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Gold/Mining/Energy : Enron - Natural Gas Industry -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (988)	11/30/2001 7:28:02 PM
From: James Calladine	Read Replies (1) \| Respond to of 1433

OT: excerpts from a column in today's SF Chronicle re ENE "...Dynegy got in a few extra licks by accusing Enron of "breaches of representations, warranties, covenants and agreements in the merger agreement" -- in other words, lying its Texas tail off. How different from when I was at Enron and the company, the biggest employer in Houston and the largest energy trader in the country, was all but immune to criticism. In fact, that was the first thing that came up when I sat down with Enron Chairman Ken Lay in his plush 50th-floor office, overlooking a new multimillion-dollar tower the company was building and, not far off, the Enron Field baseball stadium. I asked how Lay felt about Gov. Gray Davis characterizing him as a"pirate" who had plundered California's power market. This was back in the darkest days of the state's energy crisis -- remember that? -- when Enron and other energy titans were siphoning off billions of dollars in hyperinflated power charges. "It's very unfair," Lay told me, his brown eyes almost moistening at the very mention of the injustice he and his company had suffered. "He's trying to vilify us. But we didn't make the rules in California. We had nothing to do with creating the problem." Actually, Enron and Lay were early proponents of California's bungled deregulation of the state's electricity market and, according to insiders in Sacramento, played an active role in shaping the legislation that would ultimately be our undoing. Maybe Lay didn't see it that way. Maybe he was in denial. Maybe he just couldn't be bothered to worry about the misfortunes of others when Enron was still on top of the world. That has changed. Enron is now a penny stock and the company's business practices are under investigation. Authorities are looking into murky financial dealings that may have been intended to hide mountains of debt. I can't think of another corporate behemoth that imploded as quickly, or as spectacularly. After my audience with Lay, I was given a tour of Enron's supercharged trading floor. The company's Internet-based bidding system made it the largest e-commerce entity in the world. During the past two years, Enron traders have handled more than $1 trillion in transactions. I had been expecting something Wall Streetish -- men with their ties loosened and sleeves rolled up shouting orders at one another. What I encountered was a vast floor of computer terminals at which sat hundreds of young, casually dressed guys staring calmly into flat-panel displays. There was no yelling. Instead, there was rock music blaring from speakers as traders bopped their heads to the beat and matched buy and sell orders for electricity and natural gas, skimming off a few bucks in profit with each transaction. One trader called up California's power market on his screen. He showed me how Enron was buying electricity at $250 per megawatt hour and selling it at $275. "Some days we're at $250, some days $300 and some days $500," the trader said. To him, these were little more than blips on a radar screen. To California, this was evidence of how badly the state was hemorrhaging money. California now pays about $35 per megawatt hour for electricity, according to the state Department of Water Resources, which is still picking up the pieces from the energy crunch. Things are gradually returning to normal. Enron, by comparison, is staring at the biggest bankruptcy in U.S. history as $61 billion in assets comes up for grabs by creditors. Shareholders, who would be last in line to get their cash back, face the very real prospect of walking away with nothing at all. The damage would be extensive and far-reaching. For example, the California Public Employees' Retirement System, or CalPERS, holds nearly 3 million Enron shares. The stake was valued at $197 million a year ago. It's now worth little more than $1 million. When I was with Lay in his penthouse office, I asked about allegations that Enron had deliberately manipulated California power prices to drive its own profits through the roof. He smiled dismissively. "It's so easy to conjure up conspiracy theories," Lay said. He was right. Easier by the minute." above commentary by David Lazarus 11/30/01 sfgate.com.

To: ms.smartest.person who wrote (988)	12/1/2001 1:24:52 AM
From: Smart_Money	Read Replies (2) \| Respond to of 1433

This is the way I see it. DYN structures the deal by buying the shares of the independent pipeline in effect preventing Enron from submitting it into BK. By keeping the pipeline deal out of BK the courts can not apply the 90 day look back rule to bust the deal. The only action Enron can do is sue DYN in civil court. Checkmate DYN? Not so fast! DYN is doing everything it can to complete the transaction as quickly as possible. WHY? ENE may be prevent from including the pipeline in BK but creditors of the pipeline are not barred. ENE may not be paying them and they will march to the Federal Courts for involuntary action. DYN is very smart but their lien is not perfected as well as they may think, but wait a minute. I am sure DYN is going to every creditor of the pipeline and assuring them of full payment within weeks. If I was holding any pipeline debt I would be asking myself.... do I want to wait years to receive payment or weeks. I will take the weeks. End Game DYN wins the pipeline or worst case return of the money. DYN wants the pipeline and not the money since it's not their money to begin with but if ENE were to scrap the money together, the pipeline would become an asset of ENE and under control of possilbe BK court, no lien holder wants to be in that position, so I think this is remote. Now ENE can assign their rights of reclaim to a new buyer for the pipeline and the buyer may just wait for a clear ruling of the courts to disclose any offers. This will be very interesting to see if Enron creditors can break the ring fencing. The beauty is DYN is using Enrons' talented 200 lawyer that structured the ring fencing of the pipelines as his way of tying ENE hands. Bravo, Mr. Watson you just swept in the mist of the fall of ENE and cherry picked the assets all the while perfecting your lien.