|
|
Enron Mail |
Today, Enron hosted a conference call to give investors a current overview =
of the company. Here's an update of what we discussed during the call. We told investors that we're doing everything we can to protect their inter= ests and to regain their confidence. Our focus remains on our credit qualit= y, balance sheet and liquidity, which are essential for our continued succe= ss and expansion of our wholesale businesses. It took more than a few weeks to get where we are today. Here's a snapshot = of significant events that led to our current situation: -- In hindsight, we definitely made some very bad investments in our non-co= re businesses over the past several years. Those include investments in Azu= rix, India and Brazil. They have performed far worse that we could have eve= r imagined when we made these investments; -- Because of these bad investments, we've become over-leveraged as a compa= ny. The negative impact of those investments was exacerbated through the ex= tensive use of debt capital both on and off our balance sheet; -- We also entered into related party transactions that led to a loss of in= vestor confidence, which has been very damaging; -- We've been criticized for our lack of transparency and our hard-to-under= stand financial and operating disclosures; and -- On top of it all, we discovered errors in our financial statements, as d= iscussed in our 8-K filing last week, that required a restatement of previo= usly reported earnings. We've taken a new look at our businesses and have separated them into three= areas: core businesses, non-core businesses, and businesses under review. Core Businesses Our core businesses remain strong and consistent sources of significant ear= nings and cash flows for the company. They're our competitive advantage. Th= ese include: -- Natural gas pipeline businesses; -- Gas and power businesses in North America and Europe; -- Retail businesses in North America and Europe; and -- Coal businesses in North America and Europe. The events of the past few weeks have had a temporary negative impact on ou= r projected fourth quarter profitability. It's too early to tell at this ti= me what impact this might have on our operating results. We are considering= these actions now so that we can quickly return to normal business in 2002= . I also remain optimistic that the actions we've taken over the past couple = of weeks have addressed our customer and counterparty credit and liquidity = concerns. According to our business unit leaders, we have definitely seen i= mprovement in our counterparty relationships. Non-Core Businesses Our non-core businesses include our global assets group and our broadband d= ivision. We have invested more than $8 billion in these businesses, and the= return from them has been dismal. We have an aggressive program in place to exit these businesses and expect = that the sale of these businesses will generate billions of dollars in cash= that we can use to repay debt and reinvest in our core businesses. We alre= ady have more than $800 million in assets contracted for sale this year. Th= ey include CEG Rio, a gas LDC in Brazil; EcoElectrica, a power plant and LN= G receiving terminal in Puerto Rico; and asset sales of offshore oil and ga= s properties in India. The approximately $2.9 billion Portland General sale= is also on target to close in late 2002 pending regulatory approvals. Businesses Under Review These businesses are comprised of those operations outside our power and ga= s wholesale businesses and include global and industrial markets. While sev= eral of these businesses have very strong future prospects, we need to dete= rmine if their capital requirements and near-term growth prospects are suff= icient enough in terms of earnings and cash generation. Reviewing our businesses this way will help determine where we need to make= reductions to our work force. More information will follow as soon as it b= ecomes available. Credit Rating/10-Q Filing We continue to meet regularly with credit rating agencies and believe that = our liquidity enhancements and scheduled asset sales will strengthen our ba= lance sheet and maintain our investment grade credit rating. Our current cr= edit ratings by the three major rating agencies are as follows: -- Moody's at Baa3 "Under Review for Further Downgrade" -- Fitch at BBB- "Evolving Status" -- S&P at BBB- "CreditWatch Negative" We also discussed our existing financial vehicles, including Osprey, Marlin= and Yosemite, in further detail. We told investors that we will file our 1= 0-Q five days late due to our current activities. It will be filed on Nov. = 19. We will continue to have updates with investors over the coming weeks as we= ll as our frequent updates with you. The full transcript of our conference = call will be filed with the Securities and Exchange Commission in the next = few days. It will also be posted on our web site at www.enron.com/corp/inve= stors under "SEC Filings." =20 =20 In connection with the proposed transactions, Dynegy and Enron will file a = joint proxy statement/prospectus with the Securities and Exchange Commissio= n. Investors and security holders are urged to carefully read the joint pro= xy statement/prospectus regarding the proposed transactions when it becomes= available, because it will contain important information. Investors and se= curity holders may obtain a free copy of the joint proxy statement/prospect= us (when it is available) and other documents containing information about = Dynegy and Enron, without charge, at the SEC's web site at www.sec.gov. Cop= ies of the joint proxy statement/prospectus and the SEC filings that will b= e incorporated by reference in the joint proxy statement/prospectus may als= o be obtained for free by directing a request to either: Investor Relations= , Dynegy Inc., 1000 Louisiana, Suite 5800, Houston, TX 77002, Phone: (713) = 507-6466, Fax: (713) 767-6652; or Investor Relations, Enron Corp., Enron Bu= ilding, 1400 Smith Street, Houston, TX 77002, Phone: (713) 853-3956, Fax: (= 713) 646-3302. In addition, the identity of the persons who, under SEC rules, may be consi= dered "participants in the solicitation" of Dynegy and Enron shareholders i= n connection with the proposed transactions, and any description of their d= irect or indirect interests, by security holdings or otherwise, are availab= le in an SEC filing under Schedule 14A made by each of Dynegy and Enron.
|