EnronOnline ceases trading, sources say bankruptcy pending
Nov 28, 2001 (FWN Financial via COMTEX) -- [FWN] US
London, Nov. 28 (FWN) U.S. energy giant Enron Corp. has continued its catalogue
of woes: Its white-knight merger with Houston-based Dynegy has been called off
following the company's downgrading to junk bond status by both Standard and
Poor's and Moody's. EnronOnline halted trading as a result, and both Enron and
Dynegy's shares were suspended on the NYSE. Company sources said Enron is now
about to file for bankruptcy, ending all hopes for its essential scheduled
repayment of debt. Company sources said EnronOnline will continue to be turned
off until the company sees a return to credit, but the news of the failed merger
has now apparently has left bankruptcy as the only option. Many Enron staff have
already been told to clear their desks. A meeting of remaining staff is to be
held Thursday to discuss the company's future. "Customers are very reluctant to
trade with us as they have credit exposure concerns," said one Enron source. "We
have always known that bankruptcy would follow if the Dynegy merger did not go
through, and that is what we are now expecting to hear tomorrow." "The credit
ratings agencies delayed their downgradings, and this prolonged the agony for a
few more days. Today's downgrading was the final nail in the coffin," another
source at Enron said. "We have two options - we will be either be spun off or
wound down, and who would wish to buy us now?" Dynegy Chairman and CEO Chuck
Watson said that while it is "regrettable to see a leading industry player in
difficulties, this does not reflect a failure of the energy merchant business."
Earlier this month the market was stunned by the news that Enron had inflated
its profits by U.S. 586 million and understated its debt by some $2.6 billion
over a four-year period. --- Futures World News (FWN), Tel:+44 207 979 5740 |
