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Gold/Mining/Energy : Enron - Natural Gas Industry
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To: ms.smartest.person who wrote (742)11/28/2001 2:10:01 AM
From: Raymond Duray  Read Replies (2) of 1433
 
Merryfield,

Thanks for that informative WSJ article. What seems to be missing from all this high drama today is any developments on the SEC front. I strongly suspect we'll be seeing further downward revisions of earnings and more (adverse) transparency regarding ENE's liabilities on partnership positions.

What Chase and G/S are desperately trying to do today is to find some real fools to step up to a syndication. Good luck. Without the syndications and the infusion of more cash, it would appear that ENE is in a death spiral. It cannot generate sufficient cash flows from EnronOnline, now that it has been rendered irrelevant, to keep up the payments on upcoming debt service.

The one aspect I'm trying to get my hands on is the nature of the sweating that Chevron/Dynegy hope to impose on ENE. Clearly the original offer on Nov. 9 was a red herring, designed to keep other suitors at bay. Now that DYN is in the driver's seat, I believe they will find it in their best interests to let ENE dangle for as long as possible. Already in three weeks time, the offer price has declined precipitously. An end game might well be that DYN would take over the operations of ENE in exchange for assuming the debt, and getting easy FERC and anti-trust approval because of the specter of chaos in a bankruptcy proceeding. Wiping out the equity holders. Something I've expected for the last month or so. The longer negotiation goes on, the less leverage ENE seemingly has. I see no reason DYN ought to be in a hurry. They can argue that it would be prudent for the SEC investigation to be concluded before the merger is complete. That wouldn't be an unreasonable request.

Stay tuned, Ray
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