We could be toast -- see attached bloomberg.  also, another report stated that there were conflicts between Dynegy and bankers as to who has rights to the Northern Natural pipeline.
 
11/27 15:16
Enron Turned Down by Investors Alwaleed, Blackstone, Carlyle
By Mark Lake 

New York, Nov. 27 (Bloomberg) -- Enron Corp.'s bankers, seeking to raise as much as $2 billion for the energy trader, have been turned down by investors including Prince Alwaleed Bin Talal, the Carlyle Group Inc. and Blackstone Group LP. 

``I was approached by several people to invest in the company, but we declined,'' said Alwaleed, a billionaire investor from Saudi Arabia. The fall in Enron's shares, which have declined 95 percent this year, didn't necessarily make it a good investment, he said. 

Bankers led by J.P. Morgan Chase & Co. Vice Chairman James B. Lee have been unable for two weeks to raise the money because of concern Enron won't be able to meet its obligations. That concern was heightened after Enron disclosed a $690 million payment due this week. Enron needs the money to operate as it completes an acquisition by Dynegy Inc. 

The prospect that Enron will fail to line up financing, jeopardizing its plan to be acquired by Dynegy, has weighed on its stock and bonds. The company's securities gained today as talks between Enron and Dynegy to renegotiate terms of the transaction convinced some investors the takeover was more likely to take place. 

Enron 6.4 percent bonds that mature in 2006, which closed yesterday at 48 cents on the dollar, rebounded to trade at about 55 cents on the dollar. At that price, the bonds yield 22.5 percent. Enron shares rose 21 cents, or 5 percent, to $4.22. The stock finished yesterday at $4.01, its lowest level in 14 years. 

Declining to Invest 

J.P. Morgan and Citigroup Inc., Enron's largest lenders, plan to provide $250 million to Enron each as part of a $2 billion package. The bankers have been seeking additional investments, which would be made in the form of convertible stock, for more than two weeks. 

Questor Management Co., a $1 billion private-equity fund that invests in troubled companies, and buyout funds such as Carlyle Group and Blackstone have balked at investing, said people familiar with the situation. Blackstone and Questor declined to comment. Christopher Ullman, a spokesman for Carlyle, said: ``We are not in discussions with Enron about financing.'' 

``More equity would leave Enron with a stronger balance sheet, which should reassure their trading partners,'' said Kathleen Vuchetich, who helps manage $1.4 billion in assets at the Strong American Utilities Fund. Vuchetich has 4.2 percent of her portfolio invested in Dynegy shares. 

Enron and Dynegy discussed revising the terms of their merger over the weekend, said Steve Stengel, spokesman for Dynegy. Dynegy is now talking about paying less than 0.15 share for each of Enron's, valuing the company's equity at about $5 billion, or less than $6 per share, the Wall Street Journal reported, citing people close to the discussions. 

Terms 

``The concern is that the Dynegy deal breaks down,'' said Paul Tice, co-head of U.S. high-grade credit research who covers the energy market for Deutsche Bank. 

Current terms call for an exchange ratio of 0.2685 share of Dynegy stock for each Enron share. Given recent disclosures about Enron's debt and the drop in the stock price, a fairer ratio would be 0.15 share of Dynegy, said Ronald Barone, a UBS Warburg analyst who rates Dynegy a ``strong buy.'' 

Under current terms, the deal makes sense for Dynegy only if Enron earns 85 cents or more next year, said Gordon Howald, an analyst at Credit Lyonnais who rates Dynegy a ``buy.'' UBS Warburg's Barone has reduced his estimate of Enron's 2002 earnings to 75 cents a share from $1.65. 

Enron needs an infusion in part because it has $9 billion of payments due before the end of 2002 and less than $2 billion in cash and credit lines. The decline in reserves has also raised the prospect that Moody's Investors Service may cut Enron's credit rating. A lower rating would trigger $3.9 billion in debt repayments for two affiliated partnerships. 

Cash Question 

``The main question is: `What is the cash position right now?''' said Tice at Deutsche Bank. ``Is the falloff in the cash position of the company stabilizing or not?'' 

Moody's hasn't issued a report on Enron since the company filed a quarterly report with the Securities and Exchange Commission last week announcing it had a $690 million note due this week. On Wednesday, Enron got a three-week reprieve from lenders on the $690 million note and closed on a $450 million credit line. Dynegy Chief Executive Officer Chuck Watson said he was ``encouraged'' by the developments.