A Chronology of Enron's Recent Woes
Jan. 8: Enron executives met six times last year with officials of the Bush administration's energy task force, though they did not talk about the energy company's finances, Vice President Dick Cheney's office said in a letter to Capitol Hill. Mr. Cheney's office was responding to a request from Rep. Henry Waxman of California, ranking Democrat on the House Government Reform Committee, who asked for information on Enron's contacts with members of the energy task force.
Jan. 7: To shore up public confidence in financial reporting following the collapse of Enron, the Big Five accounting firms ask the Securities and Exchange Commission to quickly issue guidance to improve disclosure in corporate annual reports. In a first step toward resurrecting its trading operations, Enron receives formal bids for a majority stake in its energy-trading arm from Citigroup, UBS and BP, people familiar with the matter said.
Jan. 4: Dynegy says it settled its lawsuit against bankrupt Enron over control of the failed energy giant's Northern Natural Gas pipeline. Dynegy agrees to buy the pipeline by the end of January for $23 million. Since Enron's sudden fall, competitors such as Dynegy, Mirant and El Paso have said they are scaling back development projects and shedding assets; Calpine is expected to follow soon.
Jan. 2: Sen. Joseph Lieberman says the Senate Governmental Affairs Committee, which he heads, will hold hearings into Enron's collapse when Congress returns to work later this month. Internal Enron documents show top management and directors viewed controversial partnerships, which played a role in the company's demise, as integral to maintaining its rapid growth in recent years.
Dec. 31: J.P. Morgan Chase & Co. files a motion over the preceding weekend to quash demands from nine insurance companies for information about $2 billion in Enron-related surety bonds, a sign that the interests of various creditors of the now-bankrupt energy trader have begun to collide. U.K. companies that are also saddled with losses from Enron's collapse have seen their credit ratings downgraded.
Dec. 30: Enron asks the judge overseeing its bankruptcy case to approve the sale of assets worth several hundred million dollars by the end of the year; the assets were earmarked for sale more than a year earlier.
Dec. 20: Citigroup is close to cementing a bid for most of Enron's flagship energy-trading operations. Mirant, an energy firm affected by the fallout from Enron, said it raised $759 million from the sale of 60 million shares of stock, spurring Standard & Poor's Corp. to reaffirm its investment-grade credit standing.
Dec. 19: J.P. Morgan Chase & Co. said its exposure to Enron was nearly $1 billion more than the $900 million that it already had disclosed, raising concern that the bank has more exposure still lurking. Following in the footsteps of its energy-sector competitors, Williams Cos. will restructure to appease jittery debt-rating agencies in the wake of Enron's collapse. The credit rating of Mirant was downgraded to junk status by Moody's Investors Service Inc., making the power generator the latest in a growing list of energy companies to suffer from tightening credit standards following Enron's collapse. FleetBoston will take a $150 million pretax charge to write down troubled loans from customers, including Enron.
Dec. 18: Many Enron employees face greater losses to their retirement income than was immediately apparent, stemming not only from big hits in their 401(k) retirement-savings plans but also as a result of changes involving pension and retirement-savings plans. Credit agencies crack down on power companies, warning them to slash debt, after falling asleep when California's deregulated energy market imploded and reacting slowly to Enron's demise.
Dec. 17: Dynegy announces a $1.25 billion capital-restructuring program to boost its cash holdings and trim debt. The company was swept up in a crisis of confidence by investors in the energy trading market following Enron's collapse. The Royal Bank of Scotland was under fire from fund managers for its refusal to disclose its exposure to Enron. Volumes surge at several major online-trading firms amid heavy trading in Enron shares as the company lurched toward bankruptcy.
Dec. 14: Moody's Investors Service downgrades its credit ratings of Calpine and Dynegy unit Dynegy Holdings. Following Enron's collapse, Moody's stressed the risks posed by high leverage and reduced access to capital markets.
Dec. 13: A handful of congressional panels and regulators investigate the causes of Enron's plunge into Chapter 11 bankruptcy protection, which may lead to new regulations spurring additional oversight of accounting firms. Questions also arise about Enron's outside auditor, Arthur Andersen, which did double-duty work for the company.
Dec. 12: Enron unveils a one-year plan to restructure its way out of trouble, including a reorganization around its core businesses. Chief Executive Officer Kenneth Lay declines to testify at a joint hearing of two House panels as Congress begins a painstaking investigation into the company's financial troubles. The energy-trading giant had aggressively lobbied Congress in support of a little-noticed bill that allowed Enron to shape the industry without much government interference.
Dec. 11: The fallout continues to radiate, as Calpine, maybe the most aggressive power-plant builder in the U.S., defends its financial structure and says it doesn't deserve to be compared with Enron. The 4,500 employees let go by Enron are stunned by the quick trip from what they deemed corporate nirvana to the unemployment line.
Dec. 9: Citigroup and UBS work to finalize separate bids to take over Enron's trading operations, the first step toward a potential bankruptcy-court auction for the flagship business. Learning from the Enron experience, some rating agencies say they will try harder to tip off investors to potentially devastating credit downgrades.
Dec. 6: Job cuts continue at Enron, with 200 Houston workers laid off at the company's natural gas and electricity trading unit, Enron Americas. The bankruptcy court proceedings start to take shape; U.S. Bankruptcy Judge Arthur Gonzalez, who will hear the Enron case, is known as a stickler for detail.
Dec. 5: Enron pays $55 million to about 500 employees that it considers critical to its survival, as it seeks to emerge from bankruptcy-court protection as a slimmed down commodity trading outfit. Enron's bonds climb as "vulture" investors scooped up Enron's bonds and bank loans, sensing a bargain. Despite Enron's plight, deregulation of energy remains a priority across the globe. Meanwhile, Dynegy, seeking to reassure investors about its financial health, says its short-term borrowings of nearly $1 billion over the past week aren't related to its failed attempt to acquire Enron.
Dec. 4: Enron's highly questionable financial engineering, misstated earnings and persistent efforts to keep investors in the dark were behind its collapse. The Belfers, a wealthy New York oil family, could stand to lose as much as $2 billion due to the tailspin in Enron's stock, while the collapse of talks between Enron and Dynegy has raised a potential conflict in the negotiations involving Lehman Bros.
Dec. 3: Enron secures almost $1.5 billion in debtor-in-possession financing and presses negotiations for an additional lifeline for its energy-trading operations. The company also announces it has laid off 4,000 people in Houston.
Dec. 2: Enron files for protection from creditors in a New York bankruptcy court, the biggest such filing in U.S. history. Simultaneously, the Houston-based energy firm sued Dynegy for "not less than $10 billion," accusing it of wrongfully terminating their merger deal. Enron Europe cuts roughly 1,100 jobs in the United Kingdom just a day after its European energy-trading arm sought protection from creditors.
Nov. 30: The Wall Street Journal reports the SEC is investigating the actions of Arthur Andersen LLP, Enron's auditor, and federal prosecutors in New York and Texas want to monitor the SEC's investigation into possible accounting fraud at Enron.
Nov. 29: Enron's financial travails reverberate around the globe, roiling markets and manufacturers and threatening to derail deregulation of the U.S.'s energy markets. Large energy companies will fail to collect about $600 million owed them by Enron if the energy-trading firm winds up in bankruptcy court.
Nov. 28: Enron appeared near collapse after credit-ratings agencies downgraded its debt to junk status. Dynegy called off its planned merger with the rival energy concern following the announcements. The merger was scuttled when Standard & Poor's lowered Enron's credit rating to "junk" status. Enron's woes could have widespread consequences for scores of companies across the economy. The government is unlikely to bail out Enron if it goes under. Energy trading is sent reeling as EnronOnline is shut down. Enron CEO's political connections run silent during firm's crisis. Mutual funds may get hit by Enron's meltdown. Enron asks laid-off workers to waive legal claims against it in exchange for some of their severance payments.
Nov. 27: Enron and Dynegy work to save their deal amid the threat of a credit downgrade to Enron's debt. Bankers have big stake in the merger succeeding.
Energy markets remain untouched by Enron's deepening fiscal crisis.
Nov. 26: Enron has advanced talks to cut the price of the all-stock acquisition by Dynegy by more than 40% to about $5 billion. Enron stock fell 70 cents to $4.01, its lowest level in over a decade.
Nov. 23: The Wall Street Journal reports that Enron is being sued by members of its employee-retirement plan, which has suffered losses because of its plunging stock price. Separately, the slide in its share price and mounting financial problems put increasing pressure on Dynegy to renegotiate or walk away from its deal to acquire the firm.
Nov. 20: Enron warned that continuing credit worries, a decline in the value of some of its assets and reduced trading activity could hurt its fourth-quarter earnings.
Nov. 13: Enron Chairman Kenneth Lay decides to forgo a severance payment of $60.6 million that could be triggered by Dynegy's planned acquisition of Enron.
Nov. 8: Enron reduces its previously reported net income dating back to 1997 by $586 million, or 20%, mostly due to improperly accounting for its dealings with the partnerships run by some company officers.
Nov. 9: Dynegy announces a deal to buy Enron for about $7 billion in stock. ChevronTexaco will inject $1.5 billion into the deal immediately, and an additional $1 billion upon closing.
Nov. 5: Enron has held talks with private-equity firms and power-trading companies for a capital infusion of at least $2 billion as it faces an escalating fiscal crisis.
Nov. 1: Enron says it has secured commitments for $1 billion in financing from units of J.P. Morgan and Citigroup.
Oct. 31: The SEC elevates to a formal investigation its inquiry into Enron's financial dealings.
Oct. 29: Moody's lowers its ratings by one notch on Enron's senior unsecured debt and kept the company under review for a possible further downgrade.
Oct. 25: The company draws down about $3 billion, the bulk of its available bank credit lines. The Fitch rating agency puts Enron on review for a possible downgrade, while another, Standard & Poor's, changes Enron's credit outlook to "negative" from "stable." A noninvestment-grade rating would throw the company into default on obligations involving billions of dollars of borrowings.
Oct. 24: Enron replaces Mr. Fastow as CFO with Jeffrey McMahon, the 40-year-old head of the company's industrial-markets division.
Oct. 23: Enron's treasurer acknowledges the company may have to issue additional shares to cover potential shortfalls in investment vehicles it created, although he says the company believes it can repay about $3.3 billion in notes that were sold by those investment vehicles without having to resort to issuing more stock.
Oct. 22: Enron announces SEC will begin a probe of company's "related party transactions," including those with Fastow partnerships. Enron says it will fully cooperate.
Oct. 19: The Wall Street Journal discloses that general partners of Fastow partnerships realized more than $7 million last year in management fees and about $4 million in capital increases on an investment of nearly $3 million in the partnerships, set up principally to do business with Enron, according to an internal partnership document.
Oct. 16: Enron takes $1.01 billion charge related to write-downs of investments. Of this, $35 million is attributed to partnerships until recently run by CFO Andrew Fastow. Enron also discloses it shrank shareholder equity by $1.2 billion, as a result of several transactions including ones undertaken with Mr. Fastow's investment vehicle. |
