Hi opalapril,
Re: So does DYN inherit all of ENE's liabilities, shareholder derivative suits included?
From my latest reading, DYN is expecting its overall committment to purchase ENE to be between $23-24 Billion. This would be the $8 Billion in cash and stock, and the assumption of $15 Billion in debt and liability. Now, I believe that DYN may well simply be negotiating for the sake of time to unwind some of its exposure to ENE. There's something that's got my radar up on this. And that is that DYN's press releases don't seem to be reflecting the additional $3.3 Billion in financing costs that ENE is going to be facing due to the downgrade of its bonds to junk status. That's a material deterioration of ENE's position that occurred today and ought to be material, if DYN is negotiating in good faith. My antennae sense that Lay and DYN's Watson, who are partners on a sports team and buddies, apparently, have been colluding this week to try to put off the inevitable creditor's meeting at which ENE will most likely either declare for Chapter 11 relief or be dismembered.
I've become a huge fan of Raymond Plank, CEO of Apache Corp. He summed up the game that ENE and DYN are engaged in pretty colorfully:
<Snip>
The market for gas derivatives is 15 times the cash market for delivery to customers, and broad price changes make it difficult for oil and gas companies to set budgets, Plank said.
``You've got a 150-pound tail wagging a 10-pound dog,'' Plank said. ``You can't predict what your cash flow may be. Therefore, your budgeting is difficult.'' <End Snip>
Message 16630156
The whole derivatives game really is in desperate need of re-examination by the regulatory agencies. It was ENE and its schemes that are largely responsible for the fact that California went from its largest state budget surplus to net deficit within the last year. These games that Ken Lay and his ilk cooked up are dangerous to the economic well being of the nation and ought to be seen for what they are. Dangerous and incautious casino operations. The demise of ENE would be the best result I can imagine coming out of the current and continuing disclosure of the chicanery, fraud and self-dealing of ENE and its apparently utterly corrupt management.
One more try: So does DYN inherit all of ENE's liabilities, shareholder derivative suits included?
Chapter 11 would allow ENE to moot shareholder derivative lawsuits. I can see this being part of Lay's scheming. What I can't see is why Watson would do a deal before the equity holders were wiped out.
JMHO, Ray |
