Corrections
The New York Times, 11/22/01
Employees' Retirement Plan Is a Victim as Enron Tumbles
The New York Times, 11/22/01
Circling the Wagons Around Enron
Risks Too Great To Let Trader Just Die
The New York Times, 11/22/01
Enron's Japan subsidiary reviewing its business
Associated Press Newswires, 11/22/01
Major Enron Unit Stake May Be Sold For Under $700M-Source
Dow Jones International News, 11/22/01
JAPAN: Shock waves from Enron crisis felt in Japan.
Reuters English News Service, 11/22/01
Major Enron Unit Stake May Be Sold For Under $700M-Source
Dow Jones International News, 11/22/01
JAPAN: Shock waves from Enron crisis felt in Japan.
Reuters English News Service, 11/22/01
Enron's Wessex Water unit faces possible bid from institutions - report
AFX News, 11/22/01
Enron seeks to stave off collapse
The Times of London, 11/22/01

INVESTORS TAKE PROFITS FOR SECOND STRAIGHT DAY; SOME BELIEVE MARKET MAY HAVE MOVED TOO FAST IN RECENT UPTURN
San Jose Mercury News, 11/22/01
Shares Take Step Backward In Trading Before Holiday
The New York Times, 11/22/01
Enron's cash woes endanger merger ; Dynegy mulls whether to ask for renegotiation
Chicago Tribune, 11/22/01
Valuation not what it used to be
Chicago Tribune, 11/22/01
WORLD STOCK MARKETS - Bad news from techs heralds Wall St decline.
Financial Times, 11/22/01

COMPANIES & FINANCE UK AND IRELAND - Institutions cast eyes over Wessex Water - WATER ENRON SEEKS SALE.
Financial Times, 11/22/01
Enron Shares Fall Again on Doubts Energy: A retreat by bankers or a credit downgrade could threaten Dynegy merger and land firm in bankruptcy. Stock tumbles to 12-year low.
Los Angeles Times, 11/22/01
FRONT PAGE - FIRST SECTION - Enron granted breathing space.
Financial Times, 11/22/01
Houston Chronicle Jim Barlow Column
KRTBN Knight-Ridder Tribune Business News: Houston Chronicle - Texas, 11/22/01

Battered Enron sags even more | Doubts mount over fate of Dynegy deal
The San Diego Union-Tribune, 11/22/01

Enron Gets Loan Extension
The Washington Post, 11/22/01

Prudential, Pimco Have Owned Falling Enron Bonds (Update1)
Bloomberg, 11/22/01




Business/Financial Desk; Section A
Employees' Retirement Plan Is a Victim as Enron Tumbles
By RICHARD A. OPPEL Jr.

11/22/2001
The New York Times
Page 1, Column 2
c. 2001 New York Times Company

The rapid decline of the Enron Corporation has devastated its employees' retirement plan, which was heavy with company stock, and has infuriated workers, who were prohibited from changing their investments as the stock plunged. 
Through the 401(k) retirement plan, employees chose to put much of their savings in Enron shares, and the company made contributions in company stock as well. But around the time Enron disclosed serious financial problems last month, the company froze the assets in the plan because of an administrative change. For several weeks, as the stock lost much of its value, workers stood by helplessly as their retirement savings evaporated. They were not allowed to switch investments at all -- even though the plan had far less risky choices.
The unfortunate timing caps a year of pain for Enron's workers. At the end of last year, the 401(k) plan had $2.1 billion in assets. More than half was invested in Enron, an energy conglomerate. Since then, the stock has lost 94 percent of its value. 
At Portland General Electric, the Oregon utility acquired by Enron four years ago, some workers nearing retirement have lost hundreds of thousands of dollars. The utility has lined up grief counselors to help them work through their problems. 
''We had some married couples who both worked who lost as much as $800,000 or $900,000,'' said Steve Lacey, an emergency-repair dispatcher for Portland General. ''It pretty much wiped out every employee's savings plan.'' 
''Shortly after it was frozen, the articles started coming out about some of the questionable activities of Enron,'' Mr. Lacey added. ''The stock took a tremendous drop, and we were pretty much helpless.'' 
The loss serves as a grim reminder of the danger of relying too heavily on one investment. Stock plunges similar to Enron's have also wiped out the retirement savings of many employees of the Nortel Networks Corporation, Lucent Technologies Inc. and Global Crossing Ltd. 
The loss by Enron's workers also stands in stark contrast to the profits made by some senior Enron executives, who sold stock during the last few years. Enron's chairman, Kenneth L. Lay, made $20.7 million during the first seven months of 2001 by exercising stock options -- and more than $180 million by exercising options during the three prior years. Last week, Mr. Lay agreed to forgo a $60 million severance package after Enron traders and employees made clear how upset they were that he would profit from the proposed acquisition of the company by Dynegy Inc. while they were suffering. 
Enron -- which is already the subject of a Securities and Exchange Commission investigation of transactions among Enron and partnerships headed by the company's former chief financial officer, Andrew S. Fastow, and a number of shareholders' suits -- now has an additional legal problem. 
On Tuesday, Steve W. Berman, a lawyer from Seattle who represented states against the tobacco industry, filed a lawsuit in Federal District Court in Houston seeking class-action status on behalf of Enron employees who lost money on the stock through their retirement plan. The lawsuit says that Enron schemed to pump up the price of the stock artificially and violated its fiduciary duty to its employees by failing to act in their best interests. 
''They were promoting Enron as a retirement investment vehicle and matching employees' contributions with Enron stock, when they knew the stock was overvalued, and that's a breach of their fiduciary duties,'' Mr. Berman said in an interview yesterday. 
What's more, he said, the assets were frozen on Oct. 17, with the stock at $32.20, even though Enron executives knew there would be imminent disclosures about the company's accounting practices. ''They knew the worst news was about to come out, but they froze the stock,'' he said. 
Enron closed yesterday at $5.01. 
The company declined to comment on much of the allegations because of pending litigation. A spokeswoman, Karen Denne, said that the change in plan administrators had been in the works for a number of months and that she did not know the exact date the change was put into effect. 
Like many other big companies, Enron made its contributions to the plan in company shares. But employees also chose to put much of their own contributions into the stock, lured by its stellar past performance. The company says that 89 percent of the Enron stock in the plan wound up there because employees chose it, and 11 percent was the company's contribution. 
''A lot of people believed in the stock, so it wasn't just the company match,'' said an employee at Enron's headquarters in downtown Houston. ''It was their own money, too. People are just shell-shocked.'' 
The stock's past performance had lured many workers. Last year, as the stock soared, total assets in the 401(k) plan rose more than 35 percent. 
About 57 percent of Enron's 21,000 employees participate in the 401(k) plan. The company generally matches employee contributions at 50 cents on the dollar, up to 6 percent of their salary, with Enron stock, which cannot be sold and put into another investment until the employee reaches age 50. But Ms. Denne said workers otherwise ''have a range of options'' in which to invest their money. 
Gerry O'Connor, a senior consultant with the Spectrem Group, a consulting firm based in Chicago, said it was not uncommon for companies to freeze assets when administrators were switched. ''If you don't, you can wind up with misallocated money, wrong statements, and all kinds of complicating factors,'' he said. 
But a heavy dose of assets in one company stock has been a concern to many specialists in retirement planning. Employees are taking ''a lot of risk, but they don't think of it as such,'' Mr. O'Connor said. 
''They say, 'You know, I work for this company, and we're doing great.' '' 
In addition to the swoon in their 401(k) plans, Enron employees have watched the value of their stock options wither. Enron gave a far larger percentage of employees options than most companies do, but now, with the fall in Enron shares, nearly all of those options are worthless. 
Enron's tumbling fortunes have come as a particular shock to some of its workers in Oregon. About 95 percent of the 2,700 employees of Portland General, which Enron recently agreed to sell to help it raise badly needed cash, are invested in the 401(k) plan, said Scott Simms, a spokesman. 
The losses, he added, have hit everyone ''including officers all the way through to other staff.'' 
''It's certainly not something in which certain employees have lost out and others haven't,'' he said. ''It was the same plan for everyone.'' 
In an interview with The Oregonian in Portland, Peggy Y. Fowler, Portland General's chief executive, said the asset freeze was an unfortunate coincidence. ''The timing couldn't have been worse,'' she said. 
''We refer to our retirement program as a three-legged stool -- Social Security, the company pension and the 401(k),'' Ms. Fowler said. ''One of the legs has been cut off.''

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Business/Financial Desk; Section C
Circling the Wagons Around Enron
Risks Too Great To Let Trader Just Die
By ANDREW ROSS SORKIN and RIVA D. ATLAS

11/22/2001
The New York Times
Page 1, Column 2
c. 2001 New York Times Company

Officials of Dynegy yesterday weighed whether to seek to renegotiate the terms of the company's agreement to acquire Enron, its Houston rival, while Enron and its bankers sought to shore up its finances, executives close to the two companies said. 
The discussions came as the stock and energy markets continued to register doubts about the financial stability of Enron, the energy trading concern. Enron's stock fell another 27 percent, even though the company won a three-week reprieve from its banks on a $690 million note that would have come due next Tuesday if Enron had been unable to come up with collateral.
An executive close to Enron described the loan extension, by J. P. Morgan Chase and Citigroup, as a Band-Aid, given the approach of Thanksgiving. ''People are trying to take the time to come up with something for the intermediate term,'' the executive added. 
The bankers also met with investors, including leveraged buyout firms and two industrial companies, which might inject up to $2 billion into Enron under arrangements that would protect them from a further collapse in the company's stock, the executives said. 
The new investments would be in Enron's Transwestern Pipeline, which links natural gas fields in Texas to the California market, they said. The deals would be structured like Dynegy's agreement, as part of the merger, to infuse $1.5 billion into the Enron subsidiary that owns the Northern Natural Gas pipeline. That arrangement lets Dynegy keep the pipeline even if the merger falls apart. 
Besides talking with other potential investors, J. P. Morgan Chase and Citigroup agreed to terms that have each taking a $250 million equity stake in such a deal, the executives said. The bankers plan to meet with Enron officials on Monday to complete the transactions, they added. 
Karen Denne, an Enron spokeswoman, noted that the company had previously said it was seeking a further infusion of up to $1 billion in equity. ''We are not going to discuss the specifics of who we are talking to,'' she said. 
Though investors again manhandled the stock of Enron, which is down 94 percent this year, the banks, Dynegy and credit-rating agencies all sought to proceed delicately. Executives explained that hasty moves could only deepen the crisis of confidence in Enron, wiping out the energy trading operations that only months ago made it one of the nation's most admired and politically influential companies. 
Dynegy officials worried yesterday that even talking about renegotiating the merger deal could damage confidence in Enron among investors and other energy traders. 
An executive close to Dynegy said that there did not yet appear to be legal grounds on which to break up the deal unilaterally. Nor, he added, was Dynegy prepared to demand that Enron allow the terms of the deal to be changed. But he indicated that the situation could change. 
Ms. Denne, the Enron spokeswoman, said that she was not aware of any attempts by Dynegy to renegotiate the deal. Dynegy issued a statement saying that its chief executive, Chuck Watson, was encouraged by the steps Enron had taken with its bankers. Mr. Watson said the company was continuing its due diligence on the deal. 
Dynegy's shares, which rose as high as $46.94 in the days after the merger was announced, on Nov. 9, closed yesterday at $39.76, down more than 4 percent for the second consecutive day. 
Enron was the most actively traded stock on the New York Stock Exchange, closing at $5.01, down $1.98. That means the premium that Dynegy would be paying for Enron has risen to 115 percent. 
Analysts following Enron's debt said that bankers had little choice but to support the company, given that most of Enron's bank debt is not secured. That means that if bankers pushed Enron into bankruptcy, they would receive no better treatment than the holders of more than $6 billion in Enron bonds and other debt. 
Enron said it was in talks with lenders to restructure $9.15 billion in debt that will come due by the end of 2002. ''If the Dynegy deal closed, that would be the best thing for the banks,'' said one analyst following the debt. 
James B. Lee Jr., vice chairman of J. P. Morgan Chase, echoed that thought in a statement issued by Enron. ''We believe the interests of Chase and Enron's other primary lenders are aligned in this restructuring effort,'' he said. ''We will work with Enron and its other primary lenders to develop a plan to strengthen Enron's financial position up to and through its merger with Dynegy.'' Along with Citigroup, J. P. Morgan Chase is Enron's lead bank, and it is also an adviser on the merger with Dynegy. 
Another group with the power to push Enron to the brink, the big credit-rating agencies, continued to step gingerly. The agencies have held Enron's debt rating one step above ''junk'' status, knowing that downgrading it further would force the company to pay or refinance up to $3.9 billion in debt -- effectively rendering Enron insolvent. One rating agency official said yesterday that such a move would roil the entire debt market, adding that it was ''patriotic'' to hold off. 
Still, one rating agency, Fitch, put out a strongly worded commentary yesterday. 
''If Dynegy steps away entirely from the merger, Enron's credit situation seems untenable, with a bankruptcy filing highly possible,'' wrote Ralph Pellecchia and Glen Grabelsky, the Fitch analysts following Enron. ''Our present BBB- rating rests on the merger possibility and continued support of the lending banks, without which Fitch would consider lowering the rating.'' 
Analysts and energy executives said that Enron's collapse -- though unthinkable just weeks ago -- would be unlikely to cause a meltdown in the nation's energy markets. While Enron has been the nation's biggest trader of electric power and natural gas, many other companies -- including Dynegy -- make markets in those commodities. Analysts say the gradual unfolding of Enron's financial woes this fall has given its trading partners time to unwind deals and limit their exposure to Enron. 
Yet even one of Enron's most stubborn supporters was forced to concede yesterday that his confidence had been shattered by the company's problems, including the rapid depletion of its cash reserves, restatements that erased $600 million in earnings and the surprise disclosure of the $690 million debt. 
That fan, Goldman, Sachs & Company's energy analyst, David Fleischer, downgraded the shares to neutral. Until yesterday, Goldman had kept the stock on its recommended list.

Photo: Kenneth L. Lay of Enron, left, and Chuck Watson of Dynegy, on Nov. 9, when the acquisition was announced. (Associated Press) Chart: ''The Stock's Collapse'' Enron's stock has lost more than 90 percent of its value in the last year. Graph tracks the daily closing price of Enron shares from November 2000 to yesterday. (Source: Bloomberg Financial Markets) 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	



Enron's Japan subsidiary reviewing its business

11/22/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

TOKYO (AP) - The Japanese subsidiary of Enron Corp., the beleaguered U.S. energy trading company, is reviewing its business here and hopes to conclude its findings in the next few weeks, a company spokeswoman said Thursday. 
Earlier this month, rival Dynegy Inc. said it plans to acquire Enron. Enron has begun an assessment of its global operations.
Enron Japan Corp., a wholly owned subsidiary of the Houston-based company, began its own assessment about a week ago, said spokeswoman Mika Watanabe. 
Enron Japan's business includes E Power Corp., a venture set up in Japan by Enron and Orix Corp., a leasing company, which had been studying possible electric power plants. 
Shares of Enron plummeted another 28 percent Wednesday even though it reached a critical agreement to extend a $690 million debt payment. 
Analysts continued to question, however, whether Dynegy's planned $8.9 billion acquisition of its larger rival Enron will survive, particularly as some traders are limiting business with Enron because they don't know if more negative revelations are coming. 
Enron shares have plunged more than 90 percent over the past several months following the departure of the company's chief executive and an accounting controversy that eventually caused it to restate its earnings since 1997, eliminating more than $580 million of reported income. 
Its latest round of woes started Monday, after Enron filed a document with the Securities and Exchange Commission saying it would have to repay $690 million in debt by Nov. 26 because of decreased credit ratings. 
Enron Japan was established in April 2000 and employs about 60 people, and had hoped to eventually break into Japan's power industry, which is gradually growing more open.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Major Enron Unit Stake May Be Sold For Under $700M-Source

11/22/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -(Dow Jones)- The foreign-owned 85% stake in India's $2.9 billion Dabhol Power Co. may be sold for under $700 million, a senior Indian government source told Dow Jones Newswires Thursday. 
"The two prospective buyers for Dabhol's foreign equity, BSES Ltd. (P.BSX) and Tata Power Co. (P.TPW) have currently suggested a price which is below $500 million. During the final purchase negotiations, their take-it-or-leave-it offer may go up to as high as around $700 million," said the official.
U.S. energy company Enron Corp. (ENE) owns a controlling 65% stake in the 2,184-megawatt Dabhol power project, located in the western Indian state of Maharashtra. 
Enron wants to sell its stake because of payment defaults by its sole customer - the Maharashtra State Electricity Board - and the Indian federal government's failure to honor payment guarantees. In August, the U.S. company said it was willing to sell its stake at cost. MSEB owns 15%, while General Electric Co. (GE) and Bechtel (X.BTL) own 10% each in Dabhol Power. 
Tata and BSES were expected to complete their due diligence on the Dabhol project by end January 2002 at the latest. After the due diligence is completed, price negotiations will start and thereafter, the transfer of shares and transfer of ownership will take place, said the official. 
He said India's state-owned utility National Thermal Power Corp. (P.NTP) was keeping a close eye on DPC's negotiations with BSES and Tata and there was a possibility that at some stage it may quote its price to buy a stake in Dabhol. 
"NTPC might join the race at some stage. They have the financial resources and the core competence in the power sector. There's a possibility that NTPC may make its price offer just about the time the final price negotiations of BSES and Tata with Dabhol Power Co. start," said the official. 
-By Himendra Kumar, Dow Jones Newswires; 91-11-461-9426; himendra.kumar@dowjones.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

JAPAN: Shock waves from Enron crisis felt in Japan.

11/22/2001
Reuters English News Service
(C) Reuters Limited 2001.

TOKYO, Nov 22 (Reuters) - The shock waves from the crisis at Enron Corp are being felt in Japan, where the stressed energy group has about 60 billion yen ($486.9 million) of bonds outstanding, money market dealers said on Thursday. 
Dealers said most of Enron's yen-denominated bonds are believed to be held by Japanese investors.
In the U.S. bond market, Enron's 6.4 percent dollar-denominated notes maturing in 2006 were selling at a deep discount of 62 cents on the dollar on Wednesday. 
The price of Enron's yen bonds are also under pressure, but because the Japanese market is far less liquid than the U.S. market it is virtually impossible to quote a price. 
"Even if you want to sell them, there's no one is out there to buy," said a market source, who declined to be identified. 
Some investors holding Enron's bonds put on brave face. 
"Enron's core business is still doing fairly good. And we have bonds due next May. So we have concluded that there won't be grave concerns for its redemption," said Yasushi Inoue, manager at UFJ Partners Asset Management. 
Some in the market are concerned, however, that some money management funds (MMFs) have Enron bonds in their portfolio. 
MMFs, seen as an alternative to bank deposits, generally invest in safe assets in order to secure stable fixed income. 
But because the Bank of Japan has been guiding short-term rates to near zero since last March, some funds are allocating money to riskier bonds, or commercial paper, to raise returns. 
Five MMFs run by four asset management companies hold Enron bonds totaling about 38.5 billion yen nominal value. 
DEFAULT WORRY 
Should Enron default on the yen bonds, the price of those MMFs would fall below their purchase price, meaning some funds would be unable to fully pay back the money entrusted to them. 
Although MMFs technically do not guarantee principle, they are widely regarded be almost as safe as deposits. 
"If the MMF prices fall below purchase price, investors may lose confidence in MMFs, which could trigger an exodus of funds out of MMFs," said the market source. 
That would force fund managers of MMFs to sell a large part of assets in their funds, which could in turn push up short-term interest rates. 
"I could not rule out such possibility," said the source. 
Separately on Thursday, Enron said it was reviewing operations in Japan, including an option to sell the business to a third party. 
"Enron Corp is reviewing its operations in Japan ... considering every possibility including retaining the operations or selling a part of it," a spokeswoman in Tokyo said. 
The company will likely finalise its plans within five or six weeks, she said. 
Enron gained its first foothold in Japan in 1999, when it established affiliate E Power Corp, hoping to benefit from Japan's deregulation of the retail power market. 
In April last year, it set up Enron Japan Corp, which has so far introduced electricity trading and marketing and other financial instruments. The company has 70 employees in Japan. 
Shares of Enron closed down 28.33 percent at $5.01 on the New York Stock Exchange on Wednesday. ($1=123.22 yen).

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Enron's Wessex Water unit faces possible bid from institutions - report

11/22/2001
AFX News
(c) 2001 by AFP-Extel News Ltd

LONDON (AFX) - At least four financial institutions are circling Wessex Water PLC as possible bidders for the south-west of England water company that Enron, the struggling US energy group, needs to sell, according to the Financial Times. 
The newspaper did not name its source, but said Royal Bank of Scotland PLC, Candover Investments, WestLB and Barclays Capital are understood to have expressed an interest in buying Wessex, which provides water and sewage services to 2.4 mln people.
Nomura, the Japanese investment bank, has previously expressed an interest in Wessex. 
Enron, which bought Wessex in 1998 for 1.36 bln stg revealed on Monday that it must repay 6.35 bln stg of debt by the end of next year. 
The newspaper said a purchase is likely to be complicated. 
Enron -- subject of a 9 bln usd bid from Dynegy, its smaller US energy rival -- could be faced with a charge of 650 mln usd if the combined value of Azurix, which controls its water interests, falls to 1.95 bln usd or 25 pct below its book value, the newspaper said. ml/rn For more information and to contact AFX: www.afxnews.com and www.afxpress.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Business
Enron seeks to stave off collapse
Chris Ayres in New York

11/22/2001
The Times of London
News International
Final 4
30
(Copyright Times Newspapers Ltd, 2001)

DIRECTORS of Enron, the US energy group with close ties to President Bush, will spend today's Thanksgiving holiday locked in emergency negotiations to save the company from collapse, after a 44 per cent plunge in its share price over two days. 
Investors were increasingly worried last night that rival Dynegy's $8.9 billion (Pounds 6 billion) all-stock rescue bid will fall apart over the holiday period. As part of the deal, ChevronTexaco, which owns a quarter of Dynegy, will inject $1.5 billion of emergency funding into Enron.
Enron, which has admitted to huge accounting errors amid a Securities and Exchange Commission inquiry, said on Monday that it could be forced to pay back $690 million of debt because of its deteriorating creditworthiness. In a crucial concession, that payment was yesterday delayed to mid-December. It will have to pay another $9.1 billion by the end of 2002. 
Enron is being investigated by the SEC for allegedly making complex investment deals that kept billions of dollars of debt off the company's books.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Business
INVESTORS TAKE PROFITS FOR SECOND STRAIGHT DAY; SOME BELIEVE MARKET MAY HAVE MOVED TOO FAST IN RECENT UPTURN
BY AMY BALDWIN, Associated Press

11/22/2001
San Jose Mercury News
Morning Final
6C
(c) Copyright 2001, San Jose Mercury News. All Rights Reserved.

NEW YORK -- Doubtful that the stock market's latest surge can be sustained indefinitely, investors secured profits for the second straight day Wednesday, leaving prices moderately lower. 
''It is a bit of recognition that the market may have moved too, too fast,'' said Alan Ackerman, executive vice president of Fahnestock & Co.
After weeks of swooping up stocks on their increasing belief the economy will turn around in 2002, investors were expected to lock in some gains. 
The Dow Jones industrial average closed down 66.70, or 0.7 percent, at 9,834.68. Profit-taking brought the Dow 75 points lower Tuesday, but the blue chips had climbed 368 points in the previous six sessions. 
The Dow is 19.4 percent above its 2001 low of 8,235.81 on Sept. 21, which followed a 1,369-point plunge the first week of trading following the Sept. 11 terrorist attacks. 
''It's not surprising to see some profit taking under way. The market has literally run a mile,'' Ackerman said. 
The broader market also slipped Wednesday. The Nasdaq composite index pulled back 5.46, or 0.3 percent, to 1,875.05 and the Standard & Poor's 500 index declined 5.63, or 0.5 percent, to 1,137.03. 
The broader indicators have also risen substantially from the lows they incurred after the attacks. The Nasdaq is up 31.7 percent; the S&P 500, up 17.7 percent. 
''Frankly, the market from Sept. 21 to today has gone from an extremely oversold condition to an extremely overbought condition,'' said Larry Wachtel, market analyst with Prudential Securities. 
Volume was lighter than normal Wednesday as many traders took the day off ahead of today's Thanksgiving holiday. The market will have an abbreviated session Friday. 
A positive report on consumers' mood failed to motivate investors to buy. The University of Michigan consumer sentiment index rose to 83.9 percent in November, up from 82.7 percent in October, according to what index subscribers told Dow Jones News Service. 
Stocks fell across most sectors and industries, in keeping with how widespread the market's run-up has been. Among Wall Street's losers were companies whose outlooks or performance disappointed investors. 
In technology, Dow industrial Microsoft fell $1.35 to $64.05 after Salomon Smith Barney downgraded its rating on the software maker. Triquint Semiconductor tumbled nearly 12 percent, down $2.33 at $17.22, having said its fourth-quarter results will be at the low end of previous estimates. 
Debt-ridden Enron slid 28 percent, down $1.98 at $5.01, amid worries about the company's ability to handle its spiraling financial problems. Rival Dynegy fell $1.94 to $39.76 on concerns over its $8.9 billion merger with Enron, slated to be completed by summer. 
Department-store retailer Dillard's fell 50 cents to $15.05 after posting a third-quarter loss that was 6 cents a share wider than Wall Street expected. 
Meanwhile, investors rewarded companies that offered positive prospects for their future. Amgen rose $4.07 to $61.98 after the biotech company said Tuesday earnings per share will grow in the 20 percent range next year. 
Xerox gained 67 cents to $7.67 after Deutsche Bank Alex. Brown raised its rating on the stock. {CHART} CHART: MERCURY NEWS 150 
Source: Media General

Chart 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Business/Financial Desk; Section C
THE MARKETS: STOCKS & BONDS
Shares Take Step Backward In Trading Before Holiday
By Reuters

11/22/2001
The New York Times
Page 5, Column 5
c. 2001 New York Times Company

Stocks retreated further from bull-market territory yesterday, as traders hesitated to hold big positions going into the Thanksgiving holiday with worries about the short-term health of the economy and corporate earnings. 
Even a bullish economic report, which showed the number of Americans lining up for first-time unemployment benefits was down for a fourth consecutive week, could not overcome fears that a recovery was still a way off.
''The market has been levitating -- you could pass a hoop over it and see there's not a lot of fundamental support,'' said Jeffrey Kleintop, chief investment strategist for PNC Advisors, who said his firm had sold bonds but was holding cash instead of buying stocks. 
''Jobless claims were down,'' he said, ''and that's a good sign, but we're still a long way from seeing the bottom in earnings for corporations.'' 
Indeed, analysts do not expect quarterly profits to start to increase again until at least the second quarter of next year, according to the market research firm Thomson Financial/First Call. 
Amgen bolstered health shares after the company, a leader in biotechnology, said strong sales of new drugs would help earnings increase faster than analysts had expected. But big technology names like Microsoft fell. 
The Dow Jones industrial average dropped 66.70 points, or 0.7 percent, to close at 9,834.68, down for the second session after clambering into bull-market territory on Monday. A bull market is defined as a gain of at least 20 percent from a recent low. 
The Standard & Poor's 500-stock index declined 5.63 points, or 0.5 percent, to 1,137.03, while the technology-laden Nasdaq composite index fell 5.46 points, or 0.3 percent, to 1,875.05. 
The market is closed today for Thanksgiving; there will be a half-day of trading tomorrow. 
Enron, the most-active stock on the New York Stock Exchange for a second consecutive session, tumbled $1.98, to $5.01, on worries the company may not stay afloat long enough to be rescued in a pending takeover by Dynegy. 
Enron said it had won a three-week reprieve from its banks on a $690 million note and reaffirmed its agreement to be taken over by Dynegy. But shares remained lower after the announcement. 

-------------------- 

Treasuries Are Lower 
(By Bloomberg News) 
Treasury bond prices fell yesterday as jobless claims declined for a fourth week and a consumer confidence index rose, bolstering expectations the economy may have bottomed. 
The 10-year Treasury note fell 22/32, to a price of 100 14/32. The note's yield, which moves in the opposite direction from the price, rose to 4.95 percent from 4.87 percent on Tuesday. 
The price of the 30-year Treasury bond fell 17/32, to 100 11/32. The bond's yield rose to 5.35 percent from 5.32 percent on Tuesday.

Graph tracks the Dow Jones industrial average over the past year. (Sources: Associated Press; Bloomberg Financial Markets) Tables: ''Hot & Cold'' provides a look at stocks with large percentage gains and losses; ''The Favorites'' lists stocks held by largest number of accounts at Merrill Lynch. (Compiled from staff reports, The Associated Press, Bloomberg News, Bridge News, Dow Jones, Reuters) Chart: ''Freddie Mac Yields'' Average for Federal Home Loan Mortgage Corp. participation certificates, plotted weekly. Graph tracks averages of 15 and 30-year mortgages from July through November. (Source: F.H.L.M.C.) 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	


Business
Enron's cash woes endanger merger ; Dynegy mulls whether to ask for renegotiation
From Tribune news services

11/22/2001
Chicago Tribune
North Final ; N
1
(Copyright 2001 by the Chicago Tribune)

Officials of Dynegy Inc. on Wednesday weighed whether to seek to renegotiate the terms of an agreement to acquire Enron Corp., its Houston rival, while Enron and its bankers sought to shore up the energy trader's finances, executives close to the two firms said. 
Although Enron said it secured the remaining $450 million of a new $1 billion credit line and pushed back the deadline for repaying a $690 million debt, its shares fell a further 28 percent, after falling 23 percent on Tuesday.
"If Dynegy steps away entirely from the merger, Enron's credit situation seems untenable, with a bankruptcy filing highly possible," rating agency Fitch Investors said. 
UBS Warburg analyst Ron Barone said "bankruptcy would not be out of the question" if the merger fell through or ran into obstacles. 
"We believe the odds of Enron incurring a material adverse change on its operations is soaring," Barone said in a research note, saying that Dynegy may invoke clauses allowing it to walk away from or alter the terms of the $9 billion agreement. 
In a statement, Enron said it was in feverish talks with its other lenders to restructure its debt obligations and reaffirmed its commitment to the Dynegy deal. 
"We continue to believe that this merger is in the best interests of our shareholders, employees and lenders," Enron Chairman and Chief Executive Kenneth Lay said. 
J.P. Morgan Chase & Co. Vice Chairman James Lee said in the same statement that Chase believes its interests and those of Enron and its other primary lenders are aligned, and that the bank would "develop a plan to strengthen Enron's financial position up to and through its merger with Dynegy." 
Enron's shares fell $1.98 to close at $5.01. It was the most actively traded issue on the New York Stock Exchange for a second day in a row. 
The shares had dipped as low as $4.55 on Wednesday, rebounding slightly after Enron's announcement. Accounting for stock splits, that is the lowest Enron has traded since February 1989. 
Dynegy shares were off $1.94, or 4.65 percent, at $39.76. 
Dynegy on board 
Dynegy Chairman and CEO Chuck Watson said he is encouraged by the new loan and debt extension. Watson said in a statement that Dynegy was working to "accelerate the regulatory approvals required to complete the merger." 
Watson said ChevronTexaco Corp., which owns 26 percent of Dynegy, reiterated its "full confidence" in Dynegy's ability to complete the merger. 
However, Dynegy officials worried Wednesday that even discussing the idea of renegotiating the merger agreement could damage confidence in Enron among investors and other energy traders. 
An executive close to Dynegy said that there did not yet appear to be legal grounds on which to break up the deal unilaterally. Nor, he added, was Dynegy prepared to demand that Enron allow the terms of the deal to be changed. 
An Enron spokeswoman said that she was not aware of any attempts by Dynegy to renegotiate the deal. 
Privately, analysts were calling the odds of success lower since Enron made a filing with the Securities and Exchange Commission on Monday alerting investors to its credit crunch. 
Monday's filing noted that Enron's financial woes have led to a "reduced level of transaction activity" with the company by trading partners. 
Most analysts interviewed by Reuters called the chances of the deal even, where earlier they had listed odds of success at 60 percent to 70 percent. 
However, one analyst said he thought emotion was driving the current stock moves, and that it comes despite three powerful factors in favor of the deal. 
"The bottom line, Enron needs this to happen, Dynegy wants this to happen, and ChevronTexaco is supportive of it happening," Credit Suisse First Boston analyst Curt Launer said. 
Trading deals down 
Goldman Sachs downgraded Enron and Dynegy to "market perform," and took both off its recommended list. Goldman said the cash infusion from Dynegy--$1.5 billion--"appears inadequate to restore the confidence of Enron customers." 
Enron's trading partners said they were treading carefully. 
"We've been scaling back for some time, but we're still dealing with Enron. Every day, our credit people are watching," said Al Butkus, a vice president with Kansas City-based UtiliCorp United Inc. 
The trading business, Enron's crown jewel and the part most coveted by Dynegy, relies on volume for profitability, and Enron has said it was possible that the lower volumes would hamper fourth- quarter earnings. 
One indicator of Enron's shape was the fact that its bonds are being quoted by price, like junk bonds, rather than by how much extra yield they carry over U.S. Treasuries, like investment-grade bonds. 
The company's 6.4 percent notes maturing in 2006 and 6.75 percent notes maturing in 2009 were respectively bid Wednesday afternoon at 62 and 60 cents on the dollar, each down from the high 60s on Tuesday. Their yields to maturity were a respective 19 and 16 percent. Its 20-year zero-coupon convertible bonds traded Wednesday at just over 34 cents on the dollar, down from 38 cents on Tuesday.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Business
Market report
Valuation not what it used to be
Bill Barnhart

11/22/2001
Chicago Tribune
North Final ; N
1
(Copyright 2001 by the Chicago Tribune)

Gone are the cheerleading stock analysts, who achieved celebrity by touting stocks while quietly collecting bonuses for helping the same companies distribute their shares. 
The profit outlook for many American corporations is dismal, with or without accounting manipulations.
Yet in recent days, a widely followed measure of stock values, the price/earnings ratio (P/E) of the benchmark Standard & Poor's 500 index, once again has climbed to near historic highs, more than 30, nearly the level it was at the market's frothy peak 20 months ago. 
Have investors failed to learn the lesson of the Nasdaq stock boom and bust? 
Maybe. But the numbers also indicate this thumbnail indicator investors use to take the temperature of their stock values has itself lost value. 
"You shouldn't use a P/E multiple today to make sense of the stock market," said Bart Madden, a partner at Chicago-based HOLT Value Associates. 
The conventional P/E is calculated by dividing the price per share of a stock by the sum of its most recent four quarters' earnings per share. 
High P/Es--more than 20--are said to reflect optimism, bidding up stock prices before earnings are evident. Low P/Es are said to indicate pessimism--investors refusing to pay much for profits generated. 
That sounds simple, but it's not. Many definitions of earnings are used these days, leading to radically different P/Es for the same stock. 
For example, Enron, the embattled Houston-based energy trading company that has been in the news for a series of financial disasters, had a P/E of 47 in Wednesday's Tribune; 54 in The Wall Street Journal and Quicken.com, and 68 on the CNN/Money Web site. 
By any definition, if a company's earnings per share decline and its stock price stays the same, the P/E will rise, falsely implying more optimism. 
"Based on trailing earnings, the present elevated S&P 500 P/E ratio is mostly a function of the collapse in earnings rather than the appreciation in equity prices," wrote analyst Joe Liro in a report for Stone & McCarthy Research Associates. 
For example, the P/E of Lisle-based Tellabs was 35 on March 10, 2000, when the Nasdaq market peaked. It was 35 on Wednesday. But Tellabs shares closed at $16.04 on Wednesday, compared with $57 on March 10, 2000. Earnings at Tellabs have eroded. 
A more subtle factor affecting the earnings denominator of the P/ E calculation is the failure of accounting rules to reflect changing business conditions in the information age and the expansion of service businesses relative to manufacturers. 
Many service and information companies invest heavily in research and development and advertising as opposed to plants and equipment. 
Yet R&D and advertising must be deducted as they are incurred as an expense, resulting in lower profits (and higher P/Es) compared with companies more reliant on plant and equipment investments that are depreciated over many years. 
The numerator (share price) is also a moving target. Stock prices stand more than 25 percent below last year's peak, based on the S&P 500 index, despite the recent rally. Stock prices look forward, currently reflecting hopes for a swift economic revival. 
But share prices don't mean the same thing they did a decade ago, when interest rates were much higher. Traders estimate stock prices by dividing the expected cash returns to investors in the business by the risk-free rate of return, indicated by yields on Treasury securities. 
With long-term Treasury yields 40 percent lower than 10 years ago, stock prices inevitably are higher for the same amount of cash returns in any business, HOLT Value Associates' Madden said. Even with businesses suffering, lower interest rates boost P/Es. 
Moreover, the giant Baby Boom cohort, currently at its peak investment years, maintains steady buying pressure in the market, regardless of earnings disappointments. 
Wednesday's action: Stock prices retreated for a second day Wednesday, as investors trimmed their positions ahead of the holiday. 
Treasury bonds continued their recent slide, sending interest rates higher, after the government reported that first-time claims for unemployment benefits unexpectedly dropped for a fourth consecutive week. 
The Dow Jones industrial average fell 66.70, to 9834.68. All but five of the 30 Dow industrials lost ground. 
Losers outnumbered winners by 3-2 among New York Stock Exchange stocks. NYSE volume reached 1.02 billion shares ahead of the Thursday holiday. 
Tech stocks fared better than blue chips. The Nasdaq composite index slipped 5.46, to 1875.05, on Nasdaq volume of 1.58 billion shares. Losers topped winners by a slim margin.

GRAPHIC; Caption: GRAPHIC: Looking at valuations Sources: Dow Jones & Co., Bigcharts.com Chicago Tribune - See microfilm for complete graphic 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

WORLD STOCK MARKETS - Bad news from techs heralds Wall St decline.
By Mary Chung in New York.

11/22/2001
Financial Times
(c) 2001 Financial Times Limited . All Rights Reserved

US equities were broadly lower in early trading with technology stocks leading the decline after bleak corporate news from two chipmakers and an analyst downgrade for Microsoft. 
By midsession, the Dow Jones Industrial Average was down 75.14 at 9,826.24 while the S&P 500 index dropped 8.73 at 1,133.93. The Nasdaq Composite shed 20.98 at 1,859.53. Volume was light ahead of today's Thanksgiving holiday.
Microsoft fell 2.3 per cent at $63.81 after Salomon Smith Barney reduced its rating on the world's biggest software company to "neutral" from "outperform" based primarily on valuation. Salomon targets the company's price at $60. 
Salomon also downgraded Analog Devices after the chipmaker reported quarterly results that failed to match Wall Street expectations. The stock fell 1.4 per cent at $41.39. 
Triquint Semiconductor tumbled 12 per cent at $17.22 after the company cut its fourth-quarter earnings targets. Merrill Lynch promptly reduced its revenue targets on the company but maintained its "accumulate/buy" rating. 
Tech Data gave up 5.5 per cent at $38.39 after Salomon Smith Barney downgraded the company to "outperform" from "buy" based on valuation and weakening European IT spending. 
Most other big cap tech stocks were moving lower with Cisco Systems off 4.2 per cent at $18.95 and Sun Microsystems 5.4 per cent at $12.54. Intel, however, was up 0.5 per cent at $30.09. 
Enron, the embattled energy trading company, suffered another blow after Goldman Sachs downgraded the company and its acquirer Dynergy. Goldman said: "The cash infusion from Dynergy appears inadequate to restore the confidence of Enron customers. Enron plunged 33 per cent at $4.68 while Dynergy gave up 6 per cent at $39.10. 
Healthcare stocks were the one bright spot on Wall Street as shares in AstraZeneca rose 2 per cent at $46.30 and Pfizer 1 per cent at $43.63. 
Amgen jumped 6.5 per cent at $61.70 after the biotechnology company forecast an increase in sales of its new anaemia and arthritis drugs. 
Chiron Corp, however, dropped 9 per cent at $45.66 after the company's said late-stage clinical trials of a drug for treating severe sepsis failed to meet its main goals. 
Toronto moved lower in early trading and by midsession the S&P 300 composite index was off 0.5 per cent at 7,342.0. 
Nortel Networks, the market's top-weighted stock, shed 51 cents at C$12.39. 
Barrick, up 6 cents at C$23.16, led a modest improvement for the golds sector. 
(c) Copyright Financial Times Ltd. All rights reserved. 
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

COMPANIES & FINANCE UK AND IRELAND - Institutions cast eyes over Wessex Water - WATER ENRON SEEKS SALE.
By JIM PICKARD and ANDREW TAYLOR.

11/22/2001
Financial Times
(c) 2001 Financial Times Limited . All Rights Reserved

At least four financial institutions are circling Wessex Water as possible bidders for the south-west of England water company that Enron, the struggling US energy group, needs to sell. 
Enron, which bought Wessex in 1998 for #1.36bn - then worth $2.2bn - revealed on Monday that it must repay $9.15bn ( #6.35bn) of debt by the end of next year.
Royal Bank of Scotland, Candover Investments, WestLB and Barclays Capital are understood to have expressed an interest in buying Wessex, which provides water and sewage services to 2.4m people. 
Nomura, the Japanese investment bank, has previously expressed an interest in Wessex. 
A purchase is likely to be complicated. Enron - subject of a $9bn bid from Dynegy, its smaller US energy rival - could be faced with a charge of $650m if the combined value of Azurix, which controls its water interests, falls to $1.95bn or 25 per cent below its book value. 
This is because of complex off-balance sheet debt and ownership structures of Atlantic Water Trust and Marlin Trust. 
Wessex is the main asset of Azurix of which Enron owns a third directly and controls another third through its 50 per cent interest in Atlantic Water Trust. 
Medium-sized water companies similar to Wessex are trading on the London stock market at about 85 per cent of their regulated asset value, say brokers. This would indicate a possible price tag for the company of about #1bn, likely to be well below the threshold required by Enron. 
Financial institutions have expressed a growing interest in refinancing UK water companies, largely by debt. Revenues from water services are be securitised to repay loans. 
A possible trade bidder for Wessex has yet to emerge. However, Centrica and Enel, the Italian group, both expressed an interest in buying Southern Water from Scottish Power. 
The Scotland-based energy group instead announced plans last week to raise #1.9bn from refinancing Southern Water through the bond market. 
Credit Suisse First Boston, which advised Scottish Power, said it expected other utilities to consider similar debt-financed schemes. 
WestLB earlier this year supported a heavily debt-financed #106m management buy-out at Mid-Kent Water while Royal Bank of Scotland worked on the securitisation of Glas Cymru, the co-operative Welsh company that bought the principality's water company. 
Drummond Capital, a subsidiary of Royal Bank of Scotland, is backing a management buy-out of Brockhampton, owner of Portsmouth Water, for #71m and assumption of #6m of net debt. www.ft.com/water. 
(c) Copyright Financial Times Ltd. All rights reserved. 
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Business; Financial Desk
Enron Shares Fall Again on Doubts Energy: A retreat by bankers or a credit downgrade could threaten Dynegy merger and land firm in bankruptcy. Stock tumbles to 12-year low.
THOMAS S. MULLIGAN
TIMES STAFF WRITER

11/22/2001
Los Angeles Times
Home Edition
C-1
Copyright 2001 / The Times Mirror Company

NEW YORK -- Investors pounded shares of Enron Corp. to a 12-year low Wednesday amid mounting doubts about whether the Houston-based energy-trading king can survive long enough to complete its announced takeover by cross-town rival Dynegy Inc. 
Enron shares plunged $1.98, or 28%, to close at $5.01 in New York Stock Exchange trading, its lowest level since April 1989. Enron, a Wall Street darling just months ago, is down 94% year-to-date.
A minefield stands between Enron and the merger, analysts said. Almost any stumble--a further downgrade by a credit rating agency, a retreat by Enron's bankers or trading partners, another negative surprise about its financial condition--could pitch it into bankruptcy. 
Still, the credit rating agencies held their fire Wednesday, keeping Enron's bonds one notch above "junk," or sub-investment-grade, status. 
Enron also gained some breathing space from its lenders, announcing that a $690-million note payment due Tuesday had been postponed to mid-December. 
"I think they'll probably limp through [to the merger]," said analyst Michael S. Worms of Gerard Klauer Mattison in New York. "But it's a bad limp." 
There were no major new disclosures to prompt Wednesday's sell-off, but investors seemed to be afraid to hold Enron stock over the Thanksgiving weekend, traders said. The stock market is closed today and open Friday for an abbreviated session--traditionally the lightest trading day of the year. 
Enron shares plummeted 23% on Tuesday in reaction to a filing Monday with the Securities and Exchange Commission in which Enron disclosed the $690-million obligation. The disclosure was a surprise even to the credit rating agencies that have been in constant contact with Enron executives since the company's finances began unraveling last month. 
The rating agencies' view is critical, because under some controversial Enron deals that have come to light recently, a downgrade to junk level would be a "trigger event" requiring Enron to immediately pay $3.9 billion to creditors, the company said in Monday's SEC filing. 
Such an event could instantly bankrupt the company, analysts said. 
Enron has been reeling since mid-October, when it began disclosing details of deals involving limited partnerships organized by current or former company executives. The partnerships' purpose appears partly to have been to pump up Enron's reported profit while concealing large amounts of debt it was incurring. 
The SEC has announced that it is investigating the situation. 
In addition to announcing the delayed payment, Enron said Wednesday that it had tapped the remaining $450 million of a previously announced $1-billion credit line from its chief lenders, J.P. Morgan Chase & Co. and Citigroup Inc. 
Enron probably can restructure its debts and postpone most payments until May, analyst Ronald M. Barone of Standard & Poor's rating agency said Wednesday. It is in the lenders' interest to cooperate, as much of Enron's debt is unsecured by hard assets, and the banks would stand to lose most of their principal in a bankruptcy, he said. 
Dynegy broke its recent silence Wednesday by issuing a statement in which Chairman and Chief Executive Chuck Watson said he was "encouraged" by the news of Enron's agreements with its lenders. 
Dynegy is "working to accelerate the regulatory approvals required to complete the merger," Watson said, adding that oil giant ChevronTexaco Corp., which owns 26% of Dynegy's stock, reiterated its support for the deal. 
Ratcheting up the pressure on Enron, another credit rating agency, Fitch Inc., issued a statement Wednesday listing its own concerns. Enron's energy trading partners seem to be demanding more cash collateral and reducing their exposure to Enron, which calls into question the ongoing value of the company's core trading business, Fitch said. 
Although Dynegy has reiterated its intention to complete the merger, Enron's problems make renegotiating the merger terms or canceling the deal a possibility, Fitch said. 
"If Dynegy steps away entirely from the merger, Enron's credit situation seems untenable, with a bankruptcy filing highly possible," Fitch said. 
If the merger falls through, Dynegy still will retain the right to purchase Enron's Northern Natural Gas Co. pipeline system for $1.5 billion. 
However, analyst Andre Meade of Commerzbank Securities said he believes Dynegy still is mainly interested in the trading franchise. 
"I don't think it's worth Dynegy's while to go through all this pain if they just want to pick up assets [such as the pipeline] on the cheap," Meade said.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

FRONT PAGE - FIRST SECTION - Enron granted breathing space.
By ROBERT CLOW, ANDREW HILL, SHEILA MCNULTY and GARY SILVERMAN.

11/22/2001
Financial Times
(c) 2001 Financial Times Limited . All Rights Reserved

FRONT PAGE - FIRST SECTION - Enron granted breathing space - US energy group postpones $690m in repayments as it fights for survival. 
Enron, the crisis-hit US energy trader, won a stay of execution from its lenders yesterday but remained on a knife edge as it struggled to restore the confidence of customers, bankers and investors.
The former stock market star said repayment of $690m ( #479m) of outstanding notes would be postponed from next Tuesday to "mid-December". The group also said it had finalised the remaining $450m of a $1bn credit line from JP Morgan Chase and Salomon Smith Barney, part of Citigroup. 
Enron's survival is crucial to the smooth functioning of the US energy market, which the group dominates. Its failure would also have severe repercussions in the wider financial markets, where Enron offsets much of the risk of energy price changes. 
Negotiations with lenders are set to continue through today's Thanksgiving holiday, according to people close to the talks. 
Whether Enron can survive depends on the commitment of Dynegy, rival US energy group, to its $9bn rescue takeover bid, announced two weeks ago. Dynegy said yesterday it was "encouraged" that Enron had progressed in boosting its liquidity and it was continuing the "due diligence" review of Enron's operations. 
Some analysts believe Enron will burn through its cash balances of $1.2bn before the Dynegy deal can be completed next year. 
David Fleischer of Goldman Sachs, one of the last remaining bulls on Enron, downgraded the stock yesterday, pointing out that cash balances were inadequate to pay off debt obligations of $2.8bn by the end of the year. 
One person close to the talks with lenders said Enron had a medium-term plan for restructuring $9.15bn of debt due by the end of next year. Jimmy Lee, vice-chairman of JP Morgan Chase, said the bank would work to "strengthen Enron's financial position up to and through its merger with Dynegy". 
In morning trading yesterday, Enron's stock fell 33 per cent before it announced the extension of the $690m repayment. The group's bonds had also fallen to levels that suggested Enron faced bankruptcy. 
By lunchtime in New York the stock had recovered slightly and was trading at $4.97, 29 per cent lower on the day. The shares started the week at $9, but a regulatory filing by Enron on Monday that detailed the extent of its debt prompted traders to limit exposure before Thanksgiving. 
Additional reporting by Gary Silverman and Robert Clow .. Lex, Page 22 Enron seeks sale, Page 24. 
(c) Copyright Financial Times Ltd. All rights reserved. 
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Houston Chronicle Jim Barlow Column
Jim Barlow

11/22/2001
KRTBN Knight-Ridder Tribune Business News: Houston Chronicle - Texas
Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World Reporter (TM)

Tis the season to be thankful. It's just that it seems as if any column counting our blessings this Thanksgiving Day should start with, "Yes, but " 
What with airplanes being flown into buildings, thousands dead, a war in Afghanistan that will no doubt spread to other places, anthrax in the mail, a recession looming, Houston companies collapsing or being sold and jobs disappearing -- well, thankfulness is harder to come by.
The most, it seems, that can be said is, "Well, it could be worse." 
I mean, Enron could be being purchased by someone from out of town instead of by Dynegy. This deal means that the great majority of those Enron jobs may still be here. 
Or that while Conoco is being bought by Phillips Petroleum -- never mind that "merger of equals" talk -- Phillips has decided, for sound business reasons, to put the merged company headquarters here instead of Bartlesville, Okla., where Phillips is based now. 
Then there's the recession. May it be short. But if it isn't, we will survive. Unfortunately, no one has really found a way to abolish the business cycle. It's a fixture of market economies. We've been through this before, and if we live long enough we will go through it again. 
Some encouraging signs? 
In the past Houston has done better in many of the national recessions simply because we were the place you had to come if you wanted to keep your car running and the electricity running through your air conditioner. However, as is usual in recessions, demand for energy drops and the price of oil and natural gas tend to follow. 
That's bad for Houstonians. But it's good for the national economy. Lower energy prices usually result in higher overall economic activity. And besides, people aren't going to quit driving completely. (He said hopefully.) 
Let's see. Let's see. More encouraging signs. There must be some around here. Somewhere. 
Ah, yes. The 2001 Transamerica Retirement Survey finds half of all Americans say they plan to save more money for their retirement than they did in the past. That's good news indeed, since nearly nine in 10 Americans acknowledge they aren't saving enough to live comfortably after they quit work. Of course prior polls found Americans also vowing they were going to increase retirement savings. Let's hope, as the disclaimers on the mutual funds say, that past performance is not indicative of future results. 
GOOD NEWS/BAD NEWS: Here's a press release from Continental Airlines saying for the first 15 days of November the airline filled 68.4 percent of its seats. That was only 1.8 points below the 70.2 percent load factor in the same period last year. 
Before we get euphoric, however, we have to remember that Continental has cut 18 percent of its flights, resulting in a 15.8 percent decline from the number of seats available last year. And the passenger revenue per available seat declined 21 percent from the year before. Still, that's a bump up from the 23 percent decline in October. And over the Thanksgiving holiday Continental expects the same full planes it had last year. 
See, you can find those silver linings if you look hard enough. It's just that the storm clouds are rather heavy right now. 
And speaking of travel, here's some classic good news/bad news from VacationsToGo.com of Houston. If you're not familiar with them, they sell last minute cruise vacations on the Internet. Last minute usually being 90 days or less before departure. 
The Web site says cruise lines are now selling cruises below their own costs, simply because it's still better than letting the ship leave with an empty cabin. That's bad news for the line but great news for those contemplating a vacation. 
Then there's the stock market. In the recent past it's been making mincemeat of my retirement savings and yours. It does seem to be creeping back a bit. Three cheers. Maybe four if the trend continues. Historically, the stock market drops in advance of a recession and comes back before the good times return. Perhaps the economic turnaround isn't that far away. 
And finally, the best reason to give thanks is that I'm around to write this and you to read it. It's the same reason why the aches and pains of old age can be welcome. It sure beats the alternative. 
Comments? Telephone 713-220-2000 and touch code 1000. E-mail to jim.barlowchron.com. Fax to 713-354-3405.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

BUSINESS
Battered Enron sags even more | Doubts mount over fate of Dynegy deal
Kristen Hays
ASSOCIATED PRESS

11/22/2001
The San Diego Union-Tribune
1,2,6,7
C-1
(Copyright 2001)

HOUSTON -- Shares of beleaguered Enron Corp. plummeted an additional 28 percent yesterday even though it reached a critical agreement to extend a $690 million debt payment. 
Analysts continued to question, however, whether Dynegy Inc.'s planned $8.9 billion acquisition of its larger rival Enron will go through, particularly as some traders are limiting business with Enron because they don't know if more negative revelations are coming.
"While it is unclear how much weaker the wholesale trading business profile is, it is likely that counterparties will continue to closely monitor and limit their exposure to Enron," Fitch Inc. analyst Ralph Pellecchia said Wednesday. 
Enron shares have plunged more than 90 percent over the past several months following the departure of the company's chief executive and an accounting controversy that eventually caused it to restate its earnings since 1997, eliminating more than $580 million of reported income. 
Its latest round of woes started Monday, after Enron filed a document with the Securities and Exchange Commission saying it would have to repay $690 million in debt by Nov. 26 because of decreased credit ratings. 
Enron also acknowledged a "reduced level of transaction activity" with the company by trading partners. 
Shares fell 23 percent Tuesday, then dropped an additional 32 percent in early trading yesterday after a report by Goldman Sachs & Co. analyst David Fleischer that questioned whether Enron had enough cash to survive. 
The filing "raised new issues about liquidity and the ability of the company to even finance itself over the next several months," Fleischer wrote. 
Fleischer said Enron had burned through $2.5 billion from Sept. 30 to Nov. 16 and said its cash balance of $1.2 billion was inadequate to meet remaining debt obligations. 
Enron responded later in the day with a statement saying that it had received an extension on the debt payment until mid-December, and also was tapping an additional $450 million line of credit. 
That news wasn't enough to help Enron's sagging stock price. In trading yesterday on the New York Stock Exchange, its shares closed down $1.98 at $5.01. 
Enron's all-time trading low is a split-adjusted $3.94 on Oct. 27, 1987, according to the Center for Research in Security Prices at the University of Chicago Graduate School of Business. The company traded at a 52-week high of $84.87 in February. 
Michelle Foss, director of the Energy Institute at the University of Houston, said Enron's latest round of troubles had to raise concerns about whether the Dynegy-Enron deal can be arranged. "It doesn't look like it's going to be able to happen," Foss said yesterday. "It did look like a decent idea when they proposed the merger, but today I'm sure they'll look at it and see if they can salvage their attempt to buy Enron." 
Dynegy chairman and chief executive Chuck Watson said in a statement he was "encouraged" by the news of Enron's debt extension and its credit agreement, adding that Dynegy was moving ahead with its acquisition. 
But Fitch's Pellecchia said this week's events suggest that Dynegy might renegotiate the deal. He also said that if Dynegy steps away, bankruptcy is highly possible. 
Shares of Dynegy closed yesterday at $39.76, down $1.94 or 4.5 percent, on the NYSE. 
UBS Warburg analyst Ronald Barone issued a report yesterday saying the signs of trader withdrawal were leading him to project that Enron would lose 25 cents per share in operating costs for the fourth quarter -- a switch from his previous projection of a 25-cent per- share gain. 
"This, combined with the virtual complete absence of visibility and continued breathtaking surprises in updated financial disclosures is causing us to implement even more conservative earnings and price target assumptions on the company," Barone said. 
Raymond James & Associates analyst Jon Kyle Cartwright said Dynegy likely still wants to buy Enron. 
"It's too early to put a probability on a prediction that Enron is imploding," he said. "I would like to believe (Dynegy) recognizes the enormous potential value of a healthy Enron trading group and that it's not the type of asset you can acquire out of bankruptcy." 
But he also acknowledged the problems Enron faces. 
"If the trading operation actually collapses, Enron becomes a Trivial Pursuit question."

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Financial
Enron Gets Loan Extension

11/22/2001
The Washington Post
FINAL
E02
Copyright 2001, The Washington Post Co. All Rights Reserved

Enron won a three-week reprieve from lenders on a $690 million note, giving the debt-laden energy trader more time to restructure its finances. Enron stock nonetheless dropped an additional $1.98 a share, or 28 percent, to $5.01. Its bonds also fell amid concern the company would run out of cash before a takeover by rival Dynegy is completed next year. Enron had disclosed Monday that it might have to repay the $690 million debt by Nov. 26 because its credit ratings have been lowered. 
'You've Got Pictures' Unit Closing
Eastman Kodak plans to close its PictureVision subsidiary, which operates AOL Time Warner's Internet-based You've Got Pictures service, to reduce costs. PictureVision, based in Dulles, employs 128 people in the United States and Israel, most of whom will be fired. You've Got Pictures and other online storage and sharing services will be done by Kodak's Picture Center. 
MORE NEWS 
Fruit of the Loom failed to win court approval of its proposed bankruptcy-sale procedures, jeopardizing an $835 million offer for the underwear maker by billionaire Warren Buffett's holding company, Berkshire Hathaway. A U.S. Bankruptcy Court judge turned down Fruit of the Loom's request to approve the procedures after Berkshire's lawyer said the company will not accept less than $30 million if it's outbid for Fruit of the Loom or if the recovery plan based on its bid is rejected. Officials of both companies said in court documents that if the procedures aren't approved by Nov. 30, the bid might be pulled. Fruit of the Loom filed for Chapter 11 in December 1999 and owes secured creditors around $1.6 billion, court papers show. 
Windows XP sales plunged in the new operating system's second and third weeks on the market, in part because of the slowing economy, an analyst said. U.S. retailers sold 260,000 copies of the Microsoft operating system from Oct. 25 to Oct. 27, the product's first three days on the market. Sales dropped 40 percent, to 155,000, during the following seven days, then dropped a 51 percent from that level in the week ending Nov. 10, said Steve Koenig, a senior analyst at NPD Intelect. 
Philip Morris, which is seeking to change its name to Altria Group, was asked to halt the switch by Altria Healthcare, an Alabama-based health-care billing, consulting and training company. "It is obviously of great concern to a health-care business to have a big tobacco and alcohol company wish to adopt an identical name," said Warren Smedley, president of the Alabama company. 
Microsoft General Counsel William H. Neukom, who directed the largest software maker's legal strategy during a decade of battles with U.S. antitrust enforcers, will step down early next year after 22 years as the company's major cases wind down. 
SafeWeb, a California company partly funded by the CIA, has discontinued a free service that allowed Internet users to view all sites on the Web even on computers that governments or corporations had outfitted with filtering software. SafeWeb, for now, is focusing its efforts on revenue-generating security applications for businesses. Jon Chun, president and co-founder of SafeWeb, said the company is expected to decide soon whether to restore the privacy and anti-censorship service on a subscription basis. 
Bristol-Myers Squibb has been sued by a consumer group seeking to force the drugmaker to tell consumers that its Theragran multivitamins contain lead and cadmium. The nonprofit group, the American Environmental Safety Institute, contends that the metals can cause cancer, birth defects and kidney damage. Under a 1986 California law, companies must disclose if their products contain chemicals the state designates as potential causes of cancer or birth defects. New York-based Bristol-Myers did not immediately return a call for comment. 
Abbott Laboratories and Baxter International have been accused in lawsuits of violating civil fraud and racketeering statutes by manipulating prices of certain drugs and causing elderly patients and others to overpay for treatments. The suits, filed last week in Chicago by a union benefits plan and a senior citizens group, contend that the companies illegally inflated the prices of some drugs covered by Medicare. Abbott denied the allegations, and Baxter declined comment. 
Ford has pushed back the introduction, until spring, of several safety features it had promised would be available on the 2002 Explorer by this fall, the Detroit Free Press reported. In January, Ford said its redesigned version of the nation's top-selling sport-utility vehicle would offer such things as tire-pressure monitors and air-bag-like safety canopy rollover sensors after the public uproar over the Firestone tire recall. Ford now plans to offer the safety equipment to customers in March, about three months before the end of 2002 model year production. 
INTERNATIONAL 
Taisei Fire & Marine Insurance said it will file for bankruptcy protection because claims from Sept. 11's terrorist attacks in the United States and this month's New York plane crash may make the Japanese insurer insolvent. Claims from the attacks on New York's World Trade Center and the crash of an American Airlines jet in Queens will total $604 million, the company said. Taisei, a money-making company with no long-term debt as of the end of its last fiscal year, may have simply been too small to withstand the catastrophes. 
An agreement between non-OPEC and independent oil producers to cut output was "imminent," Venezuelan President Hugo Chavez told a group of business leaders. Last week, the Organization of Petroleum Exporting Countries agreed to trim production by 1.5 million barrels a day, but only if independent producers such as Russia, Norway and Mexico agreed to an additional combined cut of 500,000 barrels a day. 
Four U.S. food firms agreed to sell about $24 million in grain and food to Cuba, the first American food shipments since the United States eased a trade embargo last year. The shipments by Cargill, Archer Daniels Midland, ConAgra and Riceland Foods are intended to replace Cuban food supplies destroyed by Hurricane Michelle earlier this month, the companies said. The transactions are still subject to U.S. government approval, Cargill said. 
International Monetary Fund officials said they would recommend that the multilateral lending agency's board approve a new standby credit for Peru to support the country's economic program for the next two years. Though the IMF statement didn't specify any amount, Peruvian Economy Minister Pedro-Pablo Kuczynski has said the standby credit would be about $300 million. Peru hopes the IMF backing will improve its credit with other potential lenders. 
About 16,000 workers at Volkswagen's largest and oldest Brazilian factory voted to accept a management offer to cut salaries and working hours by 15 percent to save 3,000 jobs at the plant. The pact was negotiated last week by ABC Metalworkers' Union, after the workers walked off their jobs when the automaker dismissed 3,000 of them by letter, citing their high pay and a slump in demand for new cars. 
LOCAL BUSINESS 
Calpine said it plans to spend about $500 million to build a power plant in Virginia that can serve a million homes as part of the energy supplier's plan to increase business in the southeastern United States. Calpine will build, own and operate the 1,000-megawatt natural-gas-fired plant in Gravel Neck, 50 miles southeast of Richmond. 
EARNINGS 
Hormel Foods, the largest U.S. turkey producer, said fiscal fourth-quarter profit rose 13 percent, to $68.8 million, on an expansion of its poultry business and higher sales of Spam luncheon meat and Hormel chili. 
Dillard's said its fiscal third-quarter loss widened to $40 million, from $4 million a year earlier, as sales at the department-store chain fell 5.4 percent, to $1.87 billion. 
Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers.


http://www.washingtonpost.com 
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. 	

Prudential, Pimco Have Owned Falling Enron Bonds (Update1)
2001-11-22 02:19 (New York)

Prudential, Pimco Have Owned Falling Enron Bonds (Update1)

     (Updates to add details of renegotiation of $690 million
payment and stock price in 14th AND 15th paragraph.)

     New York, Nov. 22 (Bloomberg) -- Joseph Portera says he
regretted owning Enron Corp. partnership bonds when he sold them
last month at a 10 percent loss of about 100,000 euros, or
$88,000.

     These days, the head of fixed income at MacKay-Shields
Financial Corp. counts himself among the lucky. If he'd waited
until this week to sell, Portera would have lost almost $400,000
on the bonds issued by Enron's Osprey Trust.

     ``I was pretty glum when I sold, but I'm happy now,'' said
Portera, who sold the debt from the MainStay Strategic Income
Fund. ``My job is portfolio manager, not becoming a member of a
creditors' committee.''

     Many Enron partnership bond investors may end up less
fortunate than Portera. Money managers, including Prudential
Insurance Co., Pimco Advisors Holding LP and SunAmerica Life
Insurance Co., a division of AIG Life Insurance Co. have held the
bonds this year.

     Prudential and SunAmerica were among the biggest owners of a
$1.4 billion note issued by Osprey Trust that pays annual interest
of 8.31 percent and matures in 2003. Prudential owned 8.6 percent
of the notes and Pimco owned 5.4 percent, according to Bloomberg
data.

     Other owners have included AIG, Travelers Insurance Co., a
division of Citigroup Inc., and Metlife Inc., according to
Bloomberg data that includes filings between March and July.

      Spokesmen for Prudential, Pimco, SunAmerica, AIG, Travelers
and Metlife declined to comment on whether those companies have
sold Osprey bonds.

     Enron's dealings with affiliated partnerships have led to
credit-rating cuts, a cash crunch, a federal investigation and an
83% plunge in the company's share price since Oct. 1. The
partnerships are responsible for $3.9 billion of the $17 billion
in debt listed by Enron on Monday in its second financial
restatement this month.

                           Falling Bonds

     Enron, the largest energy trader, has agreed to be acquired
by smaller rival Dynegy Inc. in a transaction now valued at about
$23 billion in stock and assumed debt. Dynegy plans to complete
the buyout by October, and Enron may have to ask lenders to
restructure payment schedules to survive.

     Enron's bonds tumbled this week, with most trading below 70
cents on the dollar yesterday, on concern the company's debts may
scuttle the Dynegy acquisition. Enron's 6.4 percent coupon notes
due in 2006 were bid at 80 cents on Monday, dropped to 73 cents on
Tuesday and were bid as low as 62 cents yesterday. Enron's 6.95
percent bonds due in 2028 traded as low as 50 cents on the dollar
yesterday.

     Enron's bonds would likely rise to par, or $1, if Dynegy buys
Enron. They could fall below 50 cents if the proposed deal
collapses, said Shannon Bass, who helps manage $50 billion at
Pacific Investment Management Co. Based on those prices, investors
give the Dynegy takeover no better than a 50-50 chance, Bass said.

     Dynegy has said it will assume about $15 billion of Enron
debt -- $13 billion of short and long-term liabilities such as
bonds and $2 billion of preferred shares.

     The debts include $9.15 billion in loans, notes and bonds
that Enron is obligated to repay or refinance before the end of
next year, according to the company's filings. With its credit
rating in jeopardy, Enron can't refinance easily, calling into
question whether it will be able to pay its debts before the
Dynegy purchase would be completed next year.

                         Marlin and Osprey

     Enron is negotiating with bankers to restructure the $9.15
billion in debt, and it plans to pay off some it with sales of
assets. Enron Corp. won a three-week reprieve from lenders
yesterday on a $690 million note that became due next week after a
rating downgrade.

     Shares of Enron, the most-active U.S. stock, dropped $1.98,
or 28 percent, to $5.01, its lowest close since April 1989.

    Enron created partnerships, including the Osprey and Marlin
trusts, and used them to shift liabilities off its balance sheet.
The partnerships sold trust bonds and Enron guaranteed them by
promising to issue millions of shares of stock to back any losses.

    Funds from the Osprey and Marlin bonds were transferred to
other Enron affiliates to buy power plants, pay for a water
management business and make Enron-approved investments, according
to bond prospectuses.

     When Portera sold Enron partnership bonds last month, Enron
had been buffeted by the resignation of Jeff Skilling as chief
executive, a third-quarter loss of $1.01 billion from failed
investments by partnerships and a Securities and Exchange
Commission investigation into Enron's finances.

                       ``Not Enough Money''

     Portera sold his bonds because of a ``put'' provision in
Osprey notes that allows holders to sell the bonds back to Enron
if the credit rating is cut to a junk grade by any of the three
major ratings companies, Moody's Investors Service, Standard &
Poor's and Fitch. Fitch and S&P rate Enron's senior debt at ``BBB-
,'' or one level above junk.

     ``If there was that downgrade, everybody would try to put the
bonds back and there just wouldn't be enough money to go around,''
Portera said. Typically, put provisions allow bondholders to sell
back bonds at their original price.

     Portera sold the Osprey stake on Oct. 24 at 89 cents on the
dollar after holding the bonds 13 months. The notes had traded at
96 cents on the dollar just days before Portera sold. The notes
were bid at 56 cents this week.

     When Enron sold debt through Osprey and Marlin between
September 1999 and July 2001, its credit rating was improving and
its bonds were trading near face value. The company likely planned
to sell new bonds to pay off partnership debt when it came due,
said Austin Ramzy, director of fixed-income research at Principal
Capital Income Investors.

     With Enron now all but shut out of the capital markets, the
company's next option would be selling assets of the partnerships,
which include power plants and water systems. The partnership debt
can be seen as only ``partially secured'' because the assets
wouldn't fetch enough to cover all the obligations, Ramzy said.

     ``Right now the exercise is to estimate how far short the
asset coverage is in these trusts,'' said Glenn Reynolds, an
analyst at CreditSights Inc., a New York-based fixed-income
research firm.

--Terence Flanagan in the New York newsroom (212) 893-5662