out that rival Dynegy Inc. is close to taking over Enron at about $10 a share.
Enron's stock and credit ratings plummeted after off-the-balance-sheets deals, now under investigation, were disclosed in mid-October.

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

UK: UK power prices gain, take strength from gas.

11/09/2001
Reuters English News Service
(C) Reuters Limited 2001.
LONDON, Nov 9 (Reuters) - British electricity prices strengthened on Friday, playing catch-up to gas which is being lifted by firmer oil prices.
Traders said volume was fairly light and continued uncertainty about Enron was muting the market to some degree.
Day-ahead (Monday) baseload electricity rose to about 19.50 pounds per megawatt hour from 18 pounds or so on Thursday.
Block five day-ahead (Monday) was heard done at about 50 pounds.
Prompt gas prices rose by as much as six pence a therm on Friday on the back of cold temperatures.
December baseload power was also stronger at about 18.80 pounds from 18.55 pounds while January baseload rose to 21.1 pounds and February baseload gained to 20.5 pounds.
On Friday Enron's credit ratings were cut to a notch above junk status and some energy traders have become increasingly wary of dealing with the company.
A report in the Wall Street Journal on Friday said Dynegy is close to buying Enron, currently under investigation after disclosures of off-balance sheet deals, for $7 billion.

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

Business
Play of the Day: Dynegy Close To Buying Beleaguered Enron
Deborah Marchini, Peter Viles

11/09/2001
CNNfn: Halftime Report
(c) Copyright eMediaMillWorks, Inc. (f/k/a Federal Document Clearing House, Inc.). All Rights Reserved.
DEBORAH MARCHINI, CNNfn ANCHOR, HALFTIME REPORT: Enron (URL: http://.www.enron.com/) reportedly is close to a merger deal with rival Dynegy (URL: http://www.dynegy.com/) in what would be the implausible end to a remarkable corporate collapse. Peter Viles takes a second look at that collapse now in our "Play of the Day".
Pete?
PETER VILES, CNNfn CORRESPONDENT: This is really a costly lesson for investors, but it`s worth revisiting, painful at it is. And the lesson is this: Do not count on straight talk from a public company, especially if that company is in trouble. Let`s go back to October 22nd. Enron, on that day, confirms the SEC is looking into its various deals.
And Enron issues this statement, saying, "We believe everything that needed to be considered and done in connection with these transactions was considered and done." At that point the stock is at $24.40, down from a peak of $82. I`m sure there were some investors who were thinking, gee, the company says the deals are OK. The stock has been beaten up and I`m going to trust the company on this one. Well, fast forward to yesterday, it turns out that everything that needed to be considered and done in those transactions-was not!
The company says, "Certain off balance sheet entities should have been included in Enron`s consolidated financial statements; $591 million in earnings disappears, the stock closes $8.41.
So, if you trusted and believed that a company in late October, just about three weeks ago, you would have lost 65 percent of your investment-just in the past three weeks, not going back to the $82.
And to be clear-we`re not picking on the company here, they made that initial statement knowing full well this was a huge controversy. The government was looking into it, investors were losing faith in management. Still they said, we believe we did everything right. I think in that case it might have been better to say, we`re just looking into it.
MARCHINI: Why would Dynegy want to risk exposing itself in fear that there might be still more to come?
VILES: Well, this new information about earnings, this restatement did not come from the company. It came from a special board that was brought in just to look at this. And the lawyer for that board was Bill McLucas (ph). He used to be the chief enforcement officer from the SEC. So, a certain amount of credibility in the new set of numbers. Also the performance this year at Enron is not terrible. The earnings I think, are at $1.30 per share, through three quarters. So, you`re looking at maybe $1.50 for the year. An $8 stock, $1.50 in earnings. It`s really cheap, maybe there is a business here worth saving.
But it is clear that current management does not have a whole lot of credit, is they`re bottom fishing and they`re bottom fishing at a pretty cheap price. I mean it was a $20 stock when the controversy erupted. It has only gone lower and I guess they think there is some value here.
MARCHINI: You know, Moody`s downgraded it today. This is a business that is very heavily depend on looking good to counterparts, looking like its not much of a risk.
VILES: Yes, and that`s what`s gone wrong in the last three weeks. People have just said, Geeze, there is just all kinds of stuff going on there. I don`t really understand it. The company hasn`t really explained it. I think I`ll stay away and just let the dust clear and see what happens when it does clear.
I think what Dynegy is saying, they think they`ve seen enough to know that there is something left to the company. It has been premiere energy trading company in the United States. Energy trading is decent business. Dynegy knows that business. They would probably know better than bond investors and stock investors what is there and what`s of value.
MARCHINI: At least their shareholders hope so, right?
VILES: Hope so.
MARCHINI: Thanks, Peter.

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

Indian court restrains Enron from serving termination notice over power project
By N. SUNIL
Associated Press Writer

11/09/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.
BOMBAY, India (AP) - An Indian court Friday temporarily barred Enron Corp. from serving a final termination notice to the state utility in an ongoing tug-of-war over the American company's $2.9 billion power project, court officials said.
The Bombay High Court restrained Enron subsidiary Dabhol Power Co. from serving the notice before the next hearing, scheduled for Dec. 3.
The ruling came even as talks were being held in Singapore aimed at salvaging the power project, focusing on two potential buyers for Enron's controlling stake. Enron owns 65 percent shares of the Dabhol Power Co.
Two of India's largest private power companies - Tata Power Co. and BSES Ltd. - are the only contenders vying to buy Enron's stake, V.K. Saxena, chief general manager of the Industrial Development Bank of India, told Dow Jones Newswires Friday.
In Bombay, India's financial hub, DPC had served a preliminary termination notice on the state-run Maharashtra State Electricity Board in May 2001 following disputes over the payment of monthly power bills.
According to the agreement between DPC and the utility, the Enron subsidiary can serve a final termination notice only six months after a preliminary notice. That initial notice was served in May, and DPC's six-month deadline is Nov. 19. But it would now be deferred until the court ruling.
Lenders to the project have approached the high court seeking to prevent the DPC from serving the final notice over the 2,100 megawatt project, so that they can recover their money.
In May, Enron stopped construction of the 90 percent completed project - India's biggest ever foreign investment.
Enron, which has seen its share prices plunge 80 percent over the past three weeks over worries about its finances, is in talks with rival energy trader Dynegy Inc. over a possible merger.

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

Source: Dynegy close to deal to buy Enron
By BRAD FOSS
AP Business Writer

11/09/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.
NEW YORK (AP) - Dynegy Inc. is close to finalizing a deal to buy its much larger, albeit troubled, rival Enron Corp., for between dlrs 7 billion and dlrs 8 billion in stock, a source familiar with the situation said.
The deal could be announced Friday and would include an immediate infusion of about dlrs 1.5 billion from ChevronTexaco Corp., which owns more than a quarter of Dynegy, the source said on condition of anonymity. ChevronTexaco would contribute an additional dlrs 1 billion upon completion of the deal, though the source said talks could still fall apart.
Both Dynegy and Enron have released statements confirming they were discussing a deal, but declined to provide any details. Neither company could immediately be reached for comment on Friday.
In a related matter, Moody's Investors Service early Friday downgraded Enron's debt ratings to one level above junk bond status and said the company's long-term debt ratings remain under review for further downgrade.
On Thursday, Enron Corp. acknowledged it overstated earnings by about 20 percent over the past four years and kept large amounts of debt off its balance sheets through business partnerships now under investigation by the Securities and Exchange Commission.
Enron's stock price has been pounded in the past three weeks, falling roughly 80 percent over concerns that serious financial problems were not being disclosed to shareholders.
Shares of Enron rose 9 cents to dlrs 9.19 in midday trading Friday on the New York Stock Exchange, where Dynegy's shares climbed dlrs 3.80, or about 10 percent, to dlrs 40.30.
In a report on The Wall Street Journal's Web site on Friday, the imminent deal between Enron and Dynegy was valued at dlrs 7 billion, which would value Enron's shares at dlrs 9.50 each, according to unnamed sources.
Enron, the top U.S. buyer and seller of natural gas and the top wholesale marketer in the United States, had become one of the nation's 10 largest companies, recording revenue of dlrs 100.8 billion in 2000.
---
On the Net:
http://www.enron.com
http://www.dynegy.com

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

USA: UPDATE 1-Enron, Dynegy shares jump on talk deal is near.
By Nichola Groom

11/09/2001
Reuters English News Service
(C) Reuters Limited 2001.
NEW YORK, Nov 9 (Reuters) - Shares of Enron Corp. climbed more than 9 percent on Friday on reports that the beleaguered energy marketing and trading giant is close to finalizing a deal to be acquired by Dynegy Inc. .
The stock, which has fallen more than 73 percent since the company disclosed off-balance-sheet deals that are now under investigation by the U.S. Securities and Exchange Commission, was up 79 cents, or 9.4 percent, to $9.20 at midday on the New York Stock Exchange.
The estimated $7 billion deal between the two Houston-based companies calls for Dynegy to swap 0.27 of its shares for each Enron share, The Wall Street Journal reported in its online edition on Friday.
The deal would also include an immediate injection of $1.5 billion for Enron from ChevronTexaco Corp. , which holds a 26.5 percent stake in Dynegy, and an injection of additional $1 billion when the deal closes, the Journal said.
"Clearly, Dynegy has them over a barrel," analyst John Olson of Sanders Morris Harris told Reuters. "This would basically quadruple Dynegy's size with a very accretive earnings contribution, too."
Shares of Dynegy also rose, climbing $3.95, or 10.8 percent, to $40.45.
Also on Friday, the debt-rating agency Moody's Investors Service cut its long-and short-term ratings on Enron and warned that another cut was possible because a substantial loss of investor confidence had hurt the firm's financial flexibility.
Last month, Enron said it would take a charge of $1 billion in the third quarter and reduce shareholder equity by $1.2 billion.
Enron on Thursday restated its financial statements since 1997, reducing its earnings by $591 million, or 22 percent, over the four years ending in 2000, and increasing its debt by $628 million, or 6 percent.

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

Indian Court Bars Enron From Terminating Power Project

11/09/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)
BOMBAY, India (AP)--An Indian court Friday temporarily barred Enron Corp. (ENE) from serving a final termination notice to the state utility in an ongoing tug-of-war over the U.S. giant's $2.9 billion power project, court officials said.
The Bombay High Court restrained Enron subsidiary Dabhol Power Co. from serving the notice before the next hearing, scheduled for Dec. 3.
The ruling came even as talks were being held in Singapore aimed at salvaging the power project, focusing on two potential buyers for Enron's controlling stake. Enron owns 65% shares of the Dabhol Power Co.
Two of India's largest private power companies - Tata Power Co. (P.TPW) and BSES Ltd. (P.BSX) - are the only contenders vying to buy Enron's stake, V.K. Saxena, chief general manager of the Industrial Development Bank of India, told Dow Jones Newswires Friday.
In Bombay, India's financial hub, DPC had served a preliminary termination notice on the state-run Maharashtra State Electricity Board in May 2001 following disputes over the payment of monthly power bills.
According to the agreement between DPC and the utility, the Enron subsidiary can serve a final termination notice only six months after a preliminary notice. That initial notice was served in May, and DPC's six-month deadline is Nov. 19. But it would now be deferred until the court ruling.
Lenders to the project have approached the high court seeking to prevent the DPC from serving the final notice over the 2,100-megawatt project, so that they can recover their money.
In May, Enron stopped construction of the 90% completed project - India's largest-ever foreign investment.

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

USA: Enron faces lawsuits seeking class action status.
By David Howard Sinkman

11/09/2001
Reuters English News Service
(C) Reuters Limited 2001.
NEW YORK, Nov 9 (Reuters) - Troubled Enron Corp. , under investigation by U.S. regulators and in talks to be acquired by a smaller rival, also must contend with a battery of lawyers smelling blood.
At least seven law firms have filed suits against Enron and its principal officers on behalf of shareholders who bought the energy trading giant's shares from Jan. 18, 2000 to Oct. 17. The stock has plummeted about 89 percent this year.
The lawsuits accuse the nation's largest energy trader of overstating operating results, failing to write-down assets on a timely basis in accordance with generally accepted accounting practices and concealing investments that may require Enron to issue large amounts of shares to cover losses.
Houston-based Enron declined to comment.
But on Thursday Enron restated financial statements from 1997 to 2000 and the first two quarters of this year, admitting it erred in reporting past results.
The company also on Thursday fired its treasurer and the general counsel for one of its divisions, the latest executives to leave or be forced out of senior positions at Enron.
The firms are actively seeking Enron shareholders to join their lawsuits, which seek class action status. The suits were filed in the United States District Court for the Southern District of Texas in Houston.
Judge Lee Rosenthal is assigned to Newby vs. Enron Corp., which seeks $75 million in damages, according to Chief Deputy Clerk David Bradley. The suit also named Enron Chairman and Chief Executive Kenneth Lay, former CEO Jeffrey Skilling and former Chief Financial Officer Andrew Fastow
Skilling, a long-time Enron executive, resigned in August as CEO after only six months in that position. Fastow abruptly left the company last month.
DISCLOSURE AT HEART OF SUITS
A scheduling conference is set for Jan. 25 and a judge will then determine if all the lawsuits should be consolidated and if the case should be certified as a class action lawsuit.
Lawyer Arthur Stock of law firm Berger & Montague PC, one of the law firms filing a class-action suit, said the court would decide which firm would be lead attorney, a decision based on the firm that represents the largest shareholders.
Since Enron released earnings on Oct. 16, U.S. regulators have launched a probe into some Enron transactions, its shares have fallen almost 75 percent and wiped off $19 billion in market capitalization, and ratings agencies have slashed its credit rating to near junk status.
Enron posted charges of $1 billion in its third-quarter earnings, and announced the day after the earnings were released it would write down shareholder equity by $1.2 billion.
"We are quite sure the impact of Enron's off-balance-sheet investments were material and not adequately disclosed," said Stock.
"We allege that Enron's investments in Azurix and New Power were overvalued at the end of 2000, but Enron wrote them down at the end of the third-quarter in 2001. They knew or were reckless in failing to know - the information was available."
New York University Law School Professor Marcel Kahan, who specializes in securities law, said class-action lawsuits are usually lawyer-initiated, with lawyers calling shareholders rather than shareholders calling them.
But there is nothing wrong with this, said Kahan, because "if we waited for the clients to move first we would have virtually no suits."

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

USA: ANALYSIS-Enron seen test of U.S. SEC's course under Pitt.
By Kevin Drawbaugh

11/09/2001
Reuters English News Service
(C) Reuters Limited 2001.
WASHINGTON, Nov 9 (Reuters) - When they write the history book on Harvey Pitt's stewardship of the Securities and Exchange Commission, Enron Corp. will likely fill Chapter Two.
If Chapter One was about the Sept. 11 attacks and Pitt's deft handling of the financial aftershocks, the next episode in the new SEC chairman's tale is sure to be how he treats the Enron affair, leading securities lawyers said this week.
"It's going to begin to define the parameters of Pitt's approach. This is a tough one," said Bill Singer, a partner at the law firm of Singer Frumento in New York.
America's market watchdog is investigating Enron, the Houston energy trading giant rocked recently by financial reversals, shareholder lawsuits and a plunging share price.
At the heart of Enron's problems are some unusual and complex financial transactions involving company executives that appear to have been going on since 1997, but only came to wide public attention last month after they went sour.
The fate of Enron may turn, lawyers said, on whether it tried to cover up the transactions and their impact or whether it has sincerely tried to expose them and fix the damage.
SEC investigations can lead to fines, criminal charges, sometimes even ruin for the targeted company. Former SEC Chairman Arthur Levitt was known as an aggressive enforcement advocate who came after targeted companies with guns blazing.
Pitt, too, is known as a legal bulldog. But he has been talking a lot about enforcement reform since his appointment by President George W. Bush this summer.
CREDIT FOR DISCLOSURE
In the name of streamlining securities law enforcement, the SEC on Oct. 23 issued informal guidelines on how firms could minimize damage from legal trouble by passing certain tests.
"The message was sent loud and clear last month that clean-up efforts and good faith compliance will gain you points at the SEC," said Donald Langevoort, professor of securities law at Georgetown University in Washington.
The guidelines laid out four tests of company cooperation:
- Self-policing prior to discovery of misconduct;
- Self-reporting of misconduct upon discovery;
- Remediation, including dismissal or punishment of those responsible, improvement of preventative internal policies and procedures, and compensation of those hurt by the misconduct;
- Wide-open cooperation with SEC investigators.
Pass these tests, the SEC said, and benefits could range from taking no enforcement action at all to bringing reduced charges, lighter sanctions, or mitigating language in documents related to enforcement actions.
"This does not mean that we have gone, or will go, 'soft' on securities violations or financial fraud," Pitt said in a speech on Thursday to securities lawyers in New York.
How Pitt and the commission handle the Enron case, in light of the guidelines and Pitt's other statements, will say a lot about the SEC's future course, lawyers said.
"It's going to be a test of whether the commission will look carefully to make sure that the four steps were really met," Langevoort said.
For its part, Enron has ousted the chief financial officer who was instrumental in setting up two outside partnerships that were involved in the unusual transactions being probed.
The company on Oct. 31 appointed a special committee to investigate the affair. The committee hired the high-profile law firm of Wilmer Cutler & Pickering and the accounting firm of Deloitte & Touche to assist it in its probe.
On Thursday, Enron fired two more executives and restated its financial results back to 1997.
"The company has from the outset, and will continue to cooperate fully with the SEC. We will also proceed with our own review of the transactions," said Enron spokesman Mark Palmer.
While much remains to be seen, Langevoort said Enron's action "seems to be a set of efforts that goes very much in the direction" of satisfying the SEC's guidelines.
SELF-POLICING SEEN KEY
But he and other lawyers pointed out that the Oct. 23 guidelines on cooperation were issued in response to a case involving Kansas food and shipping group Seaboard Corp. , a much smaller company in a much smaller matter.
Moreover, securities lawyers said, the first of the four tests - self-policing prior to discovery of misconduct - may be a difficult hurdle for Enron to surmount.
"This is a serious case and the SEC guidelines don't provide the answer to it," said Richard Phillips, a partner at the law firm of Kirkpatrick & Lockhart in San Francisco.
"Self-policing prior to discovery" means consistent vigilance over company finances. Securities lawyers said they found it difficult to imagine that Enron senior executives were in the dark for four years on the unusual transactions.
"Cover-up with respect to public companies is really headed for the trash bin. You can't cover up anything," said Stanley Sporkin, a partner at Weil Gotshal and Manges in Washington who is a former U.S. District Court judge and top SEC official.

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

USA: Dynegy close to complete deal to buy Enron-WSJ.

11/09/2001
Reuters English News Service
(C) Reuters Limited 2001.
HOUSTON, Nov 9 (Reuters) - Dynegy Inc. is close to finalizing a deal to buy beleaguered energy marketing and trading giant Enron Corp. for about $7 billion in stock, The Wall Street Journal reported in its online edition on Friday.
The deal, likely to be announced later on Friday, calls for Dynegy to offer 0.27 of its shares for each Enron share, the Journal said, citing people familiar with the matter.
The deal will also include an immediate injection of $1.5 billion for Enron from ChevronTexaco Corp. , which holds a 26.5 percent stake in Dynegy, with a similar injection of $1 billion when the deal closes, the Journal said.

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

Can Bandwidth Market Survive Without Independent Enron?
By Michael Rieke and Erwin Seba
Of DOW JONES NEWSWIRES

11/09/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)
HOUSTON -(Dow Jones)- Can the telecommunications bandwidth market survive without an independent Enron Corp. (ENE), its biggest promoter?
Some say the bandwidth market will shrink or disappear without Enron. Others say the fundamental advantages of risk management will enable the market to survive.
Two industry analysts see a significant reduction in bandwidth trading if Enron merges with Dynegy Inc. (DYN) or even ceases to exist.
"I think the bandwidth trading business just went 'poof'," said Susan Kalla, senior telecommunications analyst with Friedman, Billings & Ramsey, who earned the nickname "Dr. Doom" because of her dire predictions earlier this year for telecom companies and telecom equipment manufacturers.
"I think it will be a severe step-down in the volume of trading from what it was six months ago," Kalla told Dow Jones Newswires. "It will be a shadow of its former self."
Seth Libby, an analyst with Yankee Group in Boston, said the bandwidth market has yet to reach its potential.
"The bandwidth market as envisioned by Enron has not materialized," Libby said. "Is it a viable market yet? No."
But Enron has been able to get people to change their way of thinking about how bandwidth has traded in the past and how it will trade in the future, he said.
Libby expects brokers and traders to continue to do bandwidth deals. But he also expects an increasing number of deals to get done through Internet-based exchange centers.
"It may move down one level from carrier to carrier, to carrier to large buyers, with people in centralized centers selling Internet protocol capacity," he said.
Craig Pirrong, director of the Center for Risk Management at Oklahoma State University, said the bandwidth market's problems are bigger than Enron's difficulties.
"Is this really a viable market?" Pirrong asked. "Enron had the 'field of dreams' trading idea. 'If we build it they will come'."
Before Enron's recent problems developed, the bandwidth market was already handicapped by financial problems in the telecom sector, he said. Few telecom companies had sufficient credit to trade. The market is also handicapped by lack of connectivity among networks.
The bandwidth market's problems will probably be found to be part of Enron's difficulties, Pirrong said. "I think they realized there wasn't going to be a pot of gold at the end of the rainbow, or...they realized they weren't going to reach (it) anytime soon."
Still, some on Wall Street have accepted the value of managing risk through bandwidth contracts, said Yankee Group's Libby.
Some analysts are starting to agree with Enron that the economy is evolving into an information economy, which relies on telecommunications networks. "In that type of economy, can you afford to be exposed to risk without bandwidth contracts?" he asked.
Some are looking to Dynegy to rescue the bandwidth market just as it is expected to rescue Enron. Dynegy is in discussions to invest in Enron or acquire it.
While Dynegy has a small bandwidth trading desk, it has emphasized telecom assets over trading. It lit a high-speed national telecom network last month and is now seeking to fill the network with telecom customers.
Dynegy has been very smart in developing its bandwidth operation, Libby said. It hasn't been pushing the traded bandwidth market to the exclusion of other forms of sale, especially long-term contracts.
Dynegy wants to be a viable telecom first, he said. "They will be a wholesale player and they're going to introduce risk management as part of their deals."
A source with a traditional telecom carrier company who didn't want to be identified had a similar opinion of Dynegy.
"I think they've been much more willing to help this market move along," he said. "We work very closely with them to farther the market."
Enron was becoming too difficult to deal with, the carrier official said. He thought the deals Enron presented to him were "ridiculous." As a result, he hasn't talked to them recently. "(Enron) thought they had the model for the way the world should work and the carriers would have to accept it."
Because the bandwidth market isn't liquid yet, Enron wasn't able lay off risk in that market as it does in the more liquid gas and power markets. "The lack of liquidity is not as annoying to us as it is to Enron," he said.
Without a liquid market in bandwidth, companies have to separate trading from risk management.
While the carrier can't hedge its entire position in the bandwidth market, it can structure deals so it isn't giving away services that customers would be willing to pay for. It can also make sure it has the proper credit procedures in place.
If Enron disappears and the bandwidth market does develop, there will be more opportunity for the survivors, he said. "If we get to the point where we can (trade), then I become the default market maker."
-By Michael Rieke, Dow Jones Newswires, 713-547-9207; michael.rieke@dowjones.com; and Erwin Seba, 713-547-9214, erwin.seba@dowjones.com

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

INDIA: Enron's Dabhol suffers legal setback in Indian row.

11/09/2001
Reuters English News Service
(C) Reuters Limited 2001.
BOMBAY, Nov 9 (Reuters) - U.S. energy major Enron Corp's Indian unit, Dabhol Power Company (DPC), on Friday said a court had stopped it from pulling out of its beleaguered $2.9 billion power project until December 3.
The Bombay high court, which on Friday heard a petition against Dabhol by a clutch of Indian lenders to the project, prevented the company from issuing a final notice to terminate its contract with the Maharashtra State Electricity Board, a Dabhol official told Reuters.
The court order is a blow to Enron, which owns 65 percent of Dabhol. General Electric Co and Bechtel Corp own 10 percent each, with the Board holding the remaining 15 percent.
The U.S. energy giant's attempts to exit the project by either selling its stake or terminating the contract has become more urgent in the face of its financial troubles at home.
The Houston-based company has been plagued by investor doubts and is under the gun to shore up its crumbling finances.
The first phase of Enron's controversial Indian project has been completed, but work on the second phase was abruptly stopped in June following a bitter dispute between Enron and the local utility, the plant's sole buyer.
The cash-strapped Indian utility had in 1995 contracted to buy all the power from Dabhol's 2,0184 MW plant on the western coast of India, the country's largest foreign direct investment.
But it later said it did not need all the power and that it was too costly.
While Dabhol has said it would prefer to resolve its dispute with the Board amicably, it felt the discussions with the power plant's Indian lenders and the government were not progressing.
In that case, it may be forced to terminate the contract, and file for damages in the International Court of Arbitration in London.
But the Bombay high court has said it will hear the case again on December 3.
The case against Dabhol was filed by Indian lenders, led by the country's largest term lender, the Industrial Development Bank of India , as they want to salvage their loans to the power project.
They fear that if Enron is unable to sell its stake and terminates its contract with the utility, it could end up defaulting on its loans.
WHICH WAY OUT?
The dispute between Dabhol and the Indian utility came to a head in June, when Enron decided it would stop work on the second phase of the project even though it was almost complete, after the Board defaulted on payments.
The dispute, which has hurt India's attempts to attract more foreign investment in the power sector, also cast a cloud over the loans advanced by Indian banks and financial institutions, which have an exposure of 48 percent of the total project cost.
Dabhol served a preliminary notice in May to terminate the project and can serve a final notice if a six-month cooling-off period fails to produce a solution.
That six month deadline ends on November 19.
Analysts said there are only two ways for Enron to pull out of the project. Wait for the Bombay high court to lift the stay on December 3, or hope that its stake is bought out by one of the two potential suitors - India's Tata Power Company Ltd or BSES Ltd .

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

Dynegy Nears Deal to Buy Enron in $7 Billion Stock Transaction
By Robin Sidel

11/09/2001
Dow Jones Business News
(Copyright (c) 2001, Dow Jones & Company, Inc.)
Staff Reporter of The Wall Street Journal
Dynegy Inc. is close to finalizing a deal to buy beleaguered Enron Corp. for about $7 billion in stock, according to people familiar with the matter.
The deal, which is likely to be announced Friday, calls for Houston-based Dynegy to swap nearly 0.27 of a share for each share of its crosstown rival, these people said. Based on current trading prices on the New York Stock Exchange, that would value Enron at about $9.50 a share. Enron shares traded at $8.41 at 4 p.m. Thursday on the Big Board, meaning the Dynegy deal amounts to a 13% premium.
Terms call for ChevronTexaco Corp. (CVX) to inject $1.5 billion into the deal immediately, and another $1 billion upon closing. Other parties also may inject cash into the deal, although it was unclear if all those details had been finalized.
If approved by regulators, the deal would be a stunning development for Enron, which transformed itself from a staid natural-gas-pipeline company into a highflying power-trading giant only to see its share price -- and hefty market valuation -- plummet in a matter of weeks. Dynegy is one-fifth Enron's size.
Enron's stock price, which traded near $85 at the beginning of the year, has been pounded in the past three weeks, falling roughly 80%, over concerns that serious financial problems weren't being disclosed to shareholders. Shares of Enron (ENE) fell 26 cents to $8.67 Friday morning on the New York Stock Exchange, where Dynegy's (DYN) shares climbed $1.90 to $38.50.
Enron has been scrambling for days to line up quick financing from a prominent outside investor and has been in discussions with private-equity firms and power-trading companies. The company desperately needs to win back its credibility on Wall Street following the disclosure that the Securities and Exchange Commission was investigating partnerships Enron created to serve as a hedge against fluctuating market conditions.
On Thursday Enron reduced its previously reported net income dating back to 1997 by 20%, mostly due to improperly accounting for the partnerships.
Concerns over Enron's financial condition are vexing investors and analysts, including those at major credit-rating agencies. On Friday, Moody's Investors Service lowered Enron's debt rating to one level above junk-bond status and said the company's long-term debt ratings remain under review for further downgrade. Late last month, Fitch put Enron on review for a possible downgrade, while another, Standard & Poor's, changed Enron's credit outlook to negative from stable.
Write to Robin Sidel at robin.sidel@wsj.com
Copyright (c) 2001 Dow Jones & Company, Inc.
All Rights Reserved.

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

USA: UPDATE1-Moody's cuts Enron's ratings, may cut again.

11/09/2001
Reuters English News Service
(C) Reuters Limited 2001.
NEW YORK, Nov 9 (Reuters) - Ratings agency Moody's Investors Service on Friday cut its long-and short-term ratings for embattled energy trader Enron Corp. and warned another cut is possible because a substantial loss of investor confidence had hurt the firm's financial flexibility.
Moody's cut Houston-based Enron's senior unsecured debt ratings to "Baa3," its lowest investment grade, from "Baa2." It also cut the company's commercial paper rating to "Not Prime" from "Prime-2."
If Moody's cuts Enron's long-term rating again, it would take it to a junk level, making it tougher for Enron to issue debt and run its day-to-day business. Friday's downgrade also adds uncertainty to a potential merger with rival Dynegy Inc. , which has been in talks to acquire Enron.
Sources told Reuters on Thursday that Dynegy's board was waiting for word from major credit rating agencies to determine whether acquiring Enron would result in a significant downgrade of its debt. Dynegy has asked for an expedited review from Moody's and Standard & Poor's on how the merger would affect its ratings.
Seeking to calm fears that it faces a credit crunch, Enron in late October said it had drawn on its committed lines of credit to provide more than $1 billion in cash liquidity.
Despite that move, Enron faces "significant debt maturities over the near term, as well as the potential for increased margin requirements from counterparties of its wholesale trading operation," Moody's said.
"The company may not be able to retain investment-grade characteristics," Moody's said.
Enron's stock and credit ratings have plunged since disclosures of off-balance-sheet deals now under investigation by the U.S. Securities and Exchange Commission for possible conflict of interest.
The deals contributed to a $1 billion third-quarter charge and $1.2 billion reduction in shareholder equity.
On Thursday, Enron restated its financial statements since 1997, trimming earnings from 1997 to 2000 by $591 million, or 22 percent, and increasing its debt by $628 million, or 6 percent.
S&P last week cut Enron's corporate credit rating to "BBB," two notches above junk, from "BBB-plus," and warned it may cut the ratings again.
Enron shares traded Friday on the New York Stock Exchange up 34 cents at $8.75.

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

Enron long-term ratings cut to Baa3 from Baa2 - Moody's

11/09/2001
AFX News
(c) 2001 by AFP-Extel News Ltd
NEW YORK (AFX) - Moody's Investors Service said it downgraded the senior unsecured debt ratings of Enron Corp to Baa3 from Baa2.
Enron's long-term debt ratings remain under review for further downgrade. Moody's said the rating actions reflect Enron's "reduced financial flexibility as a result of a substantial loss of investor confidence."
Enron drew down its bank credit facilities in order to shore up near-term liquidity, but faces significant debt maturities over the near term, as well as the potential for increased margin requirements from counterparties of its wholesale trading operation.
In addition, uncertainty surrounding the firm's contingent obligations creates increased risk for debtholders, it said in a statement.
Moody's said that Enron's well-established wholesale trading franchise and its regulated pipeline businesses have solid operating attributes and generate good cash flow.
However, the rating agency concludes that the company may not be able to retain investment grade characteristics.
Moody's review will focus on Enron's ability to further improve its liquidity and capital position. The rating agency would view a substantial near term injection of equity capital as a stabilizing event.
lj/cmr For more information and to contact AFX: www.afxnews.com and www.afxpress.com

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

Enron, Dynergy very close to deal - CNBC

11/09/2001
AFX News
(c) 2001 by AFP-Extel News Ltd
NEW YORK (AFX) - ChevronTexaco Corp affiliate Dynegy Inc and Enron Corp are "very close" to reaching a deal for Dynegy to buy out Enron, CNBC television reported.
The two companies are "very close to reaching a deal... they could make an announcement very soon", said CNBC's David Faber.
Yesterday, the companies confirmed they were in talks over a possible tie-up but said they would refrain from making any further statements until a definitive agreement is reached. According to reports, Dynegy offered 7-8 bln usd for Enron.
vog/lj For more information and to contact AFX: www.afxnews.com and www.afxpress.com

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

Business
Easton`s Call: Returns are No More
Rhonda Schaffler

11/09/2001
CNNfn: Market Coverage - Morning
(c) Copyright Federal Document Clearing House. All Rights Reserved.
RHONDA SCHAFFLER, CNNfn ANCHOR, MARKET CALL: We`re going to turn to Tom Easton our guest host once again. Enron (URL: http://.www.enron.com/) one of the many stories, I guess. Companies that were flying high and then just brought down to earth quickly. Different story with Enron because it`s an SEC matter as well.
TOM EASTON, SR. CORRESPONDENT, "THE ECONOMIST": But let`s be clear about Enron. Enron understood that it`s commercial paper was going to downgraded. That`s why it drew on it`s back up facilities last week. The fact that it`s been downgraded to one step above junk for it`s longer term debt, was also known.
What is not known is what really remains inside this company. They know they have a pipeline. That old, obsoltete - it was the history of the company kind of thing, and that has be only thing really to have definable value. And that`s why they used it to refinance with last week. The question is what is left? In all their derivative contracts and all their partnerships, where is their value?
You know, you have to assme there`re pronbably a lot of very smart financial buyers sniffing around right now to see if they can buy and actually pull some value out of those contracts. I wouldn`t be surprised if there were some sort partnership that came up with a Berkshire (URL: http://www.berkshirehathaway.com/) or an AIG (URL: http://www.aig.com/) or some very, very clever financial buyer that would try to separate out the pipeline and these other things and extract some of the value.
SCHAFFLER: You know, we were talking about the overall value of the market earlier. That you think P/Es are running a little high. Historically they are running high. And what the argument that we`re hearing now with what`s going on in the bond market, with what`s going on in Japan? We talked about Latin America before. The argument people are saying, is well where else will you put you money if you want get some sort of return?
EASTON: You know, that is an argument that a lot of brokers use when they sell stocks. There is no return that can be gained if your stock falls.
So, the question is...
SCHAFFLER: Yes, that is true.
EASTON: .you know, you have a low commercial paper return, you have a low savings account return, but as stocks go down you`ve lost. And, in fact, the concern is not the P/Es are high. It`s that they are going to get higher. And they`re going to get higher because corporate profits are dropping. So therefore, when you see the market trade down, that isn`t a bad thing for an economy. That`s a good thing. That`s an economy coming to terms with the valuation of its companies.
So, I think that people are looking at the posibility of not ARENA: \making very large financial returns. And that`s too bad because a lot of people are also losing their jobs. So, they`re thinking where am I going to make money? And the truth is, there aren`t that many good opportunities to make money at this point. And, I guess all we can say is you have better opportunities in United States than many other places in the world too have a viable job and to make some return. And there are lot of risk free alternatives. I mean, you can get inflation free bonds, for instance. And there are savings and so forth. You know, it`s sad to say that big returns just aren`t there. But you know what? Big returns just aren`t there.
SCHAFFLER: What makes it so hard is that they just were there. It was so dramatic during the `90s and before it all evaporated.
EASTON: And that raises a really crucial issue. There are many people in America who think they have investment problem. They don`t have an investment problem, they have a spending problem. They are spending or they are saving in the anticipation of larger gains, than they are really likely to receive. And, so what people will have to figure out, or what they`ll come to conclude is returns of 7 percent or so are really good. And 20 percent is just out of the question. And they`ll have to adjust their lives. And I`m sorry that that`s true. It`s not good news.
SCHAFFLER: So you`re going to give us this reality check on a Friday Tom? I tell you.
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Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

USA: Enron shares slip on debt downgrade concerns.

11/09/2001
Reuters English News Service
(C) Reuters Limited 2001.
NEW YORK, Nov 9 (Reuters) - Shares of Enron Corp. declined in early trade on Friday on concerns a possible takeover of the energy trading giant by rival Dynegy Inc. would result in a significant downgrade of its debt.
Enron shares were off 20 cents to $8.21 on the Instinet electronic brokerage. There were no trades in Dynegy.
The two companies on Thursday confirmed they were discussing a possible "business combination." But they had not yet reached agreement on a deal said by sources to involve a stock swap worth $8 billion, or $10 a share, and a $1.5 billion capital infusion by major Dynegy stakeholder ChevronTexaco Corp.
Talks between the two companies were continuing late Thursday, although specific terms of the stock swap had not been determined, the sources said.
Dynegy's board is waiting for word from the major credit rating agencies to determine whether the acquisition would result in a significant downgrade of Enron's debt. Only when Dynegy's board is comfortable with that situation will it negotiate specific terms, the sources said.
Enron stock and credit ratings have plunged after off-the-balance sheet deals now under investigation by the U.S. Securities and Exchange Commission for possible conflict of interest were disclosed in mid-October.
The deals contributed to a $1 billion third-quarter charge and $1.2 billion reduction in shareholder equity that earned the ire of Wall Street, which has been clamoring for an explanation ever since.
Enron on Thursday restated its financial statements since 1997, which reduced its earnings by $591 million, or 22 percent, over the four years ending in 2000, and increased the company's debt by $628 million, or 6 percent.

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

Moody's Diaz on Enron Credit Downgrade and Outlook: Comment
2001-11-09 12:49 (New York)

Moody's Diaz on Enron Credit Downgrade and Outlook: Comment

     New York, Nov. 9 (Bloomberg) -- John Diaz, a managing
director at Moody's Investors Service, who covers Enron, comments
on the company's downgrade of Enron Corp.'s long- and short-term
debt ratings and the possibility that Dynegy Inc. may buy it.

     Moody's lowered Enron's short-term credit rating to ``Not
Prime'' from ``P3,'' its lowest investment grade level. It also
downgraded the No. 1 energy trader's long-term debt rating one
notch to ``Baa3,'' the lowest investment-grade rating,'' from
``Baa2.''

On why short-term ratings are junk, while long-term aren't:
     ``The downgrade reflects the weak liquidity position of the
company and that it has no access to the commercial paper
market.''

On company outlook and ability to remain investment-grade:

     ``Enron has enough liquidity to last for several months as
long as counter-parties continue to trade with it and the line of
credit it is negotiating with its banks'' is closed.

     Enron now needs to ``shore up confidence in the company so
that counter-parties continue to trade with it,'' he said. ``If
that goes away, it becomes a precarious situation, which is
something that has been pretty clear to the market for awhile.''

On possible Dynegy purchase of Enron:

     Enron did provide Moody's with a pro-forma balance sheet
should the company reach an agreement with Dynegy, but that had
``no bearing'' on the downgrade, because ``no deal has been
formally announced, and that would be putting the cart before the
horse.''

     ``If a deal happens with Dynegy, there is a real potential of
stabilizing the situation. Absent some equity or liquidity
infusion into Enron,'' the company could be downgraded to junk
status.

     ``Enron needs to have liquidity to shore up its operations.
It has liquidity to last for several months, as long as counter-
parties continue to trade with it'' and the bank deal is signed.

     A deal with Dynegy could ``end up with a capital structures
that would be improved over time, and we would look at that
liquidity structure.''

On Dynegy's credit ratings:

     When people talk about Dynegy, they should look at the
``Baa2'' rating, which belongs to Dynegy Holdings. They shouldn't
look at its parent, Dynegy Inc. The assets are at the holdings
level. ``Because of the holding company structure, the parent,
Dynegy inc. is rated one notch lower.''

     ``Bond holders at the Dynegy Holdings Level are ahead of
those at Dynegy Inc.''

Commerzbank Analyst Meade on Possible Buyout of Enron: Comment
2001-11-09 13:46 (New York)

     New York, Nov. 9 (Bloomberg) -- Andre Meade, an energy
analyst at Commerzbank Securities, comments on a possible takeover
of Enron Corp., the largest energy trader, by smaller rival Dynegy
Inc. Meade doesn't own shares of Dynegy or Enron.

     ``Dynegy is essentially betting the company on their ability
to clean up the messes at Enron and seamlessly integrate Enron's
people into its own trading business without losing traders,
volumes and the margins that Enron makes.''

     ``With the restatement of earnings yesterday it's clear Enron
had a number of things inflating its earnings, such as the off-
balance sheet transactions. I'm not convinced there aren't further
restatements to come. It calls into question the earnings power of
Enron's business.''

     ``Even though Enron's price is low by historical standards,
Dynegy is making a big bet and it's a risky bet. It will be
difficult to make it work.''

On the possible effect of an Enron bankruptcy on the market:

     ``Since Enron is the largest trader of power and gas and most
traders have receivables with Enron or owe Enron money there would
be a flurry of activity of figuring out who owes what, who will
get paid and when. It would have an impact on the short-term.''

     ``The markets will continue to function but there would be
less churn, that's transactions between traders. I don't see a big
problem.''

     ``It is a big unknown and I'm sure most traders would be
happy to see Enron continue.''

Kent Income Fund's Mitchell Stapley on Enron Bonds: Comment
2001-11-09 14:25 (New York)

     New York, Nov. 9 (Bloomberg) -- Mitchell Stapley, who manages
$3.5 billion in fixed-income assets for Fifth Third Investment
Advisors Inc., comments on Dynegy Inc.'s possible purchase of
Enron Corp. Stapley's Kent Income Fund holds Enron bonds.

     The combination would make Dynegy the largest energy trader
and owner of the second-biggest U.S. natural-gas pipeline system.

     ``Bondholders needed them to stabilize the situation, and
that's what this deal does. It's one of the rare outcomes for a
troubled situation like this, where the bondholders come out in
better shape the equity holders.''

     Through yesterday, Enron shares had fallen 90 percent this
year. Enron's 6.4 percent notes due in 2006 rose to around 76
cents on the dollar in midmorning trading, up from 69 cents
earlier.

     ``There's not really a quality market out there'' for Enron's
bonds, Stapley said. ``We're flying in the dark as to price, but
the direction in which we're flying in the dark is toward higher
prices.''

     ``There seems to be flexibility for the inevitable write-
offs, as Dynegy begins to delve into Enron's finances.  There are
still risks for Dynegy. This adds uncertainty to their balance
sheet. Can they retain Enron's talent? How deep are their pockets?
It looks like more money will have to go into Enron.''

Harris Investment's Coxe on Possible Buyout of Enron: Comment
2001-11-09 14:58 (New York)

     New York, Nov. 9 (Bloomberg) -- Donald Coxe, chairman and
chief strategist of Harris Investment Management, comments on
Dynegy Inc.'s possible bid for rival Enron Corp.

    Coxe manages 78,000 Enron shares as part of the Harris Insight
Equity Fund. Dynegy shares make up 5 percent of the Fund's assets.

    ``People who own energy stocks can breathe a sigh of relief.
We can now look at the whole energy sector with a much greater
degree of confidence going into winter. Enron's trading operation
has provided substantial liquidity to the energy markets. If we
had a prolonged period of extremely cold weather and no liquidity,
we'd have chaos.''

    The combination would turn Dynegy into the biggest energy
trader and owner of the second-longest U.S. natural-gas pipeline
system. A California consumer group has raised antitrust concerns.

    ``This is a bailout. It's not a merger. Verbiage matters in a
case like this. The only reason Enron would capitulate like this
is that they would have gone under otherwise. Dynegy can't go to
shareholders who paid $80 for Enron and say, `You'll get your
money back and more.' They've got to indicate that the alternative
would be catastrophic for the country.''

    ``(U.S. Attorney General) John Ashcroft is in a tight
situation. This is the same Justice Department that compromised
with Microsoft. Here you are dealing with a big donor (Enron Chief
Executive Kenneth Lay) to President Bush's campaign. It's the
hometown Houston crowd, and there could well be a political fight
over this.''

Strong American Utilities Fund's Vuchetich on Dynegy: Comment
2001-11-09 12:13 (New York)

     New York, Nov. 9 (Bloomberg) -- Kathleen Vuchetich, an
analyst at W.H. Reaves & Co. who helps manage the $1.3 billion
Strong American Utilities Fund, comments on Dynegy Inc.'s possible
purchase of Enron Corp. Dynegy shares make up 5 percent of the
fund's assets.

     The combination would make Dynegy the world's top energy
trader and owner of the second-longest U.S. natural-gas pipeline
system, stretching 40,000 miles.

    ``It's a wonderful deal for Dynegy. In acquisitions, (Chief
Executive Officer) Chuck Watson typically puts in conditions that
protect Dynegy against any unforeseen or undisclosed problems.
They look for distressed assets or companies. They did it with
Illinova.'' Dynegy bought Illinova Corp., an Illinois utility
owner, in February 2000, for $3.9 billion in stock and debt.

    ``They're very disciplined about what they keep. They sort it
out immediately. They'll take the best businesses acquired from
purchasing Enron, and make them hum and sing.''

    ``Enron has three wonderful businesses that have been
overshadowed by recent concern about some of the others: Energy
trading, energy management and their pipelines.

Breaking News
11:03 EST Friday
Dynegy bid for Enron said to be possible bail-out deal
Monica Perin Houston Business Journal
Dynegy's bid to acquire struggling energy giant Enron Corp. may actually be a bail-out deal for Dynegy, industry experts say.
Dynegy may be "so exposed to Enron that if Enron goes down, Dynegy could go down with them," according to one industry insider.
Wall Street "may look at the purchase of Enron as a self bail-out by Dynegy due to its exposure to Enron and industry liquidity concerns," analysts Mark Easterbrook and Neal Dingmann of RBC Dain Rauscher securities firm concur in a market report on Enron on Thursday.
"An outright bid for Enron by Dynegy would, in our opinion, not be received well by Wall Street,"
The two analysts say an equity infusion of cash from one or many sources rather than an outright sale of Enron would be preferable. But, they maintain, the infusion strategy "makes little sense for Dynegy" and its part-owner, Chevron.
For one thing, Dynegy's balance sheet would not be sufficient to take over Enron without the deep pockets of Chevron, which is reported to be offering $1.5 billion in cash to Enron now and another billion if and when the deal closes.
"I believe Ken Lay (Enron chairman and CEO) approached Dynegy and Chevron because he has already tried everybody else and he is facing the prospect of selling off Enron piecemeal," says Jean Rollins, managing partner for C-Three, a market consulting and research firm. "Enron is being shopped in pieces all over the market," she says.
Enron has already talked to Royal Dutch/Shell, General Electric, and several big foreign energy companies, apparently without success, Rollins notes. However, it is also rumored that Enron may be seeking a "white knight" to save it from a takeover by Shell. And, in order to secure a deal with Dynegy, Rollins believes Enron may have disclosed to Dynegy financial information that had not been made public.
Meanwhile, all of Enron's trading partners are nervously reviewing their own exposure and watching developments.
Kansas City-based UtiliCorp announced today it is buying back the 20 percent of its trading subsidiary, Aquila, that it spun off in an initial public offering just last spring.
Part of the reason, sources say, is that Aquila has been trying to acquire assets from Enron in the last couple of weeks but couldn't get the credit it needed because energy trading and power-producing companies have been shut out of the equity markets since the Enron meltdown began.
Other energy trading companies have been measuring their exposure to Enron but have been vague about disclosing their risk, say Easterbrook and Dingmann.
Some industry watchers say a merger between Enron and Dynegy would catch intense anti-trust scrutiny from the FTC and the Justice Department while others disagree.
Their physical assets don't overlap and there would be no market limitations on their trading operations, maintains John Sodergreen, editor and publisher of Scudder online energy trade publications.
One insider believes Lay has no intention of selling Enron and that, while he may have his back against a wall, he is still in a position to dictate terms to Dynegy because of that company's exposed position. This source sees Enron surviving with Chevron holding a big chunk of it as well as a bigger piece of Dynegy.
"Chevron could be the real winner here," this pundit theorizes.

Dynegy May Acquire Enron for $22 Bln in Stock, Debt (Update6)
2001-11-09 13:56 (New York)

Dynegy May Acquire Enron for $22 Bln in Stock, Debt (Update6)

     (Updating prices, adding Harrison in 9th paragraph.)

     New York, Nov. 9 (Bloomberg) -- Dynegy Inc. may pay as much
as $22 billion in shares and assumed debt to acquire Enron Corp.,
whose shares collapsed after a Securities and Exchange Commission
probe of accounting irregularities limited the biggest energy
trader's ability to finance its operations.

     Houston-based Dynegy moved closer to taking over Enron, a
larger rival once valued at more than $69 billion, after Moody's
Investors Service maintained an investment grade rating on Enron
today. Moody's lowered Enron's credit rating to ``Baa3,'' one
level above junk status.

     Moody's announcement, which removed the threat that a junk
rating would create a cash crunch by forcing Enron to repay early
$3.3 billion of bonds,  ``allows a suitor like Dynegy to come in
and formally make a bid,'' said UBS Warburg analyst James
Yannello, who rates Dynegy ``strong buy'' and owns no shares.

     Dynegy Chief Executive Officer Charles Watson's proposal
values Enron at about $9.86 per share, above the current price of
$8.97. Dynegy is offering 0.27 shares for each of the 913 million
Enron shares that will be outstanding after convertible bonds are
exercised, said people familiar with the situation. Based on
yesterday's closing price, the transaction would be worth $9
billion in stock. Dynegy would also assume $13 billion of debt.

     ``It's a wonderful acquisition for Dynegy,'' said Kathleen
Vuchetich, who helps manage the $1.3 billion Strong American
Utilities Fund. ``They'll take the best businesses at Enron and
make them hum and sing,'' said Vuchetich, who has about 5 percent
of her fund invested in Dynegy shares.

     ChevronTexaco Corp., which owns about 27 percent of Dynegy,
is to contribute $1.5 billion in cash to the transaction.

                          Lobbying Effort

     Enron's limited access to funds, as well as a probe the SEC
began last month into its accounting for limited partnerships
drove down shares 90 percent this year. Yesterday, Enron restated
earnings for the past four and a half years, reducing profit by
more than $500 million.

     Dynegy, which began the talks a week ago, had put the
negotiations on hold as Moody's deliberated. Dynegy was concerned
a downgrade to junk level would trigger a cash crunch by requiring
Enron to repay early $3.3 billion of bonds.

     Wall Street executives, including Lehman Brothers Holding
Inc. Chief Executive Officer Richard Fuld and J.P. Morgan Chase &
Co. CEO William Harrison, called Moody's to encourage the rating
company to keep Enron's credit rating at investment grade,
according to people familiar with the situation.

     ``We've received calls from officials at leading capital
markets firms who wanted to share their opinion with us,'' said
Frances Laserson, vice president of corporate communications at
Moody's Corp. ``This is a very controversial subject and we've
heard from a great number of people.''

     Lehman, which is advising Dynegy, and J.P. Morgan, which
along with Citigroup Inc. unit Salomon Smith Barney is advising
Enron, stood to lose millions in fees if the deal collapsed.
According to average commissions calculated by Dealogic, the firms
could reap about $28 million in fees.

     Moody's announcement that it would view a ``near term
injection of equity capital as a stabilizing event'' prompted
bankers to reopen talks. Shares shot up 69 cents to $9.10 after
talks resumed. Enron's 6.4 percent bonds which mature in 2006
jumped to about 76 cents on the dollar, up from 69 cents before
the report, said traders.

     ``They need an equity infusion or an agreement with Dynegy to
maintain their investment grade,'' said Andy Palmer, who helps
manage $2 billion of fixed income at ASB Capital Management Inc.
in Washington. ``They'll lose customers if they don't keep their
investment grade.''

                           Lower Rating

     Moody's cut its rating because Enron's finances had
deteriorated, said John Diaz, a managing director who follows the
company for Moody's. ``The downgrade reflects the weak liquidity
position of the company and that it has no access to the
commercial paper market.''

      Enron now needs to ``shore up confidence in the company so
that counter-parties continue to trade with it,'' he said. ``If
that goes away, it becomes a precarious situation, which is
something that has been pretty clear to the market for awhile.''

     The energy trader last week had its long-term credit rating
cut to ``BBB,'' the second-lowest investment grade, from ``BBB+''
by Standard & Poor's, and its short-term debt rating cut to ``A-
3,'' the lowest investment grade, from ``A-2.'' S&P said further
cuts are possible.

     Enron's short-term debt rating was cut to junk level, at
``Not-Prime,'' from ``P-3,'' its lowest investment grade rating.
     Investors said that Dynegy will face a challenge in
incorporating Enron's business.

     ``Dynegy has to move fast if it's going to keep Enron's
traders and Enron's trading customers,'' said Roger Hamilton, a
money manager with John Hancock Advisers Inc., which sold its
Enron shares in recent weeks.

     ``This would make them far and a way the biggest energy
trading operation, and a dramatic rescue would help the approval
process, which might have been difficult in other circumstances,''
said Hamilton.

     Dynegy shares gained $2.79 to $39.47.
     Enron is being advised by J.P. Morgan Chase & Co. and Salomon
Smith Barney Inc. Dynegy is being advised by Lehman Brothers
Holdings Inc.

TransCanada PipeLines CEO on Dynegy and Enron Talks: Comment
2001-11-09 13:33 (New York)

     Calgary, Nov. 9 (Bloomberg) -- TransCanada PipeLines Ltd.
Chief Executive Officer Hal Kvisle comments on the possible sale
of Enron Corp. to Houston rival Dynegy Inc. and TransCanada's
decision to sell its natural-gas trading business.

     Calgary-based TransCanada, which had been Canada's biggest
gas trader, agreed last month to sell its trading units to BP Plc
and Mirant Corp. Enron is Canada's second-biggest gas trader.

On concerns the sale would reduce competition in gas trading:

     ``In North America, there are six or eight major gas traders
that are all highly competitive. The margins in gas trading have
become very slim. It's extraordinarily difficult to manage and
administer, monitoring the risks and ensuring that things aren't
going wrong.''

     ``That is one tough business to stay on top of. We're frankly
glad to be out of it.''

     ``We don't think the acquisition of Enron by some other
player would bring too much market concentration into one party's
hands.''

     ``We think there are many other players in the gas marketing
and trading arena that are very capable of growing their
businesses and making sure competition will be there.''

On the decision to sell its gas-trading units:

     ``One of the reasons that we decided to exit the trading
sector was that the barriers to entry were few.''

     ``If you go back 15 years ago, TransCanada had a 100 percent
share of the gas that was exported from Alberta, other than the
volume that went to California. As the market opened, Enron was
one of the earliest to enter but certainly many others have
entered over time.''


We have received the executed EEI Master Power Purchase and Sale Agreement
dated 4/25/01 from the referenced counterparty.  Copies will be distributed
to legal and credit.


I am renewing the effort to compile a comprehensive list of filings made
with regulatory agencies by HPL and affiliated companies.  The template on
which to list the information has been modified pursuant to suggestions by
several people, and the final template (in Excel format) is attached hereto
(see "RegFilingForm" below).  Some of you have already sent me responses to
earlier drafts (which are already included on "RegFilingsMaster" below), but
please re-complete the form as necessary to include information in the added
columns.  We intend to ultimately be able to "sort" the entries by various
categories (company, agency, state, etc.) so that we can generate partial
lists for particular purposes.
 In addition to the spreadsheet, we are also going to put together a "desk
book" about such filings, which will include a copy of the relevant forms and
any instructions regarding the completion and filing of such forms.  So
please also send me a copy of forms/reports which you file with agencies for
inclusion in the desk book.  Since rules and forms obviously will change from
time to time, the desk book will be in loose leaf form to allow for easy
updating.
 Attachment "RegFilingsMaster" shows what information I have previously
received and already incorporated into the form.  Please use Attachment
RegFilingForm to make any additions, and I will have it incorporated into the
master spreadsheet.  If there are any corrections or deletions which need to
be made on RegFilingsMaster (e.g., if we no longer make LRC/Bridgeline
filings), please tell me that as well.
 I'm sure there are people/departments that make filings that I am not even
aware of, so please forward this form to anyone who might remotely have any
information we need to complete this project (and cc: me so I know to follow
up with them).  I hope to finalize this long-standing project by the end of
September, so please send me your responses by September 20 so we can collate
them into a complete list.  If you receive this memo and do not have anything
to add to the list, please send me an e-mail stating that fact as well so I
don't bother you again.
 Thank you very much for your help.  E-mail me or call me at 36417 if you
have any questions.


Brunell or Bledsoe - which one are you willing to trade and for what?  I
could give a rb and a WR