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

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

To: SargeK who wrote (1336)	1/30/2002 1:01:28 AM
From: Doughboy	Read Replies (3) \| Respond to of 1433

SargeK, A couple things to think about: 1. You put a lot of trust in the Court (and the new CEO) to protect "all stakeholders" including the shareholders. Under bankruptcy law, the fiduciary obligations of the Corporation swing entirely to the protection of the creditors. And the Court does not consider the interests of shareholders. Shareholders hold squat; and they have no place at the table. 2. The likelihood of any $$ being left for shareholders is diminished by the fact that Enron lathered secured creditors on all its assets. It's not a matter of selling off a billion here and a billion there; secured creditors get the vast majority of the bucks from those sales. The unsecured creditors pick over the scraps. No meat on the bones left for shareholders. What we have heard so far from the all the energy companies and the banks of the billions they are owed by Enron is the unsecured credit they extended. They don't count the billions they have in secured credit, since they are confident in collecting on that and investors would cringe to hear the multiple billions they have in those debts. Those secured creditors are sitting out there like invisible 800 pound gorillas protecting their Enron asset. Take for example, the $1.5 bb Enron gets from the sale of the Northern Natural Gas assets to Dynegy. Little reported was the fact that there were other secured creditors hanging onto the pipeline for dear life. Does Enron get a lot of the 1.5bb? I don't know, but my guess is that they don't get anything near that after they pay off the debt holders on the pipeline. 3. Let's take another example: Enron Broadband. I don't know for what amount Enron carries that on its books for, but Jeffrey Skilling said that that asset alone was worth 20 billion dollars a year ago. EBS was quietly shuttering its doors even before the bankruptcy. Enron went out to sell those assets, and got nothing. The billions of dollars Enron poured into EBS ($2-3bb?) have zero value to shareholders, and in fact probably carry a couple billion dollars of debt. My guess: Enron assets are dwarfed by liabilities by 2 or 3 times, including the litigation costs. The savvy secured creditors will be converted to equity in the new entity collecting the share of UBS Warburg profits, and nothing, nada, not a thin dime goes to the common. Doughboy.