|
|
Enron Mail |
-----Original Message----- From: Polsky, Phil Sent: Monday, November 12, 2001 1:36 PM To: Ward, Kim S (Houston) Subject: FW: Bloomberg :- Dynegy Calls SEC's Probe of Enron `Financial Noi se' -----Original Message----- From: Miller, Stephanie Sent: Monday, November 12, 2001 12:10 PM To: Polsky, Phil Subject: FW: Bloomberg :- Dynegy Calls SEC's Probe of Enron `Financial Noi se' -----Original Message----- From: "O'Toole, Sharon" <Sharon.OToole@ElPaso.com<@ENRON Sent: Monday, November 12, 2001 11:55 AM To: 'Blanca Daugherty'; 'Brian Hall-BP'; 'Debbie Chance-HM'; 'Diana Naylor Knox'; 'Kevin O'Toole'; Roberts, Linda; 'Martha Senf'; Baden, Pamela; 'Selena P-Home'; 'Stacey Neuweiler'; 'Stacy Franz'; Miller, Stephanie; 'Steve McGough'; 'Steve Marsh' Subject: FW: Bloomberg :- Dynegy Calls SEC's Probe of Enron `Financial Noi se' Dynegy Calls SEC's Probe of Enron `Financial Noise' (Update5) 2001-11-12 11:03 (New York) Dynegy Calls SEC's Probe of Enron `Financial Noise' (Update5) (Updates share prices in 14th paragraph.) Houston, Nov. 12 (Bloomberg) -- Dynegy Inc. Chairman Chuck Watson said he's convinced Enron Corp.'s trading operations are sound and described disclosures about affiliated partnerships that helped drive Enron's stock down 67 percent in three weeks as ``financial noise.'' Dynegy agreed Friday to buy Enron for at least $23 billion, including at least $8 billion in stock and $15 billion in assumed debt. Dynegy shares rose as much as 16 percent today. Enron rose as much as 20 percent. In an interview after the merger announcement, Watson and Enron Chairman Kenneth Lay discussed how the Houston-based companies reached agreement less than three weeks after Enron's shares began plunging. ``All the financial noise about the partnerships, maybe it has damaged the Enron brand a bit,'' Watson said. ``But I'll tell you what it hasn't impacted, and that's the high regard that the industry places on'' Enron's trading business, he said. Enron last week restated earnings for four years to include losses from three affiliated partnerships, reducing earnings by $586 million. Six employees, out of Enron's 20,000, may have improperly benefited from the partnerships, Lay said. ``I'm sorry those six people seem to have gone somewhat over the edge in their dealings or transactions, but you can't be absolutely protected from that in any business,'' he said. Lost Effectiveness Lay didn't specify which six people he was referring to. He removed Andrew Fastow, who helped set up and ran many of the affiliated partnerships, as chief financial officer on Oct. 24. An Enron securities filing says Fastow made more than $30 million off two of the partnerships. Fastow ``had lost his effectiveness because of all the press coverage'' on the affiliates, Lay said. Treasurer Ben Glisan and Kristina Mordaunt, a managing director and a corporate counsel for an Enron division, also were fired, Enron said in a corporate filing on Thursday. Former employees Michael Kopper, Kathy Lynn and Anne Yeager were in a position to profit from partnerships, the filing said. ``You trust people, you accept their representations and proposals,'' Lay said. ``Sometimes when you do that, you get surprised and disappointed.'' Both executives said they expect antitrust regulators to approve the merger because the two companies own different types of assets and won't dominate any market. ``There really isn't anything that lays on top of each other,'' Watson said Friday night. ``We're not in the pipeline business and they are. We're in the generation business, and they're really not.'' Dynegy shares rose 6.2 percent on Friday after terms of the Enron purchase leaked to the press. Watson expects the acquisition to add 90 cents to 95 cents a share, or 35 percent, to Dynegy's 2002 earnings. Enron is selling for $10.41 a share, one-fifth the average price over the past 12 months. Enron stock climbed 97 cents, or 11 percent, to $9.60 in late morning trading. Earlier, they touched $10.38. Dynegy rose $4.54, or 12 percent, to $43.30 after touching $45. Cash Crunch The rapid decline of Enron threatened to bankrupt the company and disrupt energy markets. Enron handles an estimated one-quarter of U.S. electricity and natural-gas trades. A falling credit rating made it difficult for the company to raise capital needed to back trades. As part of the purchase, ChevronTexaco Corp., which owns 26 percent of Dynegy, agreed to provide Enron with $2.5 billion. ``What we found when looked under the hood is that the core of Enron was still there and working as well as ever,'' Watson said. ``That business was pristine and had nothing to do with the partnerships.'' Dynegy began taking steps toward the acquisition in late October, when Watson called Lay to offer assistance with Enron's growing financial crisis, the two men said. That led to a Saturday morning meeting in Lay's kitchen. ``He even made me a breakfast roll,'' Watson said. ``He didn't eat it,'' Lay said. Lay said he won't be an active manager in the new company. Watson said Friday that he and Lay hadn't discussed a severance package. As head of Enron, Lay had refocused the Houston operator of U.S. natural-gas pipelines on trading and international expansion, boosting reported revenue 20-fold since 1995 to $100.8 billion last year. He said he doesn't regret the strategy. ``Clearly, Enron has gotten involved in business that hasn't turned out well,'' Lay said, pointing to money-losers Azurix Inc., created to supply water and build related projects around the world, and NewPower Holdings Inc., a seller of electricity to homes and small businesses. ``But you have to keep in mind, too, that 12 years ago we weren't in the wholesale merchant (trading) business. Today that's an incredibly valuable franchise.'' The trading business, which accounts for about 97 percent of Enron's revenue, buys electricity, gas and other commodities from producers and sells them to end users such as utilities and industrial customers. It also advises big business customers on energy use and sells them gas and electricity. Reassessing Steel, Lumber Watson said the new company will keep trading coal, gas, power and petroleum products, and plans to expand by buying assets and using them to develop trading. ``We'll just have to reassess over time whether we stay in'' trading of steel, lumber and other non-energy commodities, he said. Enron wants to shed its 65 percent stake in Dabhol Power Co. in India, which is owed $64 million in overdue bills from a state government agency that has refused to pay the power prices Enron was promised in contracts. ``We have strong legal remedies and we're heading down the path toward arbitration, but we'd still very much like to work out a settlement with the government,'' Lay said. Potential buyers have balked at Enron's $1 billion asking price for Dabhol. Neither man would comment on whether Dynegy plans to cut jobs after the merger, or what will happen to the naming rights to Enron Field. The Major League baseball stadium is home to the Houston Astros, and Enron paid $100 million to have its name on the ballpark. ``The name of the company is now Dynegy,'' Watson said. Dynegy's acquisition requires approval from U.S. securities, antitrust and energy regulators. Watson expects soon to share details of the new Dynegy with regulators from the European Union and U.K., where Enron operates a trading desk and owns a water company and two power plants. ``I don't know if we are required to do so, but we will talk to them anyway,'' Watson said. ``We don't think there are going to be any problems,'' Lay said. --Russell Hubbard in Houston (713) 353-4872, or rhubbard@bloomberg.net, Jim Kennett in Houston at (713) 353-4871 or jkennett@Bloomberg.net and Margot Habiby, through the Princeton newsroom (609) 750-4500/shf/alp/cdw/slb Story illustration: For a comparison of Enron and Dynegy and stocks to indexes, see {DYN <Equity< COMP D <GO<} and {ENE US <Equity< COMP D <GO<}. To graph the price of an Enron bond, see {DD1139573 <Corp< GP <GO<}. For top energy stories, see {TOP NRG <GO<}. Company news: DYN US <Equity< CN ENE US <Equity< CN NI codes: NI COS NI US NI NRG NI GAS NI OIL NI CA NI REF NI PIP NI MNA NI TX NI SEC NI EUROPE NI UK NI EU NI WIN NI WNEWS NI CMD NI TOP #<149632<# #<2124<# -0- (BN ) Nov/12/2001 16:03 GMT ****************************************************************** This email and any files transmitted with it from the ElPaso Corporation are confidential and intended solely for the use of the individual or entity to whom they are addressed. If you have received this email in error please notify the sender. ****************************************************************** - ATT709346.txt
|