I think we need to get on top of this fast!  Can McMann issue a
statement with Dynegy?


Dynegy Won't Comment On Merger Partner Enron's 10-Q
By Christina Cheddar

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

  NEW YORK -(Dow Jones)- Dynegy Inc. (DYN) declined Tuesday to  comment
on whether its merger with Enron Corp. (ENE) would be affected by the
contents of Enron's quarterly filing with the Securities and Exchange
Commission late Monday.

  In the 10-Q, which was filed five days past the SEC deadline, Enron
revised its third-quarter earnings downward by 3 cents a share, and
disclosed it may have to pay off a $690 million note owed to an
affiliated partnership because a clause  in a financial agreement was
triggered by the reduction in Enron's senior unsecured debt rating to
triple-B-minus by Standard & Poor's a week ago.
  The amount will have to be paid by Nov. 12 if Enron doesn't  find
collateral to guarantee the debt, the company said in the  filing. Enron
is working to come up with an acceptable agreement on the debt, but
didn't disclose who holds the note.

  Enron used partnerships in order to hedge its investment risk, and in
some cases to keep the debt off its balance sheet.  The practice is
being investigated by the SEC and by an internal committee Enron has
named.

  In the filing, Enron also said it may have to take a $700 million
pretax charge to earnings for the declining value of assets held by
another partnership, Whitewing LLP.

  When asked if Dynegy had known about the collateral call on  the debt
or about the decline in Whitewing's value, a Dynegy spokeswoman declined
to comment.

  "We are referring all questions about the Enron 10-Q to Enron," said
the spokeswoman. Representatives of Enron weren't  immediately available
for comment.

  Dynegy agreed to buy Enron earlier this month. Earlier Tuesday, the
deal was worth about $11.97 billion in stock, but Enron shares were
trading at a 32.5% discount to the offer price earlier Tuesday morning,
which is a sign of the uncertainty surrounding the transaction.

  Enron shares were recently trading at $7.86, down $1.20, or  13.2%,
while Dynegy shares changed hands at $43.29, down 31 cents, or 0.8%.

  A ChevronTexaco Corp. (CVX) official wasn't immediately available to
comment on the matter.

  ChevronTexaco, San Francisco, owns 26% of Dynegy and is providing $2.5
billion in cash to Dynegy as part of the buyout.  Last week, an inital
payment of $1.5 billion was transferred to Dynegy and then to Enron to
help meet Enron's immediate cash  needs.

  Dynegy's merger agreement with Enron contains several provisions
beyond the standard "material adverse change" provision that would allow
the deal to be terminated. Still, some question whether Dynegy was able
to fully assess Enron's liabilities prior to striking the deal.

  Investors have expressed frustration with Enron's lack of disclosure,
and even marvelled at the fact that the 10-Q included material that
could have been mentioned in previous filings or company conference
calls.


Energy Cos Limit Business With Enron After 10Q -Traders
By Mark Golden

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

  NEW YORK -(Dow Jones)- Many energy trading companies were unwilling to sell
power and natural gas for next day delivery to Enron Corp. (ENE) Tuesday
morning, a result of heightened credit concerns following the release of
Enron's quarterly financial report Monday, traders and other sources said.

  For weeks, companies have limited both buying and selling with Enron for
future deliveries. But for the first time since Enron's troubles began a month
ago, energy companies weren't selling to Enron in the spot markets for fear
that Enron might not be able to pay its bills as soon as next month.
  "It's pretty well accepted in the industry that people are staying away for
now," said Charlie Sanchez, energy market manager for Gelber & Associates in
Houston.

  Traders at all of the major companies contacted said they couldn't sell to
Enron Tuesday morning. Several spokespeople for energy companies confirmed the
situation, but declined to say so on the record.

  "Nobody will take Enron," one western electricity broker said. After
struggling, however, that broker eventually found a utility that was willing
to sell to Enron Tuesday morning.

  Calpine, a prominent independent power producer and trader, said it was
willing to sell power to Enron.

  "We continue to sell power to Enron and are monitoring the situation
closely," spokeswoman Catherine Potter said.

  The situation Tuesday morning was fluid. One utility that refused to sell to
Enron in the morning was willing to do so in the afternoon, a person at the
company said. That company's trading, however, was still limited to the spot
markets.

  Credit concerns about the once-dominant energy trading company were
heightened with Enron's filing of its third quarter annual report Monday
evening with the U.S. Securities Exchange Commission.

  Enron may have to pay $690 million on a note that became a demand obligation
with the company's most recent credit-rating downgrade, Enron said in Monday's
filing. The company also warned that its profits in the fourth quarter could
be hurt by credit concerns, a decline in asset values and reduced trading
activity.

  "The 10Q in and by itself is a document that could raise concerns," Fitch
analyst Ralph Pellecchia said. "We have a lot of questions outstanding
relative to disclosures that were new to us and their strategies of how they
are going to manage the situation."

  Companies are willing to buy from Enron in the spot gas and power markets,
because taking delivery on commodity and paying for it a month later poses no
credit risk for the buyer.



Reliant surprised by latest Enron disclosure
HOUSTON, Nov 20 (Reuters) - Reliant Resources Inc. (NYSE:RRI - news), a trading partner of beleaguered energy trading giant Enron Corp.(NYSE:ENE - news), said on Tuesday it was surprised by news that Enron could be forced to pay $690 million in debt next week because of a credit rating downgrade.

Shahid Malik, Reliant's president of energy trading and marketing, said his company was still evaluating the implications of the disclosure, which Enron made in a filing with the Securities and Exchange Commission (SEC) on Monday. 

``It's another surprise to the industry. We don't need any more surprises,'' Malik told reporters at a press presentation of a new index devised by Houston-based Reliant to track natural gas consumption. 

Reliant is a big wholesale electricity and natural gas trader and as such both a competitor and trading counterparty of Enron. 

Malik said Enron executives had not mentioned the potential payment of $690 million during a conference call with analysts on Nov. 14, two days before the credit rating downgrade that triggered it on Nov. 12. 

Enron agreed to be acquired by smaller rival Dynegy Inc.(NYSE:DYN - news) for some $9 billion in stock on Nov. 9 after a collapse in investor confidence and snowballing financial problems brought Enron to the brink of collapse. 

Dynegy wrote clauses into its agreement with Enron that allow it to walk away from the deal if the problems at Enron turn out to be far worse than previously disclosed, but Dynegy executives have said it is unlikely those clauses will be invoked. 

Malik said that as a trading partner in wholesale energy markets, Reliant will seek further clarification from Enron about its financial position. 

``My guess is that they are going to have a hard time coming up with the money,'' he said. 

Malik said Enron's bids and offers in the wholesale electricity and natural gas markets had become less competitive in recent weeks and that this had allowed Reliant and other companies to capture some market share from Enron. 

Reliant continued to do business with Enron, he said, but was exercising ``heightened caution''. 

Malik said Reliant had not hired any traders away from Enron recently and was currently well staffed. ``But you always look for good people, you always look for talent,'' he added.