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This story was sent to you by Peggy.McCurley@enron.com with these comments:
Thought you'd like to see this since it mentions EOL From CBS.MarketWatch.com, online at:http://cbs.marketwatch.com/news/story.a= sp?siteID=3Dmktw&guid=3D%7B94043875%2D56E4%2D4DCD%2D839B%2D6F7D573453B3%7D= =20 .h09{ font-size: 22px; font-weight:bold; color:black; } .lb01{ font-size: 1= 5px; font-weight:bold; color:#000000; } .lk001 { font-family: Arial, Helvet= ica; font-size: 13px; font-weight:normal; color:#000099; }=09 .lk01 { font-= family: Arial, Helvetica; font-size: 13px; font-weight:normal; color:#00009= 9; } .lk03 { font-family: Arial, Helvetica; font-size: 13px; font-weight:bo= ld; color:#000099 }=09 .rlk05 { font-family: Arial; font-size: 12px; font-w= eight:normal; color:#000099; }=09 .tb03 {background-color:#CCCCCC; } .t01 {= font-family: Arial, Helvetica; font-size: 13px; font-weight:normal; color:= #000000; }=09 .t03 { font-size: 13px; font-weight:bold; color:#000000; } .t= 19 { font-family: Arial; font-size: 10px; color: #000000; } .t20 { font-fam= ily: Arial; font-size: 10px; color: #000099; } .t21 { font-family: Arial; f= ont-size: 12px; color: #000000; } .t22 { font-family: Arial; font-size: 12p= x; color: #009900; } .t23 { font-family: Arial; font-size: 12px; color: #ff= 0000; }=20 [IMAGE]=09=09=09=09=09=09 CBS.MarketWatch.com =09[IMAGE]=09[IMAGE]=09=09 =09=09=09=09=09[IMAGE]=09[IMAGE]=09=09=09[IMAGE]=09 [IMAGE]=09=09[IMAGE]=09=09=09=09=09=09=09[IMAGE]=09 =09=09=09=09=09 [IMAGE] Quotes & News symbol/fund/keyword [I= MAGE] [IMAGE] Find Symbol [IMAGE] =09=09=09=09[IMAGE]=09 =09=09=09=09=09[IMAGE]=09=09=09=09[IMAGE]=09 =09=09[IMAGE] =09=09=09[IMAGE]=09=09=09=09[IMAGE]=09 =09=09[IMAGE]=09=09=09[IMAGE]=09=09=09=09[IMAGE]=09 =09=094:31 PM ET Nov 28, 2001=09=09=09 Latest Market Overview =09=09=09=09[= IMAGE]=09 =09=09=09=09=09[IMAGE]=09=09=09=09[IMAGE]=09 =09=09=09=09=09 4:30 pm ET Nov 28, 2001 [IMAGE] DJIA 9711.86 -160.7= 4 NASDAQ 1887.97 -48 SP500 1128.52 -20.98 10Yr 4.946% -0.004= [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] [IMAGE] Front Page News = Dynegy walks away from Enron deal U.S. shares end with bruising losses A= lliance rejects outside security; CIA officer killed New York Times Co. en= ters bidding for Red Sox Intel takes tech spotlight =09=09=09=09[IMAGE]= =09 =09=09=09=09=09=09=09=09=09=09 =09=09=09=09=09=09=09=09=09=09 =09=09=09=09=09=09=09=09=09=09 =09=09=09=09=09=09=09=09=09=09 =09=09=09=09=09=09=09=09=09=09 =09=09 Dynegy abandons Enron deal Shares of energy trader plunge, bankru= ptcy looms By Lisa Sanders, CBS.MarketWatch.com Newswatch More Headl= ines HOUSTON (CBS.MW) -- Dynegy Corp. on Wednesday abandoned its pla= n to rescue Enron Corp. after Enron's credit ratings were cut to junk-bond = status, raising the prospects of a bankruptcy filing for what was once the = largest U.S. energy trader. Enron shares (ENE ) closed at 61 cents, down $= 3.50, having lost as much as 85 percent of their value on the day and havin= g collapsed from a 52-week high of almost $85 just 11 months ago. The compa= ny lost around $2.6 billion worth of market capitalization from Tuesday to = Wednesday. Close to 342 million Enron shares had changed hands Wednesday b= y the close, and the stock broke the all-time volume record of 309 million = shares set by Intel on Sept. 22, 2000. Dynegy (DYN ) shares lost $4.92, or = 12 percent, to $35.97. Saying in a conference call that it had to "protect= " its shareholders, Dynegy announced it had terminated its agreement with E= nron, citing "Enron's breaches of representations, warranties, covenants an= d agreements in the merger agreement, including the material adverse change= provision." Company-specific problems? Dynegy Chairman and Chief Execut= ive Chuck Watson said: "some of the best deals are the ones that don't get = done." "While it is regrettable to see a leading industry player in diffi= culties, this does not reflect a failure of the energy merchant business," = he said. Dynegy President and Chief Operating Officer Steve Bergstrom sai= d that energy traders have had weeks to prepare for Enron's diminished role= in the business and that the industry has suffered "no degradation," as he= put it. "There has been a clear flight to quality, and it's occurring as = we speak," Bergstrom said. "Dynegydirect is a highly scalable platform." D= ynegydirect is a platform much like Enron's flagship EnronOnline, which it = turned off Wednesday and which just a month ago was the largest online ener= gy-trading platform, accounting for an average of $3 billion in trades a da= y. Dynegy's trading exposure to Enron is $75 million, and the company is n= o longer trading with its embattled former merger partner and fellow Housto= n industrial giant, Bergstrom said. "Dynegy's customer-based, asset-backed= energy delivery network has been the driver of our 45 percent compounded a= nnual growth rate for the past 16 years and will continue to provide us wit= h earnings sustainability and future growth." Watson said. As part of the = deal, Dynegy had the option to keep Northern Natural Gas, Enron's highly va= lued natural-gas pipeline, even if the agreement were terminated. The compa= ny said during the call that it would exercise that option. ChevronTexaco = (CVX ) , which owns a 27 percent stake in Dynegy, originally gave $1.5 bill= ion to the company in the transaction. Dynegy used the money to purchase 10= 0 percent of the preferred shares of Northern Natural Gas. Enron has 180 d= ays from the date the merger agreement was signed, Nov. 9, to repurchase th= e pipeline system, Watson said. Enron said in a statement that it was revie= wing Dynegy's claim of rights to Northern. Enron representatives did not p= articipate in the call, and Dynegy executives said they had been advised ag= ainst the customary practice of taking questions. Enron said it has tempor= arily suspended payments "other than those necessary to maintain" its core = energy businesses and added that it is exploring options to keep those oper= ations alive. "To do this, we will work to retain the employees necessary t= o the continuing operations of our trading and other core energy businesses= ," said Enron Chairman and CEO Ken Lay. Enron told employees their questio= ns would be answered in due course and they would receive their paychecks o= n Friday. Analysts said the next step for Enron would likely be a bankrupt= cy filing. "Chapter 11 is not the worst of all worlds by any means," said = John Olson, a Houston-based energy analyst. "The key to salvaging the busin= ess is the level of debtor-in-possession financing they can get to allow th= em to trade in some realistic fashion." DIP financing takes precedence ove= r all other claims, he said. "The equity people are now at the very bottom= of the barrel, and the only people lower than them are [the people who fil= ed] the stockholder suits," Olson said. In a note to clients, analyst Mich= ael Heim of A.G. Edwards said that Enron, without Dynegy, has "no value." = "Enron ... will most likely be declared bankrupt shortly," Heim said. "Unli= ke other bankruptcies in which a stock continues to trade at a low price, t= here are no hard assets to salvage." Ahead of this news, S&P cut Enron's r= ating to B-minus, or junk status, from BBB-minus, which is the lowest inves= tment-grade rating. The rating agency said that the move reflects "concerns= about the viability of the merger agreement with Dynegy and liquidity impl= ications of the possible failure of that transaction. The ratings are place= d on CreditWatch with developing implications." Moody's made its announcem= ent of a rating cut to B2 from Baa3 and said that Enron's debt remains unde= r review for additional downgrade. In its report, Moody's cited the likeli= hood of a Dynegy-Enron breakup, fueled by Enron's declining financial perfo= rmance, as the reason for the downgrade. "Moody's ... Baa3 rating was pred= icated on good prospects for completion of the merger with Dynegy and reaso= nable prospects for marginally investment-grade characteristics of the merg= ed entity," Moody's wrote. "Furthermore, lack of confidence in Enron by its= trading counterparties appears to be adversely affecting Enron's core trad= ing operations." For Enron to survive, the credit agency said, it's impera= tive that the volumes from the trading business remain profitable. Fitc= h, which had rated Enron BBB-minus, lowered the rating to CC, which "indica= tes that default of some kind appears probable." The U.S. Treasury is keep= ing an eye on the impact the Enron fallout is having on the credit markets,= spokeswoman Michele Davis said Wednesday. "We are monitoring credit mark= ets as we do every day," Davis said. "Markets always fluctuate and we haven= 't seen anything extraordinary." Treasury said that outside its surveillanc= e of credit markets, it would refer any inquiries on energy trading to the = Federal Energy Regulatory Commission or the Commodity Futures Trading Commi= ssion. Earlier in the day [IMAGE] Dynegy, which had originally offere= d to buy Enron for $9 billion in stock, confirmed Tuesday that the two comp= anies were discussing a new deal structure, and it said ahead of the credit= -ratings and eventual termination news Wednesday that discussions were cont= inuing. "I'm not aware of any changes in any status of the merger," Dynegy= spokesman John Sousa said before the S&P announcement. The merger agreemen= t contained a material adverse-affect clause that, if triggered, allowed Dy= negy to walk away from the deal. The decline in Enron's stock price and in= formation contained in the company's 10-Q filing of Nov. 19 could had activ= ated the clause, but Olson said the S&P downgrade clearly fit the descripti= on of a material adverse affect. Also Wednesday, UBS Warburg and RBC Capi= tal cut their ratings on Enron, to "hold" from "strong buy" and from "stron= g buy" to "buy-speculative," respectively. Lisa Sanders is a Dallas-based = reporter for CBS.MarketWatch.com. =09=09=09[IMAGE]=09=09=09=09=09 =09=09=09[IMAGE]=09=09[IMAGE]=09=09=09=09=09 =09=09[IMAGE]=09=09=09=09=09=09=09=09 [IMAGE]=09[IMAGE]=09=09=09=09Intraday data provided by S&P Comstock and su= bject to terms of use. Historical and current end-of-day data provided by = FT Interactive Data. .=09[IMAGE]=09=09[IMAGE]=09=09 [IMAGE]=09=09=09=09=09=09[IMAGE]=09[IMAGE]=09[IMAGE]=09=09 [IMAGE]=09=09=09=09=09=09[IMAGE]=09[IMAGE]=09[IMAGE]=09[IMAGE]=09
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