I'm sure you are already seeing these.......any word from Dynegy?
Peggy

IN THE MONEY: Enron Melts As Many See Merger In Jeopardy
By Carol S. Remond

11/20/2001
Dow Jones News Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

   A Dow Jones Newswires Column


  NEW YORK -(Dow Jones)- Investors are running for the exits as doubts
about Enron Corp.'s (ENE) planned merger with Dynegy Inc. (DYN) mount.
   Debt and equity markets are taking news of Enron's never ending
credit woes with renewed pessimism Tuesday, sending the company's stock
down almost 24% and its bonds sharply lower.

  And with so much riding on Dynegy's financial support, risk
arbitrageurs, those investors who bet on the stock price of companies
involved in merger, aren't willing to play. "There is just too much
risk," said a trader at a New York risk arbitrage firm. "Nobody wants to
even get close to the deal."

  Perhaps most telling about the uncertainty surrounding Enron and the
merger with Dynegy is the fact that even a 68% risk premium over the
value of the Dynegy deal has so far failed to attract investors. "The
deal appears in real jeopardy here," a bond trader said.

  Under the merger plan, Enron holders would receive 0.2685 Dynegy share
for each Enron share. At Dynegy's current share price of $41.77, that
means the value of the deal is about $11.20 a share for Enron holders.
But Enron stock recently traded as low as $6.68 a share, almost 68%
below the value of the merger.

  Adding to doubts about Enron's long-term viability, the company said
in a delayed quarterly filing late Monday that its ability to continue
as a going concern depends on a number of factors, including being able
to retain an investment grade credit rating.

  Dynegy declined to comment on whether its decision to merge with Enron
would be affected by the company's latest  Securities and Exchange
Commission filing, including the disclosure that Enron will have to
repay $690 million in debt by next Tuesday if it doesn't come up with
collateral for a loan.

  An Enron spokeswoman wasn't available to comment on the merger plan.

  Among other bad news, Enron's latest report warned investors that the
company faces immediate demand for $3.9 billion in debt if its credit
rating is downgraded any further.

  Earlier this month, Standard & Poor's Corp. and Moody's Investors
Service cut Enron's credit ratings to "BBB-" and "Baa3", just one notch
higher than below-investment grade, or "junk" status. The rating
agencies warned that they may cut their respective ratings again.
Neither S&P nor Moody's were available for comment Tuesday.

  Meanwhile, as investors look at the Dynegy deal as Enron's one and
only hope to avoid bankruptcy, bondholders are also showing renewed
worries.

  Enron's 7 7/8% bonds due in 2003 are down about 10 cents on the day,
now trading at about 70 cents on the dollar. Subordinated bonds due in
2005 are also sharply lower, changing hands at about 62 cents on the
dollar.

  Enron has set a number of partnerships over the years to hedge
investment risks, and in some cases keep debt off its balance sheet. In
the wake of a SEC probe into its accounting and disclosure practice, the
company recently restated its earnings, reducing profits taken over
previous years by more than $500 million. Enron also took steps to
consolidate some debt back on its books.

Carol S. Remond; 201-938-2074; Dow Jones Newswires
carol.remond@dowjones.com



Folder Name: Enron Corp.
Relevance Score on Scale of 100: 100

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