|
|
Enron Mail |
Premiums Stay High on Enron's Near Options, And `Doubling Up' Date Looms fo=
r Tax Losses The Wall Street Journal, 11/23/01 Dynegy Deal To Buy Enron Hits Crossroads The Wall Street Journal, 11/23/01 Enron Faces Suits by 401(k) Plan Participants The Wall Street Journal, 11/23/01 From Sunbeam to Enron, Andersen's Reputation Suffers The New York Times, 11/23/01 Chase and J. P. Morgan's Paper Anniversary A Year After the Merger, Rosy Plans Meet Reality The New York Times, 11/23/01 COMPANIES & FINANCE THE AMERICAS - Enron 'awaiting' capital injections, say= officials. Financial Times, 11/23/01 USA: UPDATE 2-Enron bleeds again as Dynegy deal doubts grow. Reuters English News Service, 11/23/01 USA: Enron avoids junk status, but observers wonder how. Reuters English News Service, 11/23/01 USA: US Corp Bonds-Enron slips again in quiet market. Reuters English News Service, 11/23/01 USA: Enron shares seesaw on concerns over Dynegy deal. Reuters English News Service, 11/23/01 TALES OF THE TAPE: Energy Traders' Perfect Storm Stalls Dow Jones News Service, 11/23/01 U.S. Energy Exhange May Scrap Online Platform Plans Dow Jones Energy Service, 11/23/01 Enron Woes May Endanger Plans For Mozambique Steel Proj Dow Jones International News, 11/23/01 STOCKWATCH Enron down, Dynegy up on lingering merger uncertainty AFX News, 11/23/01 USA: Houston economy seen weathering major layoffs. Reuters English News Service, 11/23/01 Dabhol Pwr Confirms Arbitrator Panel Mtg In Singapore Sat Dow Jones International News, 11/23/01 Enron SEC filing contained information Dynegy was unaware of - report AFX News, 11/23/01 Dynegy's Decision to Buy Enron Hits Crossroads Amid Rising Financial Woes Dow Jones Business News, 11/23/01 Employees' Lawuit Says Enron Hurt Retirement Funds Courts: The suit claims = the energy firm urged workers to invest in company stock just before it plu= nged. Los Angeles Times, 11/23/01 Portland utility's fate tied to Enron's future The Seattle Times, 11/23/01 Enron Shares and Bonds Fall on Concern About Takeover (Update5) Bloomberg, 11/23/01 KKR, Blackstone Are Among Likely Enron Investors, Analyst Says Bloomberg, 11/23/01 Microsoft MSN Fast Web Access Expansion Slowed by Enron Suit Bloomberg, 11/23/01 Options Report Premiums Stay High on Enron's Near Options, And `Doubling Up' Date Looms fo= r Tax Losses By Kopin Tan Dow Jones Newswires 11/23/2001 The Wall Street Journal C11 (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -- Volatility and premiums on Enron's near-month options remain ex= tremely high. It is a sign that investors are willing to pay a rich price f= or option protection and expect the stock to be unsettled as the Houston co= mpany sorts through its credit and debt problems and seeks to calm frazzled= investors.=20 Enron near-month defensive puts traded heavily in an otherwise quiet sessio= n Wednesday, as investors bought them to hedge. The December 5 puts traded = more than 10,000 contracts and jumped 45 cents to $1.10 at the Chicago Boar= d Options Exchange. The stock closed down $1.98, or 28%, to $5.01, as of 4 = p.m. in New York Stock Exchange composite trading. Enron's calls traded actively as some investors sold them to generate incom= e. Traders noted some call buying -- especially after Enron procured a thre= e-week extension on a $690 million note -- as some hopeful investors bet on= Enron pulling through its troubles and proceeding with its merger with Dyn= egy Inc. Enron's December 5 calls traded more than 14,500 contracts, compar= ed with open interest of 710, as they fell $1.45 to $1.15 at the CBOE.=20 For investors who want to book a tax loss on beaten-down stocks, the "wash = sale" rule can be a hurdle, because it essentially prevents taxpayers from = selling stock or securities at a loss and then reacquiring "substantially i= dentical" securities within a 30-day period before or after that loss. This= poses a problem for those who want to book a loss yet own stocks whose pri= ces now make them attractive "buy" candidates.=20 In addition, the Internal Revenue Service has taken the position that the w= ash-sale rule will disallow a loss if the investor sells an in-the-money pu= t, because there is a strong likelihood that stock will be put to or acquir= ed by the investor.=20 So investors typically get around the wash-sale rule by "doubling up": buyi= ng additional stock or options, waiting at least 31 days, and then selling = the original stock to book the loss. Investors double up by buying calls, w= hich locks a price to buy stock and achieves the same effect as buying addi= tional stock. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Dynegy Deal To Buy Enron Hits Crossroads By Rebecca Smith and John R. Emshwiller Staff Reporters of The Wall Street Journal 11/23/2001 The Wall Street Journal A3 (Copyright © 2001, Dow Jones & Company, Inc.) Even as it reiterated its intention to purchase Enron Corp., Dynegy Inc. is= coming under increasing pressure to renegotiate or walk away from the mult= ibillion-dollar deal.=20 The pressure is stemming from the continuing slide in the price of Enron sh= ares and the mounting financial problems at the Houston energy-trading comp= any, the nation's biggest marketer of electricity and natural gas. During t= he past month, Enron has taken a $1 billion write-off of assets, revised do= wnward the earnings of the past several years and taken a $1.2 billion redu= ction in shareholder equity. The problems have been due largely to dealings Enron had with private partn= erships, run by some of its own executives, under investigation by the Secu= rities and Exchange Commission. In an SEC filing Monday, Enron disclosed hu= ndreds of millions of potential additional write-offs as well as the possib= ility that its weakening financial condition could force it to repay more t= han $2 billion in loans by the end of the year.=20 As of 4 p.m. Wednesday in New York Stock Exchange composite trading, Enron = shares fell $1.98, or 28%, to $5.01 each after having dropped 23% Tuesday. = In excess of 115 million shares traded Wednesday, more than four times the = volume of any other Big Board stock. Enron's bonds also again traded sharpl= y lower, market observers said.=20 The turmoil spilled over to Dynegy's stock, which also was among the most a= ctively traded on the New York Stock Exchange. As of 4 p.m. Wednesday, Dyne= gy shares fell $1.94 to $39.76 each.=20 On Wednesday, Dynegy issued a statement in which Chairman and Chief Executi= ve Chuck Watson said his company was working "to accelerate the regulatory = approvals required to complete the merger in accordance with the previously= announced agreement" though it continued to perform "due diligence" on Enr= on.=20 Under the merger agreement, Dynegy has opportunities to renegotiate or walk= away from the deal if Enron's financial and legal problems become severe e= nough. However, some observers said it can be difficult to invoke these so-= called material adverse change clauses. They point to a decision earlier th= is year by a Delaware Chancery Court judge who forced Tyson Foods Inc. to c= omplete a planned purchase of IBP Inc. even though Tyson, a Springdale, Ark= ., food-products company, had wanted to cancel the transaction because of a= drop in IBP's earnings and accounting problems at an IBP unit.=20 Dynegy officials didn't return calls seeking comment. To complete the deal,= two-thirds of Dynegy shareholders and a majority of Enron shareholders wou= ld have to give their approval. No dates for those votes have been set.=20 One person familiar with the merger plans said the SEC filing Monday by Enr= on contained information Dynegy hadn't known about. Dynegy representatives = planned to work through the weekend evaluating the importance of this new i= nformation as part of the company's due diligence, this person said. It cou= ldn't be determined what the new information was.=20 The merger agreement, announced Nov. 9, calls for Dynegy to exchange 0.2685= share for each of Enron's roughly 850 million fully diluted shares, giving= the purchase a value of about $9 billion at Dynegy's current stock price. = However, from a price standpoint, the deal is appearing less attractive to = Dynegy.=20 On the day of the merger announcement, Enron shares were trading at about $= 8.63 each, or about 83% of the purchase price under the exchange ratio. As = of Wednesday, Enron's market price was only about 47% of the merger-formula= price. Such a sharp deterioration is unusual following a merger announceme= nt, when the stock price of the company being acquired generally begins tra= ding relatively close to the offering price.=20 Sentiment among Wall Street analysts also is turning against the merger. In= itially, many analysts lauded the merger as a move that would rescue Enron = and provide a major boost to Houston-based Dynegy. Dynegy and Enron officia= ls have predicted that the merger, supposed to be completed late next year,= would significantly and immediately increase Dynegy's earnings.=20 Now analysts are challenging that assumption. Ron Barone, managing director= at UBS Warburg LLC, said he believes that because of Enron's financial pro= blems, a combined company would actually have lower earnings next year than= Dynegy would have by itself. Mr. Barone said he thinks a "likely scenario"= is that the merger formula will be renegotiated sharply down to about 0.15= Dynegy share for each Enron share.=20 Such a ratcheting down wouldn't be without precedent in the deal. According= to one person familiar with the merger negotiations, Dynegy reduced the ex= change formula at least once prior to the Nov. 9 announcement because of En= ron's rapidly sinking stock price, which at the beginning of this year was = above $80 a share.=20 In perhaps the most significant sign of the turning tide on Wall Street, Go= ldman Sachs analyst David Fleischer lowered his ratings on Enron and Dynegy= . A longtime Enron fan, Mr. Fleischer issued a report expressing doubts tha= t the merger would help Dynegy's earnings and whether Enron could "recover = the significant business that has been lost" in its giant energy-trading op= erations. "The Enron machine continues to sputter," Mr. Fleischer wrote.=20 Some observers say that if Dynegy walked away from the deal or tried to ren= egotiate the terms significantly, Enron might be pushed into a bankruptcy-l= aw filing. Without the Dynegy acquisition and continued support from its ba= nkers and customers, an Enron bankruptcy-court filing "is highly possible,"= said Ralph Pellecchia, a senior director at Fitch, a credit-ratings agency= . On Wednesday, Fitch maintained its credit rating on Enron at just one not= ch above noninvestment-grade, or "junk," status. But Fitch also said it bel= ieved Enron's trading partners had made "significant cash collateral calls"= in recent days that are "well in excess of previous expectations," contrib= uting to "liquidity pressures."=20 Among the advisers Enron has hired during its current crisis is the law fir= m of Weil, Gotshal & Manges, which specializes in bankruptcy and corporate-= workout situations. Asked about a possible bankruptcy filing, an Enron spok= eswoman said the company expects the Dynegy deal to go through and therefor= e doesn't expect to have to look at alternatives to the merger. Since the m= erger announcement, Enron Chairman Kenneth Lay has said his company had alt= ernatives to the Dynegy deal but he has declined to identify them. Enron sa= id it made some progress improving its financial position. The company said= it reached a final agreement with units of J.P. Morgan Chase & Co. and Cit= igroup Inc. on the remaining $450 million of a previously announced $1 bill= ion in secured credit lines. Enron said lenders had agreed to extend repaym= ent of an existing $690 million note to mid-December from next week. The sp= okeswoman said a restructuring of that obligation is expected to be complet= ed next month so that repayment wouldn't be required this year.=20 ---=20 Thaddeus Herrick and Robin Sidel contributed to this article. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Faces Suits by 401(k) Plan Participants By Theo Francis and Ellen Schultz Staff Reporters of The Wall Street Journal 11/23/2001 The Wall Street Journal C1 (Copyright © 2001, Dow Jones & Company, Inc.) Enron Corp., the embattled Houston energy and trading company, has been sue= d by members of its employee-retirement plan, which has suffered losses bec= ause of Enron's plummeting stock price.=20 Two separate lawsuits, filed in federal court in Houston, allege Enron misl= ed participants in its 401(k) retirement plan about the risks of investing = in the company's shares and note that the company forced the employees to r= emain invested in its stock even as the shares fell. Amid growing disclosur= es of financial problems in recent weeks, the company "locked down" the ret= irement plan from Oct. 17 to Nov. 19 to make administrative changes, which = prevented employees from selling Enron shares as the share price collapsed. Enron, which recently agreed to be acquired by Dynegy Inc., Houston, becaus= e of mounting financial problems, has seen its stock price fall to $5.01 on= Wednesday from a peak of nearly $90 a share last year. The decline has bee= n costly to participants in Enron's retirement plan because more than 60% o= f the 401(k) assets were invested in Enron shares at the end of last year, = according to one of the suits.=20 The first suit was filed Nov. 13 on behalf of plan participants by Campbell= Harrison & Wright LLP, a Houston law firm, and the second was filed Tuesda= y by Seattle-based Hagens Berman LLP. Both seek class-action certification.= =20 Enron said its corporate policy is not to comment on pending lawsuits. A sp= okeswoman also said the company's 401(k) plan offers participants 18 invest= ment choices, one of which is company stock.=20 The company's stock has fallen amid mounting losses and disclosures that it= had extensive off-balance-sheet dealings with a web of partnerships headed= by former company officials. The Securities and Exchange Commission has la= unched a formal investigation into the company's accounting, and Enron has = said it will restate years of financial information.=20 The suits against Enron are the latest of a series of suits filed against c= ompanies over losses in the company-stock portion of their 401(k) plans. Th= e suits allege the plan trustees breached their fiduciary duties by continu= ing to offer company stock, even after they became aware of serious busines= s problems that would hurt the stock price. All the suits are pending.=20 As with most of these companies, Enron matches employee contributions to th= e 401(k) with shares of Enron stock, and also offers Enron stock as an inve= stment choice, in addition to a variety of mutual funds. About $1.3 billion= of the plan's $2.1 billion in assets was invested in Enron shares at the e= nd of 2000, according to the suit filed by Campbell Harrison.=20 Pamela Tittle, a participant in the 401(k) plan who worked in the finance d= epartment and a named plaintiff in the Enron suit filed by Campbell Harriso= n & Wright, had roughly 2,000 shares of Enron stock in her retirement accou= nt and has suffered losses of about $140,000 as a result of the stock's dec= line. The suit alleges that the trustees of the Enron 401(k) plan violated = their fiduciary duties by not informing plan participants that the company = stock was in peril.=20 The suit filed by Hagens Berman, also alleges that the company failed to wa= rn participants about risks of remaining invested in Enron stock. In additi= on, it accuses Enron of systematically misrepresenting its financial result= s since 1998 in connection with the partnerships under investigation by the= SEC.=20 Roy E. Rinard, a lineman for Enron in Oregon who is a named plaintiff in th= e suit filed by Hagens Berman, has seen the value of his retirement plan fa= ll to $70,000 from $470,000, largely as a result of the decline in Enron's = stock. "I feel like I have been betrayed," Mr. Rinard said in press release= issued by his lawyers. "I lost my savings, my plans for the future, everyt= hing."=20 Under federal pension law, companies are allowed to offer their own stock i= n retirement plans, and are allowed to force employees to hold onto the sto= ck. Enron doesn't let employees diversify out of shares they receive as mat= ching contributions to the 401(k) plan until age 50.=20 However, plan trustees are supposed to operate the plan in the best interes= ts of the participants, which includes choosing prudent investments. Genera= lly, to prove that the plan's administrators breached their fiduciary dutie= s, employees must show that the trustees knew the stock was a bad investmen= t. This presents a high hurdle, so it is not surprising that prior lawsuits= over losses in company stock in 401(k) plans have generally come in the wa= ke of allegations of accounting irregularities.=20 Lynn Sarko, one of Ms. Tittle's attorneys with Seattle's Keller Rohrback LL= P, is also co-lead counsel in a similar lawsuit against Lucent Technologies= Inc., Murray Hill, N.J. Another firm representing Ms. Tittle is Dalton Got= to Samson & Kilgard PLC, which is lead counsel in a similar suit against Ik= on Office Solutions Inc., Malvern, Pa. The two law firms are representing M= s. Tittle with Campbell Harrison & Wright.=20 The suits against Lucent and Ikon, like the suit against Enron, allege that= then-current plan trustees kept offering company stock in the plan despite= knowing of serious business problems that would hurt the stock price. Repr= esentatives for Ikon and Lucent say their companies didn't require employee= s to invest in the company stock, and educated employees about the need for= diversification.=20 The suit in which Mr. Rinard is plaintiff notes that on Oct. 17, a day afte= r Enron announced the company was taking a nonrecurring charge totaling $1.= 01 billion in the third quarter, Enron "locked down" the 401(k) plan's asse= ts, preventing participants from selling Enron shares. (A "lock-down" occur= s when a retirement plan is transferred from one administrator to another, = and generally lasts several weeks, during which time participants can't mak= e changes in their investment choices).=20 The lock-down was lifted on Nov. 19. In the interim, on Nov. 8, Enron annou= nced it would be forced to restate downward its reported financial results = from 1997 through 2000. By the time the lock-down was lifted, as a result o= f all the negative news the shares had fallen to below $9 a share from $32.= 20 on Oct. 17, when the lockup started, Hagens Berman attorney Karl Barth s= aid.=20 "They were locked into it right when Enron knew it was going to be announci= ng some really bad news," Mr. Barth said. "Mr. Rinard's looking at having n= o retirement savings now. It's a horrible thing to have to start over in yo= ur 50s." Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business/Financial Desk; Section C From Sunbeam to Enron, Andersen's Reputation Suffers By FLOYD NORRIS 11/23/2001 The New York Times Page 1, Column 2 c. 2001 New York Times Company THIS has been the worst year ever for Arthur Andersen, the accounting firm = that once deserved the title of conscience of the industry. The Securities = and Exchange Commission filed civil fraud complaints against the Andersen p= artner who audited Sunbeam and against the firm itself in the Waste Managem= ent case.=20 Now Enron has repudiated the financial statements that were certified by Ar= thur Andersen, in the process shaving more than half a billion dollars from= the company's reported profits in recent years. All of which raises the question: Has Arthur Andersen become the black shee= p of the accounting industry?=20 It is not an easy question to answer, and not everyone is willing to rush t= o judgment. ''If you want to attack Andersen for Enron, you need to know mo= re than we know,'' Arthur Levitt, the former chairman of the Securities and= Exchange Commission, said this week.=20 But if there is a thread connecting what is known about the three cases, it= is materiality. In all three cases, Andersen auditors spotted bad accounti= ng but were persuaded it was immaterial and therefore allowed it to go ahea= d.=20 Materiality is one of those flexible concepts that can get accountants into= trouble. The idea is that it doesn't much matter if a few little things we= re gotten wrong. But they can add up.=20 At Enron, however, they did not add up to that much -- a total of $93 milli= on over four years. The biggest restatement of Enron profits concerns a rel= ated party that Enron now says should have been consolidated. It is not cle= ar if Andersen had the facts needed to make that decision at the time.=20 To those who treasure the role of auditors, the humiliation of Andersen is = painful. Back in the 1950's, it was Leonard Spacek, Andersen's managing par= tner, who warned that ''the profession's existence is in peril'' because it= was not showing enough independence. His public prodding was crucial in ma= king the industry do a better job. Two decades ago, when the issue on the t= able was pension accounting, Andersen was the only major accounting firm to= break with clients and push for good rules.=20 Now Andersen's backbone is open to question. It was evidence that senior pe= ople at Andersen repeatedly gave in to pressure from Waste Management that = led the S.E.C. to bring that suit, which the firm chose to settle without a= dmitting it had done anything wrong. The partner that the S.E.C. says looke= d the other way at Sunbeam is fighting the accusations, and Andersen says h= e acted properly.=20 Lynn Turner, who was chief accountant of the S.E.C. at the time and is now = director of the Center for Quality Financial Reporting at Colorado State Un= iversity, says what is happening to Andersen now is reminiscent of what hap= pened to Coopers & Lybrand when he was a partner there and the firm had a s= eries of highly publicized blown audits.=20 ''We got bludgeoned to death in the press,'' he said. ''People did not even= want to see us at their doorsteps. It was brutal, but we deserved it. We h= ad gotten into this mentality in the firm of making business judgment calls= .'' By that he meant that the firm paid too much attention to not offending= clients and not enough to good accounting.=20 For Andersen to avoid that fate, its relatively new chief executive, Joseph= Berardino, who declined to be interviewed for this column, will need to se= t a tone inside the firm making clear that he expects auditors to show the = backbone that Mr. Spacek epitomized. And then he will have to convince the = public of that. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business/Financial Desk; Section C Chase and J. P. Morgan's Paper Anniversary A Year After the Merger, Rosy Plans Meet Reality By RIVA D. ATLAS 11/23/2001 The New York Times Page 1, Column 5 c. 2001 New York Times Company When William B. Harrison Jr. speaks of last year's $31 billion merger of J.= P. Morgan and the Chase Manhattan Corporation, he speaks proudly of a deal= that he considers to be a capstone to his 34-year career of helping build = a giant of the banking business.=20 ''This is the first merger I've been part of,'' said Mr. Harrison, the chie= f executive of the combined bank, ''where I feel our core business is compl= ete.'' The Chase-J. P. Morgan combination helped advance the bank into the investm= ent banking elite, just as Mr. Harrison intended. But with Wall Street and = the economy in far different places today than they were when the deal was = put together, the many mergers, stock sales and other money-making opportun= ities that were supposed to justify the high-priced acquisition have largel= y dried up for now.=20 Consequently, deal makers and analysts who follow the bank are already spec= ulating that Mr. Harrison, 58, may ultimately be compelled to do yet anothe= r large deal, this time to diversify his business away from its heavy empha= sis on Wall Street.=20 J. P. Morgan Chase has won some prominent assignments, like handling the re= vampings of troubled giants like Lucent and, more recently, Enron, the bele= aguered energy trading company.=20 But while J. P. Morgan Chase is proud of serving alongside Citigroup as bot= h lead lender and adviser to Enron on its acquisition by Dynegy, the dual r= ole it has worked to achieve sometimes proves complicated for the bank. Wit= h Enron's shares in free fall as more information comes out about its hidde= n debts, J. P. Morgan Chase has been scrambling to maintain the support of = other banks while simultaneously keeping the merger with Dynegy on track.= =20 Thanks largely to the slump on Wall Street, J. P. Morgan Chase's profits fe= ll by two-thirds in the third quarter, to $449 million from $1.4 billion in= the period a year ago. Its stock has dropped 15 percent this year, more th= an other banks' shares. The bank's stock is ahead of investment banks like = Goldman Sachs, with which J. P. Morgan Chase increasingly competes.=20 ''The jury is still out in many respects on this merger,'' said Judah Kraus= haar, an analyst at Merrill Lynch. Nevertheless, he likes J. P. Morgan Chas= e's stock, he said, because ''expectations are very low.''=20 All J. P. Morgan Chase's competitors are suffering from the slowdown on Wal= l Street. But some, like Citigroup, are better diversified and have greater= involvement in old-fashioned consumer banking, which is proving to be a st= rong moneymaker this year.=20 Nearly a third of J. P. Morgan Chase's revenues are consumer-oriented. By c= ontrast, its chief New York rival, Citigroup, gets half its revenues from c= onsumer businesses.=20 ''The timing of the merger was bad,'' said Steven Wharton, a banking analys= t at Loomis, Sayles & Company, which owns about a million J. P. Morgan Chas= e shares. ''There's no disputing that.''=20 Actually, Mr. Harrison disputes it. ''I can't tell you how happy I am about= having done this merger,'' he said in a recent interview. ''While there ar= e pluses and minuses to operating in a weak economic environment, we have a= much stronger platform to manage with during this difficult time.''=20 In Mr. Harrison's favor is his battle-tested team of top executives who hav= e worked together for a decade or more. Few executives remain in the top sp= ots from the old J. P. Morgan. Instead, most major posts are filled by mana= gers who have worked with Mr. Harrison since his days at Chemical Bank, whe= re he spent most of his career. Mr. Harrison's team successfully gobbled up= Manufacturers Hanover Bank in 1991, then followed that with Chemical's mer= ger with Chase Manhattan in 1996 before incorporating Morgan into the fold = last year.=20 The group of Chemical veterans includes Marc J. Shapiro, who oversees finan= ce and risk management at J. P. Morgan Chase; Donald H. Layton, one of two = leaders of investment banking; and James B. Lee Jr., the bank's senior deal= maker. The team also includes Dina Dublon, the bank's chief financial offi= cer.=20 Two other senior executives have also lived through big deals. Geoffrey T. = Boisi, the other investment banking leader, was the one-time investment ban= king chief at Goldman, Sachs. David A. Coulter, in charge of Chase's retail= bank, had been chief executive of Bank of America before it was bought by = NationsBank.=20 ''There aren't many teams that have gone through as many mergers as Bill Ha= rrison and his team,'' said Mark G. Solow, managing principal at GarMark Ad= visors, an investment firm, and a former senior executive at Chemical.=20 Still, Ms. Dublon acknowledged that the tough economy was making the J. P. = Morgan takeover more difficult than the earlier combinations.=20 ''In general, mergers are very hard on morale,'' she said. ''There is no qu= estion that this one has a tougher emotional toll.''=20 The bank's executives are making the best of a bad situation. They have tak= en advantage of the slowdown to cut around 8 percent of the combined banks'= staff, or about 2,500 more employees than anticipated at the time the merg= er was announced.=20 Many of these job cuts were aimed at high-cost investment bankers: J. P. Mo= rgan Chase expects that 6,000 jobs in its investment banking division will = have been eliminated by the end of the year.=20 ''We have focused on the tougher jobs to cut,'' Ms. Dublon said.=20 In some ways the overall market turmoil has made it easier for J. P. Morgan= Chase to overhaul its staff. With fewer jobs available on Wall Street, Mr.= Shapiro said, the employees who are left behind are less apt to complain a= bout changes in their jobs. ''People have fewer options,'' he said, ''so yo= u have a little more control over the process.''=20 Thanks partly to these cuts, the bank estimates the saving from cost cuttin= g will be $3.6 billion annually, compared with an original projection of $2= billion at the time of the merger.=20 The cost cutting has helped compensate somewhat for a sharp drop in profits= in the bank's core businesses. ''What we can control and are managing very= aggressively is the expenses of the company,'' Ms. Dublon said in a confer= ence call with reporters on Oct. 17, the day earnings were announced.=20 Aside from cost cuts, the weakness on Wall Street makes it hard for the ban= k's executives to point to tangible gains in investment banking, where fees= were down 24 percent in the third quarter. But Mr. Harrison points to mark= et-share gains the bank has achieved at the expense of competitors on Wall = Street. He hopes that when the investment banking business revives, J. P. M= organ Chase will hold on to these gains.=20 The bank is particularly proud of its standing in two areas: mergers and ac= quisitions, and the underwriting of large investment-grade bond deals.=20 The bank ranked 5th worldwide in the highly profitable category of advising= on mergers during the first nine months of 2001, up from Chase's 12th-plac= e finish and J. P. Morgan's 10th-place standing during the same period last= year, according to Thomson Financial Securities data.=20 The merger and acquisitions business, which Chase had been slowly building = for years, is stronger following the merger with J. P. Morgan, said Mr. Lee= , a vice chairman at the bank. As a result, the bank is able to win assignm= ents providing advice to customers who dealt with the old Chase only for lo= ans.=20 Mr. Lee remains proud of the bank's work with Enron, the energy company, de= spite its troubles. J. P. Morgan Chase, along with Citigroup, raised $1 bil= lion in bank financing for Enron earlier this month. It was also hired to a= dvise the company, which hopes to be saved from collapse by being taken ove= r by Dynegy.=20 The old Chase, long a lending powerhouse, would have had a good shot at lea= ding the bank financing, but an advisory role would have been less certain.= Mr. Lee said the investment banker advising Enron came from the old J. P. = Morgan. But with merger activity slow, there are few such deals to go aroun= d.=20 The bank is also proud of its strength in long-term investment-grade bonds,= another area that business executives say has been enhanced by the merger.= It moved up to second place in that area so far this year, compared with s= ixth place a year ago.=20 The bank has taken advantage of a boom in large corporate bond offerings, a= surge driven by today's low interest rates. In May J. P. Morgan Chase rais= ed $12 billion in bonds for WorldCom, the telecommunications company, in th= e largest corporate debt deal in the United States on record.=20 Unfortunately for J. P. Morgan Chase, the fees for underwriting investment-= grade debt are small compared with the money to be earned coordinating offe= rings of stock, where J. P. Morgan Chase remains a second-tier competitor.= =20 The bank actually lost market share in the rankings for underwriters of sto= ck, falling to 9th place this year, compared with the old J. P. Morgan's 6t= h-place finish a year ago. (Chase was 11th.)=20 Mr. Harrison said the bank was taking advantage of the slowdown in stock of= ferings to build momentum slowly in that business. ''We think we have a cha= nce in the second half of this year to be in the top five,'' he said.=20 Given the slowdown, some bankers predict that Mr. Harrison will ultimately = do another deal, either to expand his consumer banking business or to bolst= er weak areas in investment banking, like the equity division.=20 ''The general view is that the combination with J. P. Morgan didn't do enou= gh,'' one investment banker said.=20 Mr. Harrison disagrees: ''I don't feel,'' he said, ''we need to do another = large deal to be successful.'' Photo: William B. Harrison Jr., the chief executive, says he has no doubts = about the wisdom of forming J. P. Morgan Chase, even though the the economy= has slowed since then. ''I can't tell you how happy I am about having done= this merger,'' he said. (Associated Press) Chart: ''Still Looking for the = Right Mix'' When J. P. Morgan and Chase announced their merger in September= 2000, the combination's strength in investment banking seemed sure to be s= uccessful. But the bank's stock has suffered with Wall Street's slump, and = its more consumer-oriented and better-diversified rival, Citigroup, has far= ed better. Graph tracks the daily closing prices of Citigroup and J. P. Mor= gan Chase shares from September 2000 through November 2001. A DIFFERENT BLE= ND OF BANKING Based on revenue, before overhead expenses (first nine months= of 2001). J. P. MORGAN CHASE* Consumer and small business: 32% Investment = management and private: 9% Corporate and investment: 58% CITIGROUP Consumer= and small business: 54% Investment management and private: 4% Corporate an= d investment: 42% *Does not add to 100 because of rounding. (Sources: Bloom= berg Financial Markets; company reports)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 COMPANIES & FINANCE THE AMERICAS - Enron 'awaiting' capital injections, say= officials. By ROBERT CLOW. 11/23/2001 Financial Times © 2001 Financial Times Limited . All Rights Reserved Officials working to shore up Enron's balance sheet yesterday said the stru= ggling energy trader hoped to receive capital injections of more than $1.5b= n as early as next week.=20 Enron is in talks about $250m investments with JP Morgan Chase and Citigrou= p and is also hoping to raise at least $1bn from private equity investors. People close to Enron declined to comment on which buyout firms might wish = to invest in Enron. However, the Blackstone Group, which was reported to be= talking to the company before Dynegy made its $9bn rescue bid, is understo= od no longer to be doing so.=20 Members of the 20-strong bank lending group, led by JP Morgan Chase and Cit= igroup, are being asked to defer the maturities of their upcoming debt unti= l after the completion of the merger.=20 The moves comes as reports from Goldman Sachs and Fitch, the credit rating = agency, raised questions about the company's cash flow and its medium-term = viability.=20 David Fleischer, a Goldman Sachs analyst, argued that cash balances were in= adequate to meet $2.8bn of debt obligations falling due before the end of t= he year.=20 People close to Enron say that nearly $1bn of that debt has already been re= structured.=20 The Fitch report said that if the Dynegy deal was not completed, Enron woul= d struggle to meet $9bn of obligations due before the end of next year.=20 People close to Enron insisted that Dynegy remained committed to the merger= and played down talk of renegotiation.=20 Dynegy would shortly issue a statement reasserting its commitment to the de= al, they predicted.=20 © Copyright Financial Times Ltd. All rights reserved.=20 http://www.ft.com. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: UPDATE 2-Enron bleeds again as Dynegy deal doubts grow. 11/23/2001 Reuters English News Service (C) Reuters Limited 2001. (dateline previous NEW YORK, changes byline, updates with bond prices, deta= ils throughout)=20 By C. Bryson Hull HOUSTON, Nov 23 (Reuters) - A long weekend of work faced Dynegy Inc. and pr= oposed acquisition Enron Corp.,, whose worsening stock woes on Friday whipp= ed up fear that the deal could be renegotiated or collapse entirely.=20 Houston-based Dynegy and its advisers were expected to spend the long holid= ay weekend reviewing larger cross-town rival Enron's complex books, as both= parties race against the decline in Enron's stock to complete the thorough= financial examinations a merger requires.=20 Enron shares ended down more than 5 percent, or 27 cents, to $4.74 at the c= lose of abbreviated Friday trading on the New York Stock Exchange. Dynegy s= hares closed up 64 cents, or 1.61 percent, to $40.40.=20 Dynegy on Nov. 9 agreed to pay about $9 billion in stock for Enron. But, af= ter falling 45 percent by Friday's close amid fears it could run out of cas= h before the deal closes, Enron's market capitalization is only about $4.03= billion.=20 At Dynegy's current stock price, its offer for Enron is worth about $10.85 = a share - more than twice Enron's current share price.=20 Executives and advisers from both companies are in the final stages of the = review, known as due diligence, sources familiar with the matter told Reute= rs. The sources said renegotiations had not been discussed as of Friday aft= ernoon, and that such discussions could not occur until the due diligence r= eview is finished.=20 But should it turn up any more unpleasant surprises that qualify as a "mate= rial adverse change" in Enron's business, the likelihood increases of Dyneg= y invoking escape clauses or renegotiating, analysts and observers say.=20 "You've got to believe there is that possibility. There is a 90 percent spr= ead on the deal," said one analyst. "There's unquestionably continued malai= se in Enron's core business and Dynegy has left itself open to renegotiate = with Enron."=20 UBS Warburg analyst Ron Barone on Wednesday wrote in a research report that= the likelihood was "soaring" that Dynegy might discover a material adverse= change.=20 Enron spokeswoman Karen Denne said that, to her knowledge, Dynegy was not r= enegotiating the terms of the acquisition.=20 She repeated that Enron was working on obtaining an additional $500 million= to $1 billion in private equity funding to help shore up the balance sheet= .=20 Dynegy spokesman John Sousa said due diligence was continuing and said the = company remains optimistic about the merger.=20 TRADERS FEARING RENEGOTIATION=20 Enron's recent admission that lower volumes at its trading business - the c= rown jewel of Enron that Dynegy most covets - could cause low fourth-quarte= r earnings raises the possibility that the trading business is losing its p= rofitability. Continued losses there would remove a key attraction for Dyne= gy.=20 Electricity traders said the latest developments are making it seem more li= kely that Dynegy will renegotiate the deal or back out entirely, a move the= y said would leave Enron vulnerable to creditors and a possible bankruptcy.= =20 This week rating agency Fitch Investors said that if Dynegy stepped away fr= om the merger, Enron's credit situation seemed untenable and a bankruptcy f= iling was highly possible.=20 Traders, speaking on condition on anonymity, said they expected Dynegy to s= cramble over the weekend to narrow the growing share price gap. Enron's dep= leted market value and the shrinking volume in its EnronOnline trading syst= em makes it more likely Dynegy could pull out, traders said.=20 Meanwhile, energy traders reiterated that they would shy away from long-ter= m deals with Enron unless they received substantial assurances the company'= s credit rating would soon improve.=20 Enron's bonds on Friday were again talked at junk-bond levels, but even low= er than before.=20 Enron's 6.4 percent notes maturing in 2006 and its 6.75 percent notes were = bid Friday at 57 cents on the dollar, down from a respective 62 and 60 cent= s on Wednesday, according to a trader. The notes yield to maturity a respec= tive 21.5 percent and 17 percent. Its 20-year zero-coupon convertible bonds= fell about 1 cent on the dollar to just over 33 cents.=20 Enron is hovering at the edge of investment-grade as the three main credit = trading agencies consider whether to cut them again, and some observers won= der how Enron has avoided it.=20 "A bond trading in the 50s has nothing to do with an investment-grade secur= ity," said Scott Smith, a principal at Wells Capital Management in San Fran= cisco, where he invests $6 billion in debt and does not own Enron.=20 (Additional reporting by Jim Jelter in San Francisco, Andrew Kelly in Houst= on and Carolyn Koo, Arindam Nag, David Howard Sinkman and Jonathan Stempel = in New York)). Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Enron avoids junk status, but observers wonder how. By Jonathan Stempel 11/23/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Nov 23 (Reuters) - It is rare that holding onto investment-grade = credit ratings means as much to a company as it does now to beleaguered ene= rgy trader Enron Corp. , and some observers are wondering why a cut to junk= status is taking so long.=20 "The sum of all knowledge is in the valuation of the stock and the bonds," = said Scott Smith, a principal at Wells Capital Management in San Francisco,= where he invests $6 billion in debt, and does not own Enron. "A bond tradi= ng in the 50s has nothing to do with an investment-grade security." Enron's 6.4 percent notes maturing in 2006 and 6.75 percent notes were bid = Friday at 57 cents on the dollar, down from a respective 62 and 60 cents on= Wednesday, a trader said. The notes yield to maturity 21.5 percent and 17 = percent.=20 Meanwhile, Enron's shares have sunk 94 percent this year. Since October 16,= when it released third-quarter results, which it has since revised downwar= d, its shares have fallen 86 percent, and its bonds by nearly half.=20 Houston-based Enron, which is trying to merge with smaller cross-town rival= Dynegy Inc. , has been rocked this year by accounting problems, earnings r= estatements, a federal investigation and a top management shuffle.=20 Its advisers were expected this weekend to pore over the company's books, w= hich could lead to a renegotiation of the merger, sources familiar with the= matter said.=20 Moody's Investors Service and Standard & Poor's have cut its senior unsecur= ed debt ratings twice in the last month to their current "Baa3" and "BBB-mi= nus," their lowest investment grades. Fitch has cut its equivalent rating t= o "BBB-minus," and all three agencies have warned of more possible cuts.=20 The stakes could hardly be higher.=20 CASH CRUNCH=20 A downgrade to "junk" status could imperil Enron's trading business, force = it to pay off as much as $3.9 billion of debt issued mostly by two trusts, = and possibly force it to seek bankruptcy protection, analysts said.=20 Enron said in a securities filing it recently had less than $2 billion of a= vailable cash and credit lines.=20 S&P said on Tuesday that Enron faces "liquidity issues," but enjoys an "ali= gnment of interests" with its banks and a near-term financial position that= "is expected to be sufficient" to allow the Dynegy merger.=20 Fitch, meanwhile, said on Wednesday that "our present 'BBB-minus' rating re= sts on the merger possibility and continued support of the lending banks."= =20 If Dynegy walks away, it said, "Enron's credit situation seems untenable wi= th a bankruptcy filing highly possible."=20 Enron said on Monday it had $9.15 billion of obligations due through next y= ear, and a $690 million note that could come due next Tuesday. It later sai= d it got a three-week reprieve.=20 INVESTMENT BANKS=20 Sean Egan, managing director of Egan-Jones Ratings Co. in Philadelphia, lik= ened Enron's ratings situation to those of California's two largest utiliti= es, Pacific Gas & Electric Co. and Southern California Edison .=20 Despite investor unease, those utilities kept their investment-grade rating= s only until they defaulted on debt in January, as California's power crisi= s worsened.=20 On November 8, a day before the Dynegy merger was announced, senior officia= ls from Enron's lead banks - William Harrison, chief executive of J.P. Morg= an Chase & Co. , and Michael Carpenter, who runs Citigroup Inc.'s investmen= t banking arm - met with Moody's to help allay that agency's concerns, a pe= rson familiar with the meeting said.=20 A day later, Moody's, which issued no statement on Enron this week, downgra= ded the company's senior unsecured debt rating, but only to its current "Ba= a3."=20 "Pressure is coming from the investment banks, which have a vested interest= in seeing the Dynegy deal go through," said Egan, whose agency rates Enron= 's debt "BB," its second-highest junk grade. "Investment banking fees will = be substantial."=20 Companies pay for Moody's and S&P ratings, which they need to obtain financ= ing. Egan said his agency receives no such payments.=20 Citigroup and J.P. Morgan declined to comment. Moody's and S&P did not imme= diately return phone calls. Fitch was not immediately available for comment= . Dynegy and Enron on Wednesday, however, reaffirmed their commitment to th= e merger.=20 Wells Capital's Smith isn't sure what to expect.=20 "Enron will remain definitively investment grade if the merger as billed go= es through, ... but there are half a dozen things that could go wrong," he = said. "Obviously, the equity markets are telling you it's very skeptical th= e merger will go through, and the bond market is following its lead."=20 (Additional reporting by Carolyn Koo and Arindam Nag.). Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: US Corp Bonds-Enron slips again in quiet market. By Jonathan Stempel 11/23/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Nov 23 (Reuters) - The U.S. corporate bond market saw very little= activity on Friday, with many traders leaving even in advance of the early= close, though Enron Corp.'s bonds weakened for a third straight session am= id concern over the energy trader's liquidity, and whether its merger with = Dynegy Inc. can go through.=20 "Deadly" was how one trader described activity. Spreads, the yield differen= ce between investment-grade bonds and comparable maturity U.S. Treasuries, = finished unchanged on balance, as did junk bond prices, traders said. Enron's 6.4 percent notes maturing in 2006 and its 6.75 percent notes were = bid at 57 cents on the dollar, down from a respective 62 and 60 cents on We= dnesday, according to a trader. The notes yield to maturity a respective 21= .5 percent and 17 percent. Its 20-year zero-coupon convertible bonds fell a= bout 1 cent on the dollar to just over 33 cents.=20 Meanwhile, Enron's shares fell 5.4 percent, as its advisers prepared this w= eekend to pore over the company's books, sources familiar with the matter s= aid. Analysts said there could be a renegotiation of the Dynegy merger.=20 "The sum of all knowledge is in the valuation of the stock and the bonds," = said Scott Smith, a principal at Wells Capital Management in San Francisco,= where he invests $6 billion of debt, none from Enron. "A bond trading in t= he 50s has nothing to do with an investment-grade security."=20 Ten-year Treasuries closed down 12/32, as their yields rose to 5.011 percen= t.=20 JUNK BOND FUNDS ENJOY INFLOWS=20 Separately, investors poured cash into U.S. junk bond mutual funds for a se= cond straight week amid a newfound tolerance for riskier assets.=20 Investors added a net $628.5 million of cash to the funds in the week endin= g Tuesday, on top of $816.3 million in the prior week, according to AMG Dat= a Services.=20 The two-week inflow is the largest since the second and third week of Janua= ry. The bonds rose more than 6 percent that month, according to Merrill Lyn= ch & Co.=20 "Financial markets have rallied on hopes that the economy will get better i= n the not-too-distant future," said Jan Hatzius, senior economist at Goldma= n Sachs & Co. "A lot of the optimism right now is hope rather than reality,= but we should see signs of improvement in a month or two."=20 Through Thursday, junk bonds have returned 2.93 percent in November alone, = beating all other bonds, and are up 4.71 percent this year, Merrill Lynch d= ata show. The bonds still yield 7.98 percentage points more than Treasuries= , but that's down from 9.29 percentage points at the start of the month.=20 Companies this week sold about $3.83 billion of investment-grade, $533 mill= ion of junk, and $3.3 billion of convertible debt. Investors expect about t= hree more weeks of overall active issuance before the usual year-end slowdo= wn. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Enron shares seesaw on concerns over Dynegy deal. 11/23/2001 Reuters English News Service (C) Reuters Limited 2001. NEW YORK, Nov 23 (Reuters) - Shares of Enron Corp. fluctuated wildly on Fri= day morning, as concerns grew over rival Dynegy Inc.'s $9 billion acquisiti= on of the beleaguered energy trader.=20 Enron shares were down 8 cents, or 1.6 percent, to $4.93 in Friday morning = trading on the New York Stock Exchange, after diving more than 8 percent ea= rlier. The shares are down because of talk that the terms of Dynegy's deal with En= ron could be changed or that the deal could collapse.=20 Dynegy originally agreed to pay about $9 billion in stock for Enron. But, a= fter falling 42 percent since then by Wednesday's close, Enron now sports a= market capitalization of only about $4.26 billion.=20 In a report on Wednesday, Ronald Barone, an analyst at UBS Warburg, suggest= ed that the deal's current exchange ratio of 0.2685 share of Dynegy for eac= h share of Enron could well be readjusted.=20 He suggested that a much lower exchange ratio of 0.15 was more realistic.= =20 "You've got to believe there is that possibility. There is a 90 percent spr= ead on the deal," said one analyst, referring to a potential renegotiation.= =20 "There's unquestionably continued malaise in Enron's core business and Dyne= gy has left itself open to renegotiate with Enron," he continued.=20 Some of Enron's trading partners have scaled back their activity, causing t= hat "malaise." Lower volumes at its trading business, which is the largest = and most coveted portion of its operation, could cause fourth-quarter earni= ngs to come in below expectations, Enron has said. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 TALES OF THE TAPE: Energy Traders' Perfect Storm Stalls By Christina Cheddar Of DOW JONES NEWSWIRES 11/23/2001 Dow Jones News Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- Here's one 2001 outlook that couldn't have been more= wrong.=20 Around this time last year, pundits and fund managers were touting "the per= fect storm" of market forces that were coming together to make the energy t= rading business one to watch in 2001. Then came the California power crisis, and allegations of price-gouging and= fears of credit defaults began to cloud the outlook for the group. That wa= s followed by renewed volatility in power prices, and this time the prices = were headed down, not up.=20 And then came a crushing blow against trading firms - the unraveling of the= industry's largest player, Enron Corp. (ENE).=20 Simply put, the perfect storm stalled, and a business once buoyed by high g= as prices, strong demand and tight supply now lies in tatters.=20 The stocks of companies whom some say should be valued more like growth sto= cks than utilities are instead mired at around nine-times earnings - about = where traditional utilities trade.=20 And the chance for recovery in 2002?=20 Basu Mullick, portfolio manager of the Neuberger Berman Partners fund, is w= illing to bet there is. He thinks energy traders deserve at least the same = price-to-earnings multiple as the broader market's median, which is current= ly between 16- to 17-times future earnings, he said. It's just a matter of = time before the stocks get there.=20 "They were just recovering from Gray Davis," Mullick said, referring to the= governor of California, who had accused "out-of-state" energy traders of a= rtificially inflating the price of power in the state, and triggering the s= tate's energy crisis. "Now, they are recovering from Enron."=20 The fund manager also blames lower commodity prices, warm weather and poor = demand for the recent weak performance in the group.=20 "Energy convergence companies are putting up terrific growth rates," he sai= d. "I don't think they should get the same valuation as a garden-variety ut= ility."=20 Still, others think the stock market is continuing to make distinctions bet= ween the energy traders by taking a harder look at the companies' strategie= s and financial disclosures.=20 Enron's precarious financial situation underscores the importance of accoun= ting issues. Although many of Enron's financial problems aren't solely the = fault of mark-to-market accounting issues, there has been growing attention= paid to this form of financial reporting because of the earnings volatilit= y it can create.=20 Answers Elude Investors=20 Investors are asking hard questions, and not always getting the answers the= y want.=20 Using mark-to-market methods, a company calculates the fair market value of= a commodity position - whether it's a contract, an option, a swap, etc. - = at the time, even if the value of the position is realized over a longer pe= riod. The problem with this method is the actual cash a company realizes fr= om the position might not be the same value the company calculated in its o= riginal assessment. Also, sometimes it isn't easy to calculate the fair val= ue of the commodity position. This is particularly true in instances where = the market for the commodity isn't liquid.=20 Over time, companies with the highest level of disclosure regarding their m= ark-to-market gains will most likely trade at higher multiples to counterpa= rts that provide little or no disclosure, said ABN AMRO Inc. analyst Paul P= atterson.=20 Encouragingly, it appears companies may already be responding to the call f= or added disclosure. According to a survey Patterson conducted, more compan= ies with energy trading units were willing to disclose the details of their= mark-to-market accounting practices during third-quarter conference calls = compared with those in the second quarter.=20 Patterson said he prefers earnings that are cash-based.=20 "All things being equal, we believe reported earnings that more closely ref= lect the timely realization of cash have a higher quality associated with t= hem than earnings that do not," he said.=20 He expects investors to become smarter and learn to distinguish between ear= nings growth through accrual accounting and growth fueled by mark-to-market= accounting.=20 At the end of the day, it is not a matter of simply producing profits, but = being able to say where those earnings came from, said one investor, who ma= nages a pension fund.=20 Some investors also may be placing a greater emphasis on the cash flow the = energy merchants produce.=20 Tim O'Brien, portfolio manager of the Gabelli Utilities Fund, said energy m= erchants that own the physical power assets to back up their trading positi= ons should trade at a premium to an independent power producers and traditi= onal utility companies. Still, the stocks should be valued at less than the= growth rate of the company because of their heavy exposures to commodity p= rices.=20 Energy merchants include companies such as Dynegy Inc. (DYN), Duke Energy C= orp. (DUK) and Dominion Resources Inc. (D).=20 According to O'Brien, the group never deserved to have the price-to-earning= s multiples above 20- to 30-times earnings, which were once paid for the st= ocks.=20 "We all got sucked up by the up-leg of the cycle and forgot just how cyclic= al these companies are," O'Brien said, adding that the average multiple sho= uld be in the high single-digits to the high-teens.=20 As for independent power producers - which are companies without regulated = operations that own power plants to generate electricity to sell and trade = in the wholesale market - the group may wind up being valued on the basis o= f the replacement costs of the assets in their portfolio, according to O'Br= ien.=20 "One analogy is that they are basically like commercial real-estate plays,"= O'Brien said.=20 That could mean stocks such as Calpine Corp. (CPN), which is already in the= lower-half of its trading range, may have further to fall.=20 -By Christina Cheddar, Dow Jones Newswires; 201-938-5166; christina.cheddar= @dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 U.S. Energy Exhange May Scrap Online Platform Plans By Stephen Parker Of DOW JONES NEWSWIRES 11/23/2001 Dow Jones Energy Service (Copyright © 2001, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- The world's largest energy futures exchange is takin= g a second look at plans to launch a major new electronic trading platform = known as eNymex, and may decide to scrap them.=20 Management changes at the New York Mercantile Exchange, along with the succ= ess of Access, an online platform the exchange expanded in September, have = prompted the move. Nymex may decide to combine parts of eNymex with Access, according to sourc= es close to the matter. It is also exploring the idea of alliances with oth= er exchanges, and considering developing "e-mini" contracts - smaller energ= y contracts for Internet-based trade by retail investors.=20 "There's new management in place at the exchange," said Nymex spokeswoman N= achamah Jacobovits. "They're rethinking all of our business strategies, and= one very massive strategy was the idea of this major eNymex B2B (business-= to-business) system launch with a whole new slate of products."=20 Nymex and GlobalView Software Inc., a company that initially worked on buil= ding the eNymex trading system, have sued each other in a dispute over work= on the project.=20 Kiodex, an electronic-trading technology firm that has developed the back e= nd of the eNymex system, took on added development work for the project aft= er GlobalView departed. The trade engine Kiodex was asked to build is "subs= tantially complete, but the company can't speak to Nymex's overall electron= ic-trading strategy," a Kiodex source said.=20 The eNymex platform was conceived as a forum for trading over-the-counter e= nergy products, but Nymex has already moved ahead with plans for trading so= me of them on Access, initially an overnight trading system that was expand= ed in September. It hopes, for example, to launch gas swaps based on delive= ry at the Henry Hub within the next six weeks on Access, Jacobovits said.= =20 "We've expedited plans for a Henry Hub natural gas swap contract," Jacobovi= ts said. "Traders could be looking for OTC clearing on a neutral-based plat= form, which is a factor in that decision."=20 Before Sept. 14, Access was used only to trade energy futures at night, aft= er the day's Nymex session had ended. Use was limited to Nymex members with= dedicated phone systems.=20 The exchange had been planning to expand use of Access, but ended up doing = so sooner than it had expected. On Sept. 14, it started offering Access tra= ding over the Internet, a move that will eventually allow Nymex to open up = trade to more users.=20 The move was intended to help keep futures markets liquid after the Sept. 1= 1 attack on the World Trade Center. Nymex's building, located near where th= e trade towers stood, was shut down for several days after the attacks. Exp= anding its already existent Access system to the Internet helped ease poten= tial liquidity problems that could have arisen from shortened floor trading= hours after Nymex reopened.=20 Development of the eNymex system began last year under the direction of for= mer Nymex Chairman Daniel Rappaport. In August, Nymex said it would launch = the eNymex platform within four to eight months. New Nymex President J. Rob= ert "Bo" Collins Jr. said then that vendor problems had slowed development = of the system's front-end technology and caused the delays. But he still ex= pected eNymex to launch without any meaningful changes to its original prod= uct line.=20 If Nymex combines parts or all of the platform originally intended as eNyme= x with Access, the new system may end up being known as eNymex.=20 "eNymex right now is looking for a new mission," said an industry source cl= ose to Nymex. "You know how politics works. We don't scrap it, we just rena= me it. Anything we do electronically is now going to be called eNymex. But = the original deal and concept that Rappaport initiated is done."=20 Nymex's reconsideration comes as the energy-trading world undergoes rapid c= hange. The two most successful online energy trading platforms -- Enron Cor= p.'s (ENE) EnronOnline, and IntercontinentalExchange, or ICE -- have seen t= heir luck turn - in opposite directions.=20 Enron Corp. (ENE), which accounts for about 25% of the trade in U.S. power = and gas markets, faces questions about its creditworthiness as the Securiti= es and Exchange Commission investigates complicated financial dealings. Enr= on's possible merger with Dynegy Inc. (DYN), now appears to be in doubt, an= d energy trading companies are pulling back their exposure to the company.= =20 Enron executes about 60% of its power and gas trades on EnronOnline. When E= nron's troubles surfaced last month, Nymex quickly moved to extend its clea= ring services to over-the-counter natural gas derivatives, a move the tradi= ng community saw as an attempt to grab market share.=20 ICE, on the other hand, is moving ahead with plans to capture more energy t= rade on its electronic format. ICE closed a deal this summer to acquire the= London-based International Petroleum Exchange - Nymex's chief competitor a= nd Europe's largest traditional energy exchange. It plans to move all IPE e= nergy contracts to its Internet-based system and offer clearing services fo= r some over-the-counter contracts.=20 Nymex is exploring alliances that could give it a better footing in the new= competitive landscape. One idea under review is a joint venture with the C= hicago Mercantile Exchange to offer e-mini contracts for Nymex products on = CME's Globex electronic-trading system, the person close to Nymex said.=20 Nymex officials wouldn't confirm whether they're talking with the CME, but = they said the relationship between the exchanges is a warm one.=20 "Nymex is always open to strategic alliances," Jacobovits said. "There's no= thing we've agreed to at this point, but we have open dialogue with a numbe= r of exchanges concerning strategic alliances. We have a good relationship = with the Chicago Merc, and we certainly would be open to working with them.= "=20 Shortly after the Sept. 11 terrorist attacks in New York shut down the Nyme= x trading floor, the CME said it would be willing to offer Nymex products o= n its Globex system until Nymex resumed operations, Jacobovits said.=20 -By Stephen Parker, Dow Jones Newswires; 201-938-4426; stephen.parker@dowjo= nes.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron Woes May Endanger Plans For Mozambique Steel Proj 11/23/2001 Dow Jones International News (Copyright © 2001, Dow Jones & Company, Inc.) MAPUTO, Mozambique (AP)--The recent downturn in fortunes for U.S. energy co= mpany Enron Corp. (ENE) may quash hopes for the construction of a natural g= as-fueled factory to produce steel slabs for export in Moz
|