Enron - Natural Gas Industry Message Board

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Gold/Mining/Energy : Enron - Natural Gas Industry

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To: SargeK who wrote (1336)	1/26/2002 8:38:30 AM
From: SargeK	of 1433

Enron's USB's Lease w/Option to Buy - Enron's Wholesale Trading Platform. What others condemn as a give away, I believe to be just the opposite. Rather than sell up to 51% of the operation to gain access to cash and a credit worthy partner and to revive the operation; Enron, correctly IMO chose to Lease the Operation to a Credit Worthy bidder with an option to buy in 3 to 5 years. Rather than relinquish an asset which has contributed most to revenue growth, at fire sale prices the ACTUAL sale of the asset has been postponed until a less hostile environment prevails and real value may accrue. I thought the move was ingenious, gutsy and made the point that their liquidity problem is not as bad as previously thought or they would not have been in the position to walk away from low-ball bids to buy the operation. The wholesale trading business is expected to begin operations in March 2002. With Enron's trading infrastructure and mental capital coupled with USB's capital resources and strong credit rating, the operation is almost assured to be a real money maker. Some employees will likely get their jobs back. What has been a recent cash drain has suddenly been transformed into an income stream which will also contribute significantly toward solving the more immediate overall liquidity problem and accelerate the exit from Chap 11. Further supporting my suggestion that the liquidity problem is not as great as the mass media has reported it is a more recent report that stated the earlier need for DIP financing of $1.5 billion has already been reduced to an estimated need for approximately half that amount. Comment: I am not attempting to encourage nor discourage anyone to Buy or Sell the stock. I have put forth what I thought to be a sincere and honest effort to present a more accurate and comprehensive view of Enron based on my own research and analysis. My contrarian views obviously do not set well with some folks, that doesn't make me wrong nor does it make me a liar. Good luck SargeK

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