California Adopts Variable Pricing, Raising Ire of Generators, Traders
The Wall Street Journal, 10/30/00

Enron Offers Cash To Help Azurix Take Itself Private
The Wall Street Journal, 10/30/00

Companies: U.S. Companies
The Wall Street Journal Europe, 10/30/00

Wessex switch likely
The Times of London, 10/28/00

Enron water unit could go private under loan plan
Houston Chronicle, 10/28/00

Quietly, Bush's team talks about transition; Plenty of folks in Austin would 
love to follow Bush to D.C.
Austin American-Statesman, 10/28/00

Dynegy: Calif Price Caps Will Compromise Elec Reliability
Dow Jones Energy Service, 10/28/00

SEC Filing Shows 3rd Parties Contacted Enron About Azurix
Dow Jones News Service, 10/27/00

Enron offers to buy out Azurix
Financial Times, October 27 2000 



California Adopts Variable Pricing, Raising Ire of Generators, Traders
By Rebecca Smith
Staff Reporter of The Wall Street Journal

10/30/2000
The Wall Street Journal
A4
(Copyright (c) 2000, Dow Jones & Company, Inc.)

LOS ANGELES -- In the latest attempt to fix California's troubled deregulated 
energy market, officials adopted a unique variable-pricing plan that already 
is being criticized by power generators and traders as unworkable and praised 
by utilities and consumers as much needed protection against gouging. 
Under the plan, adopted late last week by the governing board of the 
California Independent System Operator, or ISO, a quasipublic agency 
responsible for maintaining electricity reliability in the state, the cap on 
wholesale power will be reset hourly from about $65 per megawatt hour at 
low-demand times to no more than $250 an hour at periods of high demand. It 
was the third time this year that officials effectively lowered the price cap 
on wholesale electricity in a bid to contain -- so far unsuccessfully -- 
soaring total power costs.
The move underscores the chaotic atmosphere prevailing in California's power 
market after a two-year-old experiment in deregulation has come undone. In 
other deregulated markets such as New York and New England, prices are capped 
at $1000 per megawatt hour, which are intended to be low enough to prevent 
market abuse but high enough to give generators incentive to build new 
plants. California's system was supposed to work the same way. But because 
utilities in California divested themselves of the bulk of their plants but 
weren't allowed to lock in fixed-price supply contracts, unlike in the other 
markets, merchant generators have had much greater sway over prices here on 
the spot market, where most power trades. 
During the first nine months of the year, the average price of wholesale 
electricity was $90 per megawatt hour in California, triple the price of a 
year earlier. Even on cool days in October, the price generally has remained 
above $100 per megawatt hour. California utilities have lost money on those 
power purchases because their customers' rates are frozen at $54 to $65 per 
megawatt hour, far lower than the average price utilities have had to pay for 
that power. The deficits exceeded $5 billion in the June-to-September period. 
California utilities buy the power used by their customers from the 
state-sanctioned auctions administered by the ISO and a sister organization, 
the California Power Exchange. In New York and New England, by comparison, 
less than 20% of power is purchased from the spot markets because utilities 
there were able to sign the fixed-price contracts, which California utilities 
weren't allowed to do. The price-cap decision passed last week by a vote of 
13 to 10, primarily with support from utilities and board members 
representing consumer interests. It was pushed aggressively by Pacific Gas & 
Electric Co. and Southern California Edison, the state's two big 
investor-owned utilities that have gotten caught in the price-spike vise this 
year. 
Some ISO members say they had no choice but to support the measure to ratchet 
down price caps. "We're going after the windfall profits," said S. David 
Freeman, general manager of the Los Angeles Department of Water and Power, 
who voted for the measure. "What we've got now is a market accustomed to 
ripping off the consumer. This can't be allowed to go on." 
But other experts said the hasty measure may make California's problems even 
worse. "The short-term regulatory fix is always to fix prices," said Pam 
Prairie, director of the Institute of Public Utilities at Michigan State 
University in East Lansing. "But there's a real danger you'll set prices too 
low and make your supply problems even worse." 
Other economists agreed. "At best, this is poorly administered cost-based 
regulation," said Frank Wolak, an economics professor at Stanford University 
who sits on an independent market-monitoring committee at the ISO. "At worst, 
it creates all sorts of perverse market incentives." 
For example, it may increase the problem of "megawatt laundering" on hot days 
in which in-state generators sell power to out-of-state customers who then 
sell it back into the state, effectively bypassing the cap. Likewise, it 
could encourage generators to build new plants outside of California, rather 
than where they are needed near its major cities, also to avoid the cap. In 
the end, it could increase stresses to the state's already overburdened 
transmission system. 
In fact, the decision already has brought to a halt the state's forward 
electricity market, which allows wholesale customers to sign contracts for 
power they will use in the future. The market had been trading as much as 
1,000 contracts a week. On Friday, there was practically no activity. 
"This decision shows the height of lunacy," said Rick Shapiro, a managing 
director at Enron Corp., the giant Houston-based energy trader. Mr. Shapiro 
said Enron and other generators will file appeals at the Federal Energy 
Regulatory Commission asking that the new pricing formula be rescinded. 
It is possible the FERC may throw out the pricing formula anyway. It is 
expected to issue a major order on Nov. 1 directing changes in California's 
market structure. That order will include its determination of the 
effectiveness of price caps. It also is expected to judge the merits of the 
governance structure at the ISO, which has lately been marked by infighting. 
Recently, consumer groups have charged that the ISO board has put the 
business interests of its members ahead of members' fiduciary duty to 
California residents. 
The most recent price-cap measure was approved over the objections of 
executives at the ISO whose job it will be to implement the formula. ISO 
Chief Executive Terry Winter said the measure is flawed because it doesn't 
take into account the amount of power available to the California market. Mr. 
Winter fears the caps will place the state at a disadvantage relative to 
neighboring states with no price caps. About 11 states are electrically 
interconnected in the West, meaning power can be moved between them and chase 
the highest prices. 
"We keep getting accused of making our market too complicated," Mr. Winter 
said. "Then along comes this proposal" with caps that would adjust repeatedly 
throughout the day, depending on demand.

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


Enron Offers Cash To Help Azurix Take Itself Private
By Rebecca Smith
Staff Reporter of The Wall Street Journal

10/30/2000
The Wall Street Journal
A12
(Copyright (c) 2000, Dow Jones & Company, Inc.)

Enron Corp. offered to lend Azurix Corp., an Enron spinoff, $275 million so 
that it could take itself private. 
Enron, which has been frustrated with the global water company's performance, 
suggested Friday that public shareholders receive a cash offer of $7 a share 
for their Azurix stock. While nearly double the stock's value prior to the 
offer, the suggested price nevertheless was far below the $19 at which Azurix 
made its debut in 1999.
An Azurix spokeswoman said the board, on which Enron has seats, had not yet 
decided how to treat the Enron offer. An Enron spokesman said that taking the 
company private would "give us more opportunity to directly affect our 
investment." In 4 p.m. New York Stock Exchange composite trading Friday, 
Azurix soared $3 to $6.56 in heavy trading. 
Azurix had hoped to create a splash by doing to the water business what Enron 
had done to the energy business -- increase competition and provide trading 
skills capable of creating new financial products out of old commodities. But 
Azurix stumbled, nearly from the outset. Deregulation of the water business 
and government privatizations of water systems, on which it was counting, 
were slow to come, crimping growth opportunities and profit. And Enron, 
accustomed to higher, faster returns, grew impatient with the 
capital-intensive water business. 
The company's first chief executive, Rebecca Mark, a onetime head of Enron's 
international division, resigned in the summer with the agreement of Enron 
executives, who said it was time for new leadership. The incoming chief 
executive, John Garrison, said he would look for buyers for some of the 
company's businesses; he was unavailable to comment Friday. Ms. Mark was 
believed to be considering making an offer for some of those businesses, 
herself. She declined a request for an interview. 
In its letter to Azurix officers, Enron said the water company received four 
offers from prospective suitors after Ms. Mark's departure, the best of which 
came from an unidentified bidder who offered $7 a share and went through a 
lengthy due-diligence process before backing down, apparently spooked by 
Azurix's cash flow, capital structure, tax considerations and some securities 
litigation. 
In its proposal letter, made public Friday, Enron said it concluded "that 
there is no other buyer willing to pay the $7" and so proceeded with its own 
offer. But Enron said it won't try to limit Azurix's ability to negotiate a 
better deal with others, should they come forward. Finally, Enron noted that 
Azurix had considered various partial or full-liquidation alternatives but 
said they didn't seem likely to produce more than $7 a share.

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

Companies: U.S. Companies

10/30/2000
The Wall Street Journal Europe
5
(Copyright (c) 2000, Dow Jones & Company, Inc.)

Enron Offers Loan to Azurix 
Enron Corp. offered to lend Azurix Corp., an Enron spinoff, $275 million 
(327.6 million euros) so that it could take itself private. Enron, which has 
been frustrated with the global water company's performance, suggested Friday 
that public shareholders receive a cash offer of $7 a share for their Azurix 
stock. While nearly double the stock's value prior to the offer, the 
suggested price nevertheless was far below the $19 at which Azurix made its 
debut in 1999. (Staff)

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

Business
Wessex switch likely
Adam Jones in New York

10/28/2000
The Times of London
News International
2W
64
(Copyright Times Newspapers Ltd, 2000)

Wessex Water's American parent company is likely to be taken private after a 
disastrous 14-month spell as a quoted company. 
Wessex, which provides water services to the South of England, was bought by 
Azurix in 1998 for Pounds 1.6 billion. Azurix wanted to use Wessex's 
expertise in privatised water supply to build a global business. However, 
since listing at $19 a share in June last year, Azurix stock has gone into 
freefall, closing at less than $4 earlier this week. Azurix slumped because 
it drastically misjudged the number of privatisation opportunities.
It emerged last night that Enron, the Texan energy and trading company that 
is Azurix's biggest shareholder, has taken the unusual step of offering to 
lend Azurix $275 million (Pounds 190 million) to buy its publicly held 
shares, thereby taking it private. 
The Enron proposal would value Azurix at about $800 million or $7 per share - 
63 per cent less than the IPO price. Enron would control Azurix and Wessex 
Water if it went private.

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


BUSINESS
Enron water unit could go private under loan plan
NELSON ANTOSH
Staff

10/28/2000
Houston Chronicle
3 STAR
1
(Copyright 2000)

Enron offered Friday to lend Azurix, its struggling water affiliate, about 
$275 million so Azurix can go private by purchasing 38.6 million shares that 
are publicly traded. 
The deal would have Azurix buying back its stock at $7 per share, about 
double what the shares were trading for Thursday. That's a big comedown for 
Azurix shares, which sold for $19 each when the Houston company went public 
in June 1999.
The maneuver technically can be called a "take-under," said analyst Carol 
Coale of Prudential Securities in Houston. She also described it as Enron's 
least painful solution for what to do with the venture that never lived up 
its ambitious plans. 
"Nothing about Azurix has been positive for Enron, in my view," said Coale. 
"This is a solution to a problem." 
Azurix spokeswoman Diane Bazelides said its board is studying Enron's 
proposal. She added that it was too early to comment on the offer because the 
proposal's structure had not been outlined. 
Enron imposed no deadline for a decision by Azurix, but reserved the right to 
withdraw the offer if Azurix's position with prospective customers and 
employees deteriorated. 
One of Enron's conditions is that Azurix not sell any major assets before the 
buyout. 
The deal would not change Enron's large stake in Azurix, said Palmer. It owns 
a third, while the other third is owned by the Atlantic Water Trust, in which 
Enron owns a 50 percent voting interest. 
The proposal's advantages include giving public shareholders a premium to the 
market price, said Enron spokesman Mark Palmer. 
The common stock of Azurix zoomed Friday on the news, gaining $3 to close at 
$6.56 on the New York Stock Exchange. 
Becoming a private company would give Azurix management greater flexibility 
in restructuring. Coale said it would reduce Azurix's general and 
administrative costs, helping it to bid against lower- cost foreign 
competition, particularly two big French companies. Azurix's high cost 
structure has been its primary problem, she said. 
Azurix has been looking at cost and strategies ever since it got a new 
president and chief executive on Aug. 25, said Bazelides. That was the date 
that Rebecca Mark resigned as Azurix's high-profile chairman and chief 
executive. 
Enron and Azurix have been looking at "strategic alternatives" for nine 
months, J. Mark Meets, Enron's executive vice president for corporate 
development, said in a letter filed with the Securities and Exchange 
Commission. 
One alternative was selling the company, he said. 
That didn't work out because the offers from three companies didn't exceed $4 
per share. 
The fourth potential buyer said it would consider offering $7 per share, said 
Meets. But that suitor backed out, citing reasons like cash flow, complexity 
of the capital structure, tax considerations and pending securities 
litigation. 
"We are obviously quite disappointed by this most recent turn of events," 
Meets said in the letter. "However, we strongly believe that there is no 
other buyer willing to pay the $7 per share initially proposed (but later 
withdrawn) by the fourth bidder."

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

Quietly, Bush's team talks about transition; Plenty of folks in Austin would 
love to follow Bush to D.C.
Ken Herman American-Statesman Capitol Bureau Chief

10/28/2000
Austin American-Statesman
A1
(Copyright 2000)

Not long ago, at a glossy wooden table in a Texas Capitol office, two of Gov. 
George W. Bush's high-level appointees discussed one of the key issues in 
state government these days. It involved the relative merits of White House 
posts that could be available to the two appointees if Bush becomes 
president. 
Asked this week whether it's a common topic around the Capitol, one of the 
appointees gestured to the anteroom of his office and made a motion 
indicating that even the midlevel folks have Washington on their minds.
Near the banks of the Colorado, Potomac Fever is a near-epidemic. 
And though it is political faux pas to be too open about doing White House 
transition planning before Election Day, be assured it is going on at Bush 
headquarters, where top officials are cognizant of the fine line between 
looking too confident now and looking too unprepared later. 
The candidate himself -- as well as his top aides -- steers clear of 
transition talk. When asked who might wind up in his Cabinet, Bush looks 
backward instead of forward, saying that his selection of Dick Cheney as his 
running mate should offer a glimpse of the kind of people who would wind up 
in his administration. 
The transition work, such that it is, is under the aegis of longtime Bush 
friend and aide Clay Johnson, who began as head of the gubernatorial 
appointments office and now serves as chief of staff. Johnson said nobody has 
been interviewed for any Washington post, but he has compiled a file of folks 
who are interested in serving in a Bush administration. 
Johnson also has been reading up on previous transitions -- ones that went 
well and ones that didn't. His preliminary conclusion is that the outgoing 
administrations are generally helpful and supportive, even if they were 
ousted by the incoming administration. It's the incoming administrations that 
can make the mistakes, he said. 
There is no shortage of think tanks that have think-tanked the topic. Back in 
August, the Heritage Foundation, based in Washington, issued a transition 
handbook titled "The Keys to a Successful Presidency." 
"Though we really don't expect either campaign to talk about it (and would 
discourage them from doing so), the message here is it's time to start 
planning for a possible presidential transition, quietly, well behind the 
scenes, but with the understanding that the preparation done during the next 
70 or so days, and the work done in the 70 or so days that follow (between 
the election and the inauguration) will very well determine the initial 
success or failure of the next administration," Herbert Berkowitz, a 
foundation vice president, said in releasing the study. 
All indications are that the Bush team has been following the advice, with 
Johnson at the helm. 
Johnson cautions against expectations that a Bush administration would be 
overloaded with Texans. 
"It's the United States of America, not the United States of Texas," he said. 
Despite that caveat, there is no shortage of Texans who are considered 
shoo-ins to fill some of the thousands of slots Bush could offer if he wins. 
Johnson confirms that he is very interested in a Washington job. Early 
speculation among Bush aides makes Johnson a potential leading contender for 
head of personnel at the White House. 
Karen Hughes, Bush's communications director since his 1994 gubernatorial 
campaign, is expected to become Bush's press secretary if he wins the White 
House. Karl Rove, Bush's longtime political guru, also will be on board, 
though he could wind up with an out-of- the-White-House post, perhaps at the 
Republican National Committee. 
Not as certain is the potential future for Joe Allbaugh, who is part of the 
"iron triangle" of top advisers -- along with Rove and Hughes -- who have 
been on board with Bush since the 1994 campaign. Allbaugh serves as manager 
of the presidential campaign and previously served as chief of staff in the 
governor's office. 
Capitol speculation indicates Allbaugh could decide to skip a White House 
post, possibly in favor of a lobbying job, if he is not tapped as chief of 
staff. That post could go to Don Evans, a longtime Bush friend who headed the 
megasuccessful fund-raising effort for the presidential campaign. 
However, not everyone has Potomac Fever. For example, Terral Smith, Bush's 
legislative director, said he will stay in Austin to lobby. 
In addition to the speculation about appointees, the approaching election has 
sparked talk about when Bush might leave office if he wins. Under the U.S. 
Constitution, he could remain governor until he has to become president on 
Jan. 20. 
Much more likely, however, is that Bush would leave office sooner than that, 
perhaps as soon as two or three weeks after the Nov. 7 election, if he wins. 
That could cause a housing problem for Bush, whose main residence is the 
Governor's Mansion, which comes as a free perk of the job. The Bushes have a 
home under construction at their ranch in Crawford, near Waco. The ranch also 
has a smaller house in which the Bushes now spend weekends. 
Not out of the question is that Bush could work out an arrangement with Lt. 
Gov. Rick Perry, who would become governor if Bush resigns, to remain in the 
Governor's Mansion for several weeks after he leaves office. 
If the race among Texas senators to replace Perry as lieutenant governor 
complicates the timing of the resignation, Bush could stay in the governor's 
office a little longer, but no later than the first week of January. After 
all, he will want to give Perry time to bask in his gubernatorial 
inauguration before the Legislature convenes Jan. 9. 
No matter when Bush resigns, confidantes believe he might use his Crawford 
ranch for interviews with potential top-level appointees, including Cabinet 
members. 
You may contact Ken Herman at kherman@statesman.com or 445-1718. 
Washington buzz A look at Bush allies expected to get appointments in a Bush 
administration: * Texas Secretary of State Elton Bomer * State Rep. Tom 
Craddick, R-Midland * Public Safety Commission Chairman Jim Francis of Dallas 
* Texas Railroad Commissioner Tony Garza* Texas Supreme Court Justice Al 
Gonzales * Former Dallas ISD board President Sandy Kress * Kenneth Lay of 
Houston, chief executive officer of Enron * Ralph Marquez of Texas City, 
member of the Texas Natural Resource Conservation Commission * Vance McMahan 
of Austin, a policy adviser in the governor's office * Harriet Miers of 
Dallas, Bush's personal lawyer and former appointee to the Texas Lottery 
Commission * Pat Oxford, Houston lawyer and member of the University of Texas 
System Board of Regents * Pat Wood of Austin, chairman of the Texas Public 
Utility Commission * Margaret La Montagne, the governor's education adviser

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

Dynegy: Calif Price Caps Will Compromise Elec Reliability

10/27/2000
Dow Jones Energy Service
(Copyright (c) 2000, Dow Jones & Company, Inc.)

LOS ANGELES -(Dow Jones)- A Dynegy executive said Friday that the California 
Independent System Operator's plan to impose hourly price caps on the 
wholesale power market will compromise reliability by forcing generators to 
sell electricity out of state.
"If the ISO says it will not buy above a certain price and generators cannot 
operate below that price, then we have no choice but to find other markets to 
participate in," said Dynegy senior vice president of marketing and trading 
asset management Lynn Lednicky. "That may lead to the ISO not finding the 
power it needs at a price it wants to pay." 
The ISO plans to construct hourly price caps each month based on forecast 
load, natural gas prices and generation unit efficiency. The caps will take 
effect Nov. 3 or soon therafter. 
Dynegy Inc. (DYN) sent a letter to the Federal Energy Regulatory Commission 
asking it to address reliability consequences of the price caps before Nov. 
3. Dynegy specifically requested that FERC discuss the issue at its Nov. 1 
meeting, when it will release a report on California's electricity problems. 
Enron Corp. (ENE) and Southern Company (SO) share Dynegy's concerns about 
reliability and plan to petition FERC about the issue, said a trader 
listening in to a conference call between the three companies. 
-By Jessica Berthold, Dow Jones Newswires; 323-658-3872; 
jessica.berthold@dowjones.com

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

SEC Filing Shows 3rd Parties Contacted Enron About Azurix
By Christopher C. Williams

10/27/2000
Dow Jones News Service
(Copyright (c) 2000, Dow Jones & Company, Inc.)

Of DOW JONES NEWSWIRES 

New York -(Dow Jones)- Shares of Azurix Corp. (AZX) jumped 84% in heavy 
trading Friday after parent Enron Corp. (ENE) proposed to take the company 
private in a $7-a-share buyout.
Filings with the Securities and Exchange Commission showed that Enron made 
the proposal after not being satisfied with offers it had received from four 
third parties for its stake in Azurix. 
In a letter to two members of Azurix's board, Enron said three potential 
buyers "were unlikely to be willing to pay more than the then-current market 
price of approximately $4 a share." 
Enron said a fourth potential buyer indicated it would consider a $7-a-share 
offer, but it said that proposal was recently withdrawn. "The reasons given 
by the bidder included pro forma cash flows, the complexity of the capital 
structure, tax considerations and the currently pending securities 
litigation," the letter said. 
Mark Palmer, a spokesman for Houston-based Enron, declined to say whether 
Enron was entertaining current third-party interests or was in any talks with 
other parties regarding its Azurix stake. 
In New York Stock Exchange composite trading, Azurix ended Friday up $3 to 
$6.56 on 2.8 million shares, compared with average daily volume of 239,000 
shares. Enron was up $1.38, or 1.8%, to $78.88 on 1.6 million shares, 
compared with its daily average turnover of 2.4 million. 
In the SEC filing, Enron, saying it's familiar with Azurix's various partial 
and full liquidation alternatives, said its buyout proposal is conditioned 
upon Azurix not selling any significant assets prior to the buyout. 
"Although we agree that such plans may result in greater value to Azurix's 
shareholders than the maintenance of the status quo, we believe that these 
options almost certainly will not result on a present value in a greater 
return to Azurix's shareholders than $7 a share," the letter said. 
Enron also said its buyout proposal doesn't include any breakup fees or other 
"deal protection devices." This frees Azurix's board to pursue an acquisition 
that "might provide greater value" to shareholders. 
Daine Bazelides, a spokeswoman for Azurix, declined to say whether Azurix is 
now entertaining offers for the company. She did, however, confirm the 
information contained in Enron's filing. "The historical information in the 
filing is factually correct," she told Dow Jones Newswires. 
She said she doesn't know when Azurix board will respond to Enron's proposal. 
In the filing, Enron didn't set a deadline, but warned that Azurix's position 
with customers and employees may deteriorate further. "We must therefore 
reserve the right to withdraw our proposal at any time," Enron's letter said. 
In the letter, Enron pointed out that Azurix had retained two 
"internationally recognized investment bankers" early this year to evaluate 
strategic alternatives, which included the potential sale of the company to 
unrelated third parties. 
Enron said it strongly believes there isn't another buyer willing to pay $7 a 
share for Enron's indirect interest in Azurix. "We believe it is in Azurix's 
best interest, as well as the best interest of its shareholders and 
employees, if Azurix were no longer a publicly traded company," Enron said. 

-By Christopher C. Williams, Dow Jones Newswires, 201-938-5219; 
christopher.williams@dowjones.com

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





Enron offers to buy out Azurix
Financial Times
By Hillary Durgin in Houston
Published: October 27 2000 23:31GMT | Last Updated: October 27 2000 23:36GMT


Enron, the Houston-based energy and trading group, said on Friday it had 
offered up to $275m in funding to take Azurix private at a buy-out price of 
$7 per share. 
The specific structure of Enron's proposal has yet to be determined, Enron 
said. Azurix said its board would now consider the proposal. The timing of 
any decision was unclear. 
Enron owns directly and indirectly about 66 per cent of Azurix, the troubled 
Houston water company, whose main asset is UK-based Wessex Water. 
The buyout offer is the latest development in a history of problems at 
Azurix, which was spun off from Enron and taken public at an offering price 
of $19 per share. 
But a combination of poor market timing, competitive industry conditions and 
empty promises by the company on Wall Street took their toll on the company, 
whose shares have since plummeted and have been trading most recently around 
the $3-per-share range. In August, Rebecca Mark, Azurix chief executive 
officer, resigned both from Azurix and from the board at Enron. 
Enron's offer came after four unnamed parties approached Enron about buying 
its stake in Azurix. 
While three of the four were unwilling to pay more than the then market price 
of about $4 per share, a fourth party who was considering offering $7 per 
share (before accounting for any dilution for stock options) later declined 
to pursue the transaction, Enron said in Friday's letter to Azurix, outlining 
the buyout proposal. 
"We strongly believe that our proposal is fair to Azurix's public 
stockholders," the letter stated. "Our proposed transaction would permit 
Azurix's stockholders to receive, on a timely basis, a cash payment for their 
shares that is significantly above the price at which those shares have 
traded in several months." 
Analysts that follow Azurix and had valued the shares at between $6 and $8 
per shares said the offer was fair. Analysts that follow Enron said that 
Azurix's business strategy had proved to be a failure and was characteristic 
of the hard asset approach that Enron has gradually distanced itself from. 
Enron's shares closed at $78.88 up $1.38 on Friday. Azurix's shares rose $3 
to close at $6.56.