Enron Europe Says PricewaterhouseCoopers Chosen Administrator
Bloomberg, 11/29/01

Enron's Derivatives Debt Doesn't Reveal Market Risk, NYT Says
Bloomberg, 11/29/01

Enron's Board Was Compromised by Financial Ties (Update1)
Bloomberg, 11/29/01

Enron's Indian Lenders May Take Over Power Project (Update2)
Bloomberg, 11/29/01

Enron Bankruptcy Would Be Largest Chapter 11 Filing (Update1)
Bloomberg, 11/29/01

Enron's Derivatives Debt Doesn't Reveal Market Risk, NYT Says
Bloomberg, 11/29/01

Powergen Says Exposure to Enron in U.S., U.K. `Not Material'
Bloomberg, 11/29/01

Enron's Collapse Evokes Memories of Old-Time Bank Run, NYT Says
Bloomberg, 11/29/001

RWE Says Open Positions With Enron `Much Less' Than EU10 Mln
Bloomberg, 11/29/01

Enron Soared on Innovation, Fell as Debt Scared Away Investors
Bloomberg, 11/29/01

Centrica May Have to Write off $43 Mln If Enron Fails (Update1)
Bloomberg, 11/29/01

Enron Evaluating Whether to Pay Quarterly Dividend (Update1)
Bloomberg, 11/29/01




Enron Europe Says PricewaterhouseCoopers Chosen Administrator
2001-11-29 09:08 (New York)


     London, Nov. 29 (Bloomberg) -- Enron Corp.'s European
division said PricewaterhouseCoopers has been appointed
administrator for much of its business.
     Teesside, a power plant jointly owned with Innogy Plc, Enron
Direct and some other activities are not part of the U.S.
accounting firm's area of oversight, said Enron Europe spokesman
Alex Parson.



Enron's Derivatives Debt Doesn't Reveal Market Risk, NYT Says
2001-11-29 07:32 (New York)


     Houston, Nov. 29 (Bloomberg) -- Enron Corp.'s derivatives
trading liabilities at the end of September were $18.7 billion,
although nobody is sure just how much money the energy-related
derivatives markets will have at risk if Enron fails, the New York
Times reported.

     While these liabilities, the amount of money it would owe to
other market players if it filed for bankruptcy, were up
``slightly'' from June levels, they are about $1.3 billion less
than at the end of last year, the paper said.

     The numbers don't take into account the unknown amount of
collateral that Enron may have posted, the paper said, citing
Swaps Monitor President Paul Spraos. The collateral should, in
principle, diminish Enron's actual liabilities, he said.

     In an energy swap, a company enters into a contract to lock
in a fixed price of a certain commodity, like natural gas or
electricity. The other company assumes the risk of future price
changes and quotes a fixed price that includes its own profit.

(NYT 11-29 C7)

For the Web site of The New York Times, see {NYTI <GO>}.


Enron's Board Was Compromised by Financial Ties (Update1)
2001-11-29 08:10 (New York)

Enron's Board Was Compromised by Financial Ties (Update1)

     (Updates sixth paragraph with details on cash crunch; adds
details of how credit ratings were cut.)

     New York, Nov. 29 (Bloomberg) -- Enron Corp. plunged from the
largest energy trader to the verge of bankruptcy under a board of
directors whose independence was undercut by financial ties to
management, according to corporate governance experts.

     Enron gave seven of its 14 directors consulting contracts,
sales to their business or donations to their non-profit
institutions, according to company and public records. The
recipients include three members of Enron's audit committee, which
is responsible for financial oversight.

     Lord John Wakeham, for example, a former leader of the
British House of Commons, sits on the audit committee. Enron gave
him a $72,000-a-year consulting contract. John Mendelsohn,
president of the MD Anderson Cancer Center in Houston, is also on
the audit committee. In the last five years Enron and its chairman
Kenneth Lay have donated $567,900 to the cancer center.

     ``To get on a board you have to be `clubbable,' but this
looks like collegiality turning to cronyism,'' said Allan
Cleveland, counsel to the New Hampshire Retirement System, an
Enron shareholder.

     Enron, based in Houston, Texas handled almost a quarter of
all natural gas and electricity trades. During the past seven
weeks, its board has presided over a $26 billion drop in market
value that began after the company wrote down $1.2 billion in
shareholder equity and reported it had overstated earnings by $586
million since 1997.

     As Enron's shares fell, the company suffered a cash crunch.
It sought an infusion of capital and agreed to be acquired by
Dynegy Inc., a Houston-based rival. That plan collapsed yesterday
as investors balked at investing $1.5 billion, prompting Dynegy to
withdraw its offer. Enron shares closed at 61 cents.

                          Responsibility

     Corporate boards are responsible for protecting shareholder
interests by reviewing the work of top executives. To accomplish
that, two-thirds of a board should be ``independent'' from
management, according to the Council of Institutional Investors,
which represents pension funds.

    The council defines an independent director as ``a person
whose directorship constitutes his or her only connection to the
corporation.''

     ``Consulting contracts, donations to non-profit organizations
linked to directors, this eats away at independence,'' said Ann
Yergen, the council's director of research.

     Corporate governance standards established by the New York
and NASDAQ Stock Exchanges say all audit committee members should
be independent.

    Enron board members, including Wakeham and Mendelsohn,
declined repeated requests for interviews. Vance Meyer, a company
spokesman, said Enron could not immediately respond to questions
regarding the board.

                           Compensation

     Enron's board met nine times in 2000 with each member
receiving annual compensation of $79,000 in cash and stock. Every
member attended at least 75 percent of the meetings, except Ronnie
Chan, chief executive of the Hang Lung Group, a Hong Kong
development business, according to company filings.

     Based on Enron proxy statements and other documents, the
following relationships existed between Enron and board members:
     -- Herbert S. Winokur Jr., 57, is the managing partner of
Capricorn Investors L.P., a holding company that owns the Natco
Group Inc., a maker of oil and gas production equipment. An Enron
board member since 1985, Winokur serves on the executive
committee, chairs the finance committee and was appointed to a
special committee created to look into how Enron was managed.

     In 2000, Natco had $370,294 in sales to Enron subsidiaries,
or about 1.6 percent of Natco's total sales.

                          `Compromising'

     ``We think that anything over 1 percent is compromising,''
said Yergen of the Council of Institutional Investors.

     Enron said in a proxy statement it believes the terms of the
sales were ``no less favorable than the terms of similar
arrangements with third parties.''

     -- Robert A. Belfer, 65, has been on the board since 1983 and
sits on the executive committee. He is Enron's largest individual
shareholder with 8.5 million shares, and is chairman and chief
executive of Belco Oil & Gas Corp., which operates from an office
overlooking New York's Central Park. In 2000, Belco had $32
million in trade settlements and $1 million in option premiums
with Enron Trade Resources Corp., an Enron subsidiary.

    -- John Urquhart, 72, a former General Electric Co. executive,
sat on the board until last May. He received an annual consulting
fee from Enron of almost $200,000 a year as a special adviser to
the Enron chairman.

    -- Mendelsohn, 64, is a physician who was formerly head of
medicine at Memorial Sloan-Kettering Cancer Center in New York. He
pioneered research in controlling cancer through the chemistry of
a tumor's growth and was on President George W. Bush's short list
to head the National Institutes of Health. Since 1996, Mendelsohn
has been president of the MD Anderson Cancer Center, part of the
University of Texas health system.

                             Donations


     Mendelsohn joined Enron's board in 1999. Enron has donated
$221,650 to the cancer center. Lay and a foundation he established
with his wife, the Linda and Ken Lay Family Foundation, have
donated $346,250 in the last five years. The Enron Foundation
pledged $1.5 million for a new clinic.

    -- Charles LeMaistre, 77, headed the Andersen Cancer Center
for 18 years until retiring in 1996. He has been an Enron board
member for 16 years, is a member of the executive committee and
chairs the compensation committee. That panel awarded Lay a $20
million-a-year severance package that he renounced two weeks ago.

     -- Wendy Gramm, 56, has held positions at the Federal Trade
Commission and the U.S. Office of Management and Budget and was
chairman of the U.S. Commodity Futures Trading Commission. She is
director of regulatory studies at the Mercatus Center of George
Mason University in Fairfax, Virginia. She is married to Texas
Republican Senator Phil Gramm.

     In the last three years, Enron and the Ken and Linda Lay
Family Foundation have donated more than $50,000 to the university
and the Mercatus Center, according to university records.

                          Consulting Fee

     -- Wakeham, 68, a charted accountant and self-made
millionaire, became a force in the government of former U.K. Prime
Minister Margaret Thatcher where he was known as her ``Mr. Fix-
it.''  He was the target of an Irish Republican Army bomb in 1984
that killed his wife and left him buried under rubble for seven
hours.

     Enron pays Wakeham $6,000 a month to advise the company on
European business.

     Enron's audit committee poses particular problems, according
to corporate governance experts. The committee is composed of
Wakeham, Mendelsohn, Gramm, Chan, Robert Jaedicke, a retired
Stanford University Business School dean, and Paulo Ferraz
Pereira, a Brazilian banker.

     Wakeham, Gramm and Mendelsohn are not independent, according
to corporate governance experts and standards.

     ``For the audit committee, you don't even want the appearance
of a conflict,'' said Charles Drott, a forensic accountant who has
testified as an expert witness in bankruptcy and business fraud
cases involving companies such as DeLorean Motor Co. and Lincoln
Savings and Loan Association.

     The committee is spread across the globe, with Wakeham in
London, Ferraz in Rio de Janeiro and Chan in Hong Kong.

     ``The question is why this committee?'' Drott asked. ``For a
big sophisticated company like Enron, why did they choose these
people?''

                           Swift Descent

      Enron's rapid decline -- Standard & Poor's Corp. slashed its
credit rating eight levels this month to junk status -- centered
on its dealings with partnerships the company used to move assets
and debt off the company's books. Many investors had complained
Enron's financial reports obscured the partnerships' businesses to
the point they were impossible to understand. Enron's former Chief
Financial Officer Andrew Fastow led some of the partnerships and
earned more than $30 million through their dealings with Enron,
the company disclosed.

     Enron documents filed with the U.S. Securities and Exchange
Commission state that the board determined that Fastow's
participation in the partnerships would ``not adversely affect the
interests of Enron.'' The documents also say the board approved
all transactions involving partnerships that were brought to it by
Lay and other Enron executives.

     ``What went wrong at Enron?'' said Patrick McGurn, a vice
president at Institutional Investor Services, which evaluates
board candidates for institutional investors. ``A lot of it goes
back to the board.''



Enron's Indian Lenders May Take Over Power Project (Update2)
2001-11-29 08:32 (New York)

Enron's Indian Lenders May Take Over Power Project (Update2)

     (Adds comment from IDBI managing director in ninth paragraph,
legal details starting in seventh paragraph.)

     Mumbai, Nov. 29 (Bloomberg) -- Enron Corp.'s Indian lenders
may take over its $3 billion power venture to salvage loans of $2
billion if the energy trader files for bankruptcy in the U.S.

     Enron may be forced into the biggest Chapter 11
reorganization in history after Dynegy Inc. walked away from a
rescue. Rating agencies cut most of Enron's $15 billion of debt to
junk status, and its shares are almost worthless.

     India's Dabhol Power Co., one of Enron's biggest Asian gas
and power units, has been mired in accusations of bribery and
exorbitant power tariffs.

     ``Lenders will have to take control of the project,'' said
Madhav Godbole, who headed a panel set up to resolve a payment
dispute between Dabhol Power, Enron's India unit, and the
Maharashtra State Electricity Board, its sole customer. ``Buyers
(for Dabhol) will have to negotiate with the lenders.''

     Enron, which is owed $64 million for bills that are more than
10 months overdue, wants $1 billion for its 65 percent stake in
Dabhol as it exits India. Tata Power Ltd. and BSES Ltd., the two
bidders for Enron's stake, have said the price is too high. Both
supply power to Mumbai, India's commercial capital.

     The Industrial Development Bank of India, the country's
biggest lender, and the State Bank of India are among local
lenders that loaned $1.4 billion to Dabhol. They have the most at
stake if the loans turn bad. The $600 million lent by ABN Amro,
Bank of America Corp. and other overseas banks is covered by
government guarantees, while Indian bank loans are not.

                        Cancellation Notice

     Enron on May 19 issued a six-month notice canceling power
sales to the electricity board. The deadline lapsed on Nov. 19 as
the Mumbai High Court early this month stopped Dabhol from serving
the final termination notice until Dec. 3.

     The court's move was in response to a suit filed by Indian
lenders against Dabhol to prevent it from canceling the contract.
They were concerned the loss-making electricity board will be
forced to buy the power plant, making loan recovery difficult.

     ``The matter has become extremely interesting (for India) in
the context of Dynegy pulling out,'' IDBI chairman P.P. Vora told
reporters at the lenders' earnings meet. ``I can't say more as the
matter is in the court.''

     IDBI alone has lent Dabhol $400 million.

     Indian lenders won't attend a Dabhol board meeting or a
summit of creditors, both of which are to be held in London
tomorrow, Vora said, without giving any reason. Dabhol's board is
meeting to authorize K. Wade Cline, managing director, to serve
the termination notice.

                             Discount?

     Enron's stake in Dabhol may now be worth much less than the
$1 billion it is seeking. Still, potential buyers may find it hard
to raise the money they will need to finish work on the plant.

     Construction contractors in June stopped work on expansion of
the power plant because they hadn't been paid since April. The
expansion, which was to add 1,444 megawatts of capacity to the
existing 740 megawatt capacity, and a 5 million-tons-a-year
liquefied natural gas receiving terminal, is 95 percent complete.

     ``Buyers may get a good price but they need $500 million to
complete the project,'' said Pradyumna Kaul, an activist who's
campaigned against Dabhol for eight years. ``That is a lot of
money for a project that's in distress and whose credibility is at
its lowest'' with Enron on the verge of collapse.

                        Awaiting `Response'

     BSES managing director R.V. Shahi said he's waiting for a
``response'' from the lenders on the future course of action.

     ``They came to us with (the project) and our action will
depend on what their approach is.'' BSES hasn't set a price it
would pay for the project, Shahi said. ``We've not reached that
stage yet.''

     Tata Power officials weren't available for comment.
     ``The equity value (of Enron) will go down, helping potential
buyers, but that does not solve the basic problem, that of high-
cost power,'' Godbole said. ``All parties linked with the project
will have to make sacrifices'' to reduce the cost of power.

     Dabhol's power charges in 2000 rose as high as 7.1 rupees, or
15 U.S. cents, a kilowatt-hour, compared with other suppliers'
rates of about 2.81 rupees. That led the electricity board to
default on bills, and in May it stopped buying power from Dabhol,
saying it was too expensive.

     Enron was one of the first major companies to enter India
after the country's economy opened up to foreign investment in
1991. It was awarded the contract to build the power plant 100
miles south of Mumbai without competitive bidding.

     Plant construction was delayed for about two years after
public interest groups filed lawsuits against the project, on the
grounds its power was too expensive.

     A state government reworked the contract just five months
after scrapping it, a move that sparked accusations of the company
bribing politicians in return for the contract -- a charge denied
by all parties.


Enron Bankruptcy Would Be Largest Chapter 11 Filing (Update1)
2001-11-29 08:46 (New York)

Enron Bankruptcy Would Be Largest Chapter 11 Filing (Update1)

     (Updating with Instinet share price, dividend payment.)

     Washington, Nov. 29 (Bloomberg) -- Enron Corp. may file for
bankruptcy protection in the biggest Chapter 11 reorganization in
history, forcing the largest U.S. energy trader to liquidate
billions of dollars in assets to pay creditors.

     Dynegy Inc. yesterday abandoned its proposed merger with
Enron, leaving the Houston-based company burdened with debt and
the likelihood of insolvency. Some analysts said bankruptcy is
inevitable and may come as early as today. A bankruptcy filing by
Enron, which reported more than $61 billion in assets, would top
Texaco Inc.'s record $35.9 billion case filed in 1987.

     Under Chapter 11 protection, Enron officials could continue
to control the company while negotiating a recovery plan with
creditors. An ``automatic stay'' under U.S. bankruptcy law would
block debt-collection efforts, lawsuits and other actions against
the company.

     ``A Chapter 11 filing can be a great thing for a cash-starved
company being attacked from all sides,'' said Nancy Rapoport, dean
of the University of Houston Law Center.

     An Enron bankruptcy would affect thousands of people
including the company's 21,000 employees, its customers,
suppliers, investors and other creditors. The court-supervised
recovery process would give Enron a chance to change strategies
and fix mistakes. It might take years to complete and may end in
the company's liquidation.

     In addition to its energy trading operation, Enron operates a
nationwide gas pipeline system spanning 25,000 miles. It also owns
Portland General Electric, which generates and distributes power
to about 725,000 customers in the Pacific Northwest. The company's
Enron Broadband Services is building a global fiber-optic
communications network.

                          `Witches Brew'

     Chapter 11 reorganization lets companies abandon onerous
contracts and unprofitable leases.

     ``Every bad business deal Enron got into they'll walk away
from,'' said Peter Chapman, a distressed-debt investor who also
publishes newsletters on high-profile bankruptcy reorganizations.

     The goal in Chapter 11 is a recovery plan that allows a
company to pay creditors and come out of bankruptcy. A plan
typically must be approved by a majority of creditors representing
two-thirds of a company's debts. Then a company would ask a
bankruptcy judge for final approval.

     The recovery plan divides a company's value among various
classes of creditors. Under a hierarchy set by the U.S. Bankruptcy
Code, secured creditors -- those with collateral backing their
claims -- are paid ahead of unsecured creditors, such as
bondholders and suppliers.

     Financial advisers to creditors and companies in large
bankruptcies say a Chapter 11 recovery plan for Enron would be
particularly difficult to produce.

     ``You have a host of intangible assets combined with a morass
of contingent liabilities creating a potential witches' brew of a
bankruptcy,'' said Jeff Werbalowsky of Houlihan Lokey Howard &
Zukin, an investment banking firm that has been contacted for
advice by Enron bondholders.

     Enron's shareholders are likely to lose all of their
investment in a Chapter 11 case because they would be last in line
to get paid.

     Shares, the most active in pre-market trading on Instinet,
gained 2 cents to 63 cents after plunging 85 percent yesterday.
The company's 6.4 percent notes that mature in 2006 were unchanged
at about 22 cents on the dollar, traders said. At that price the
notes yield 53 percent.

     Enron said this morning it was evaluating whether it will pay
a declared dividend. The company is scheduled to pay a 12.5-cent
quarter dividend on Dec. 20

                           `Black Hole'

     For investors now considering buying Enron's bonds and other
debts, a major issue is the uncertainty surrounding the company's
value.

     ``Until the forensic accountants can get in there and sort
things out you just don't know what Enron's worth,'' said Gary
Hindes, managing director of Deltec Asset Management LLC. ``It's a
black hole.'' Deltec has no investment in Enron, Hindes said.

     Enron's bond prices reflect the uncertainty. The company's
6.4 percent bonds, which mature in 2006, were quoted at 20 cents
on the dollar, down from 53 cents Tuesday.

     Some recovery for Enron creditors in a bankruptcy case may
come from lawsuits, said Russell A. Belinsky, an investment banker
with Chanin Capital Partners, which also has been approached for
advice by Enron bondholders.

     ``There's a lot of juicy legal issues,'' said Belinsky.
Potential targets include Enron's accounting firm and its officers
and directors, he said.

                             Liability

     Dynegy might face some liability for canceling its purchase
of Enron. Dynegy invoked terms of the buyout agreement that gave
it the right to purchase an Enron natural gas pipeline if the
takeover fell apart. Dynegy received the right to the pipeline in
exchange for a $1.5 billion investment in Enron by ChevronTexaco
Corp., which owns one-fourth of Dynegy.

     Enron might use bankruptcy to prevent Dynegy from walking
away from the buyout and claiming ownership to the pipeline.

     The Dynegy acquisition, valued at $23 billion when it was
proposed on Nov. 9, collapsed as bankers failed to raise the $1.5
billion Enron needed to operate until the deal was completed. The
lack of funds and a credit downgrade contributed to Dynegy's
decision.

     Bankers led by J.P. Morgan Chase & Co. Vice Chairman James B.
Lee tried for two weeks to raise the cash Enron needed. Investors
turned them down because of heightened concern Enron wouldn't be
able to pay its debts.

     Three credit-rating agencies yesterday cut Enron's credit
rating to junk status, triggering an acceleration of the company's
debt obligations.

                            Unraveling

     Enron's unraveling began in October after it said
shareholders' equity was reduced by $1.2 billion because of the
way the company accounted for outside partnerships it created. The
announcement prompted lawsuits and an investigation by the U.S.
Securities and Exchange Commission, and Enron ended up restating
earnings for almost five years.

     As shares plunged, Enron's trading partners lost confidence
the company would have the cash to pay bills. Trading partners
such as Mirant Corp. either demanded more collateral to trade or
restricted trading with the company.

     ``The situation is dire,'' said Deltec's Hindes. ``No one's
going to trade with Enron right now because you could wind up
being an unsecured creditor tomorrow.''



Enron's Derivatives Debt Doesn't Reveal Market Risk, NYT Says
2001-11-29 07:32 (New York)


     Houston, Nov. 29 (Bloomberg) -- Enron Corp.'s derivatives
trading liabilities at the end of September were $18.7 billion,
although nobody is sure just how much money the energy-related
derivatives markets will have at risk if Enron fails, the New York
Times reported.

     While these liabilities, the amount of money it would owe to
other market players if it filed for bankruptcy, were up
``slightly'' from June levels, they are about $1.3 billion less
than at the end of last year, the paper said.

     The numbers don't take into account the unknown amount of
collateral that Enron may have posted, the paper said, citing
Swaps Monitor President Paul Spraos. The collateral should, in
principle, diminish Enron's actual liabilities, he said.

     In an energy swap, a company enters into a contract to lock
in a fixed price of a certain commodity, like natural gas or
electricity. The other company assumes the risk of future price
changes and quotes a fixed price that includes its own profit.

(NYT 11-29 C7)

For the Web site of The New York Times, see {NYTI <GO>}.


Powergen Says Exposure to Enron in U.S., U.K. `Not Material'
2001-11-29 04:37 (New York)

Powergen Says Exposure to Enron in U.S., U.K. `Not Material'

     London, Nov. 29 (Bloomberg) -- Powergen Plc, the U.K.
electricity generator being bought by Germany's E.ON AG, said
its exposure to Enron Corp. is ``not material.'' It declined to
provide detail on its open trading positions with the company.

     Powergen trades daily with in the U.S. and U.K. with Enron,
the largest U.S. energy trader, which said yesterday that it
may file for bankruptcy protection after Dynegy Inc. abandoned its
proposed merger with the company.

     ``Enron is a regular trading partner of Powergen in both the
U.K. and the U.S. -- we do have some exposure,'' said spokesman
Jonathan Smith. ``This exposure is managed within clearly defined
risks. It's not material in the context of the overall size of
Powergen's operations.''

     RWE AG, Europe's fourth-biggest electricity company, said
today that its open trading positions with Enron Corp. amount to
``much less'' than 10 million euros ($8.9 million).


Enron's Collapse Evokes Memories of Old-Time Bank Run, NYT Says
2001-11-29 06:31 (New York)


     Houston, Nov. 29 (Bloomberg) -- Enron Corp. was successful
because the energy trading operation it created was largely an
unregulated financial business and became something like a bank,
which took depositors' money and promised to pay it back, Floyd
Norris wrote in his column in the New York Times.

     When negotiations on Dynegy Inc.'s revised takeover came down
to efforts to find $250 million or $500 million of Enron assets
that could serve as collateral for a new Dynegy cash advance, it
became clear that even Enron's rescuer was demanding collateral
and having trouble finding it, the Times reported.

     Unlike banks, Enron had no federal deposit insurance to
reassure customers when rumors spread that it was in trouble, the
paper reported. Enron's collapse is a reminder for participants in
unregulated markets that their financial health must be beyond
doubt.

     Unregulated markets can be very profitable for those with
market knowledge, as Enron seemed to have. Yet, when prices are
visible to all, the value of that knowledge falls. New regulation
can bring more openness, though it also can bring structures, like
clearing systems that reassure traders they need to worry about
the credit of those with whom they trade, the paper said.

(NYT 11-29 A1)

For the Web site of The New York Times, see {NYTI <GO>}.


RWE Says Open Positions With Enron `Much Less' Than EU10 Mln
2001-11-29 03:13 (New York)

RWE Says Open Positions With Enron `Much Less' Than EU10 Mln

     Essen, Germany, Nov. 29 (Bloomberg) -- RWE AG, Europe's
fourth-biggest electricity company, said its open trading
positions with Enron Corp. amount to ``much less'' than
10 million euros ($8.9 million).

     Enron, the largest U.S. energy trader, said yesterday it
may file for bankruptcy protection after Dynegy Inc. abandoned its
proposed merger with the company.

     ``It's sad that we may lose such an important trader in the
market,'' said Ralf Schaefer, a spokesman for RWE's trading
business. ``But there will be no financial losses for RWE.''

     Essen, Germany-based RWE has been building up its trading
activities in the last three years and trades electricity, natural
gas and coal. European utilities are seeking to profit from excess
electricity output by selling it on the open market.


Enron Soared on Innovation, Fell as Debt Scared Away Investors
2001-11-29 01:01 (New York)

Enron Soared on Innovation, Fell as Debt Scared Away Investors

     Houston, Nov. 29 (Bloomberg) -- Former Enron Corp. Chief
Executive Officer Jeffrey Skilling bragged last year that
traditional energy companies such as Exxon Mobil Corp. were
doomed. In just two years, he built a business that dominated a $2
trillion market through trading energy, not producing it.

     Today, Enron is sliding toward bankruptcy, after Dynegy Inc.
walked away from a takeover of its Houston rival. Credit rating
companies reduced most of Enron's $15 billion of debt to junk
status. Enron's shares are almost worthless and the Securities and
Exchange Commission is investigating the company's finances.

     Chairman and CEO Kenneth Lay, a friend of President George W.
Bush who made the short list for Secretary of Energy, said he
would ``work to retain'' the employees needed for trading and
certain other businesses. Enron employs 21,000 people.

     ``It's a disaster,'' said shareholder Scott Schermerhorn,
fund manager with Colonial Management Associates. ``Bankruptcy is
highly likely now.''

     The same hubris reflected in Skilling's boast paved the way
for the company's disintegration, analysts said. Enron asked
shareholders to accept reports of 14 percent annual earnings
growth, even as it used a bewildering series of outside
partnerships to hedge risks and move assets and liabilities off
its books. When accounting for those partnerships turned out to be
wrong, investor confidence evaporated.

     Standard & Poor's, whose downgrade of Enron's debt yesterday
was part of the proposed sale's unraveling, removed the company
from its index of 500 stocks. Enron shares have lost more than 99
percent, or $45 billion in market value, making them the worst
performer in the index this year.

                  `World's Greatest Company'

     A sign at Enron's headquarters calls it ``The World's
Greatest Company,'' and for several years many investors agreed.
Enron's shares rose 50 percent in 1999, 87 percent last year, and
for most of 2001 were the most highly recommended analyst pick
among S&P 500 companies.

     Enron's high profile extended beyond Wall Street. The company
accounted for a quarter of U.S. electricity and natural gas trades
this year.

     Lay attended a Bush administration economic forum in January,
and Vice President Richard Cheney sought his advice on energy
policy. Enron, its political action committee and employees gave
almost $2.5 million to federal candidates and political parties
last year, with about 75 percent of the money going to
Republicans, according to campaign finance records.

     ``Enron is aligned with all the Texas energy exploration and
production money,'' said Glenn Reynolds, an analyst at
CreditSights Inc. ``They know how to do business.''

                         Risky Strategy

     In 1990, Lay hired Skilling, who became a force behind the
company's growth. He ripped away walls in Enron's headquarters,
built trading desks and transformed the company's regulated
pipeline and utility units into a business that some analysts say
resembles a hedge fund.

     Enron reported 1999 profit of $893 million and $40.1 billion
in revenue. That same year, Enron expanded into water utilities,
sewage treatment and trading space on fiber-optic
telecommunication networks. Shareholder lawsuits filed in the past
month say those business were money losers from the start and that
executives mislead investors about them.

     A junior executive in Europe dreamed up an idea in 1999 for
an Internet trading site dealing paper, plastics and other
commodities, in addition to the usual natural gas and electricity
offerings. The site handled $50 billion in transactions in its
first six months and more than $880 billion in trades in two
years, 60 percent of the company's total.

     ``Enron had a tremendous appetite for risk,'' said Peter
Fusaro, president of Global Change Associates, which did
consulting for Enron. ``They were the first in many markets, would
take long-term contracts, they were just super-aggressive. They
hired Type-A MBA's from the best schools who learned the energy
business from scratch.''

                         Investors in Dark

     Unknown by most investors, some of Enron's increased revenue
was coming from sales of power plants to Enron-affiliated
partnerships. Those partnerships paid for the purchases by selling
bonds that were guaranteed by Enron.

     As a result, Enron's books showed an increase in cash from
the sales, and a decrease in debt associated with the plants. An
Enron restatement of finances earlier this month showed that as
much as $3.9 billion, or about a quarter of Enron's total long
term debt, had been shifted from Enron's books to affiliates.

     Skilling quit the company in August. Former Enron Chief
Financial Officer Andrew Fastow was fired last month, after the
company revealed that Fastow had personally profited from
transactions he conducted with Enron partnerships. Enron has said
it's cooperating with an SEC probe.

      When Enron's market value was near its high in late 2000 and
early this year, eight top Enron executives, including Lay and
Skilling, sold company stock for a total of $73 million. More than
20 securities lawsuits alleging illegal insider trading have been
filed against the company.

     Lay pledged to provide more information on Enron's
transactions, starting with the third-quarter earnings report.

     On Oct. 16, Enron stunned analysts and investors with the
disclosure of $1.01 billion in losses from investments in
businesses outside the main trading operation, such as in fiber-
optics ventures and the Azurix water and sewage companies.

     ``Now you have a bankrupt company,'' said Rob Plaza, an
analyst at financial advisers Morningstar who owns no Enron
shares. ``That is the smoke and mirrors of Enron.''


Centrica May Have to Write off $43 Mln If Enron Fails (Update1)
2001-11-29 09:10 (New York)

Centrica May Have to Write off $43 Mln If Enron Fails (Update1)

     (Adds detail on contracts in first paragraph, shares in
fifth, background from sixth.)

     London, Nov. 29 (Bloomberg) -- Centrica Plc, the U.K.'s
dominant natural-gas supplier, may have to write off gas and
electricity contracts worth 30 million pounds ($43 million) if
Enron Corp. goes out of business.

     The company agreed to a 10-year gas contract in 1998 with the
U.S. energy trader, which may be forced into the biggest Chapter
11 filing in history after Dynegy Inc. walked away from a rescue.
Enron supplies the U.K. company with more than 5 billion cubic
meters of gas and an undisclosed amount of power.

     Centrica ``is working to reduce its trading exposure to
Enron,'' it said in a Regulatory News Service statement. ``In the
event Enron defaults on its contractual obligations, we remain
confident in our ability to supply all our customers.''

     Centrica, created in 1997 when it was spun off from British
Gas, still makes most sales from supplying the fuel to customers
in the U.K. It meets about 20 percent of that demand with gas from
its own fields and buys the rest from other companies.

     Shares of the Slough, England-based company fell as much as
4.25 pence, or 2.1 percent, to 202.75. They've lost a fifth of
their value this year. Enron shares are now almost worthless.

     Enron provides gas to Centrica at prices linked to the
International Petroleum Exchange natural gas futures contract.

     Last week, Slough, England-based Centrica agreed to pay 62.3
million pounds for stakes in five natural gas fields in the North
Sea to replace dwindling reserves.


Enron Evaluating Whether to Pay Quarterly Dividend (Update1)
2001-11-29 08:44 (New York)

Enron Evaluating Whether to Pay Quarterly Dividend (Update1)

     (Adds background on Dynegy withdrawal in third paragraph.)

     Houston, Nov. 29 (Bloomberg) -- Enron Corp., facing
bankruptcy after Dynegy Inc. abandoned a buyout of the largest
energy trader, said it is evaluating whether to pay dividends on
its common and preferred stock next month.
     Enron is scheduled to pay a quarterly dividend of 12.5 cents
a share Dec. 20.

     Dynegy yesterday withdrew its purchase offer, valued at about
$23 billion in stock and assumed debt when announced Nov. 9, after
bankers failed to raise $1.5 billion Enron needed to operate until
the acquisition was completed. Credit-rating companies lowered
Enron's rating to junk.

     Shares of Enron fell $3.50, or 85 percent, to 61 cents
yesterday. They have fallen 99 percent this year. Dynegy fell
$4.92, or 12 percent, to $35.97. Both companies are based in
Houston.