Ugly.

 -----Original Message-----
From: 	Sole III, Carlos  
Sent:	Monday, November 26, 2001 10:58 AM
To:	Mann, Kay
Subject:	ENE

This is from Bloomberg and sadly is the best source of available information on our status.  The troubling news is the "death spiral" quote again and the statement that we only have about $2 billion in cash which raises the downgrade issue and also perhaps means that we don't want to announce lay-offs since we can't afford to make any payouts. 


Enron's Stock, Bonds Drop on Concern for Dynegy Bid (Update3)
By Jennifer Ryan 
New York, Nov. 26 (Bloomberg) -- Enron Corp.'s bond and stock prices declined amid concern Dynegy Inc.'s proposed $23 billion acquisition of the biggest energy trader may fall through. 
``It's a death spiral,'' said Edward Jones & Co. analyst Brian Youngberg, who rates Enron ``sell'' and doesn't own the company's shares. ``With the declining share price and debt disclosures, the chance of the deal going through has fallen from about 90 percent to less than 50 percent.'' 
Shares of Enron, the third most-active U.S. stock, tumbled as much as 15 percent, dropping for the fourth day in a row. Investors lowered their asking price for the 6.4 percent notes that mature in 2006 to 58 cents on the dollar from 60 cents Friday. Bids to buy bonds were unchanged at 55 cents on the dollar, traders said. The bonds yield 22.55 percent. 
Concern that Dynegy may change or cancel its bid for Enron had pushed Enron's stock down 48 percent in the past three days. Enron's shares had plummeted 86 percent since mid-October after the company reported a $618 million third-quarter loss and said expansion into water, telecommunications and retail-energy sales cost it $1.01 billion. 
Part of the third-quarter charge was connected with limited partnerships run by the chief financial officer. He was ousted, and the U.S. Securities and Exchange Commission started an investigation into Enron's accounting. The company earlier this month restated its earnings for the past four years. 
Talks on $1 Billion 
Enron said late last week talks are continuing with potential investors for as much as $1 billion. The company agreed to be bought by Dynegy on Nov. 9 for stock and assumed debt, halting a financial crisis that threatened to bankrupt Enron and throw U.S. power and natural-gas markets into turmoil. 
Shares of Enron fell 54 cents, or 11 percent, to $4.17 in late-morning trading. Earlier, they touched $4.02. Dynegy fell $1.03 to $39.37. The stock had fallen 28 percent this year. Both companies are based in Houston. 
Egan-Jones Ratings Co. lowered its rating on Enron's credit today to ``BB-'' from ``BB.'' ``Dynegy needs to show its support, or Enron will slide,'' the firm said in a report. 
``Time is not Enron's friend,'' said Stewart Morel, co-head of investment grade debt research at UBS Warburg LLC. ``There is increased concern in the market that there may be more problems that are yet to be disclosed.'' 
On Wednesday, Enron got a three-week reprieve from lenders on a $690 million note due this week, giving the company more time to restructure its finances. Dynegy Chief Executive Officer Chuck Watson said he was ``encouraged'' by the commitment to extend the note payment, as well as the closing of a $450 million credit facility, and that Dynegy remained committed to the merger. 
$690 Million Note 
Terms of the $690 million note were outlined for the first time in an Enron filing with the SEC a week ago. Enron also said that it has less than $2 billion in cash and credit lines left. If the company's cash reserves run too low, Enron's credit rating may be cut below investment grade. That would trigger $3.9 billion in debt repayments for two affiliated partnerships. 
Enron's bankers met with leveraged buyout firms and two industrial companies to seek an investment, the New York Times reported last week. J.P. Morgan Chase & Co. and Citigroup Inc. agreed to terms that give each of them a $250 million equity stake as part of a transaction to be completed today.