RE: More "stuff" ,
 PROLLY SHOULDN'T USE THE F WORD IN AN INTRA-COMPANY E-MAIL, PARDNER

 -----Original Message-----
From: 	Porter, David V.  
Sent:	Tuesday, November 20, 2001 9:41 AM
To:	Semperger, Cara
Subject:	More "stuff"

Hey Cara,

Sorry to say it, but I think we're FUCKED!

Happy Holidays,

David.


http://www.nytimes.com/2001/11/20/business/20ENRO.html

November 20, 2001
In New Filing, Enron Reports Debt Squeeze
By RICHARD A. OPPEL Jr. and FLOYD NORRIS
The Enron Corporation (news/quote </redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=ENE>) told investors yesterday that it faced debt repayments over the next year vastly in excess of its available cash. It said that if any of a number of things went wrong, its ability to continue as a going concern would be called into question.
In a delayed quarterly filing with the Securities and Exchange Commission, the company said that it would have to repay $690 million in debt by next Tuesday if it did not come up with collateral for a loan. 
Enron has about $1.75 billion in cash and credit lines now available but faces debt repayments and other obligations of $9.15 billion by the end of next year. The report for the third quarter, which was filed five days late, says the company faces immediate demand for $3.9 billion in debts if its credit rating is downgraded any further.
Enron's independent auditors with the firm of Arthur Andersen have not been able to complete their review of Enron's financial statements for the third quarter. Andersen already faces lawsuits over its audits of Enron's books related to Enron's disclosure this month that it had overstated almost $600 million in profits in the last five years. Enron has said that it will restate statements that Andersen certified and that those statements should no longer be relied upon.
Yesterday, Representative John D. Dingell of Michigan, the ranking Democrat on the House Energy and Commerce Committee, called for an investigation into Arthur Andersen's handling of the Enron audits. A spokesman for Andersen could not be reached last night.
Enron, the nation's largest energy trader, has agreed to be acquired by Dynegy Inc. (news/quote </redirect/marketwatch/redirect.ctx?MW=http://custom.marketwatch.com/custom/nyt-com/html-companyprofile.asp&symb=DYN>), its smaller crosstown rival in Houston, and credit rating agencies have said that a failure of that deal to go through

would lead to a further downgrading of Enron, which is now at the lowest investment-grade rating. Any downgrades could lead to a collapse of Enron's core energy trading business, analysts say, as other energy trading companies might stop doing business with Enron entirely. 
The Dynegy deal is expected to close sometime next year, and the disclosures yesterday indicate that Enron may face challenges in meeting its obligations before then, particularly if the closing of the deal is delayed. Enron said it hoped to complete the transaction by the end of next September.
Enron is in talks to obtain $500 million to $1 billion in additional financing through an equity infusion from major banks and institutions. In addition, executives have said they are hoping to close deals to sell $800 million in assets by the end of the year, and perhaps a few billion dollars of assets next year. Enron is also set to receive a $1 billion infusion from ChevronTexaco, which owns a 27 percent stake in Dynegy, if the deal closes next year.
Still, even after factoring in cash flow from Enron's core energy-trading operations, Enron could be left well short of what it needs to satisfy the huge obligations due by the end of next year - meaning that Enron will probably have to work to persuade bankers to restructure debts or extend maturities.
Carol Coale, an analyst for Prudential Securities in Houston, said the new disclosures indicated that Enron's troubles had run deeper than what investors and analysts believed, even as the stock crashed early this month before the merger with Dynegy was announced.
"Our initial read was that this might have been like a run on the bank," Ms. Coale said. "But now it sounds like Enron's problems were actually more inherent than perceived."
Enron's deal with Dynegy calls for Enron holders to receive 0.2685 Dynegy share for each Enron share, but in trading since the deal was announced Enron's share price has lagged Dynegy's price, reflecting investor doubts that the deal will be completed at the announced terms.
In New York Stock Exchange trading yesterday, before the Enron filing was released, Enron rose 6 cents, to $9.06, and Dynegy rose $1.13, to $43.60. At those prices, the value of the Dynegy offer is 29.2 percent above Enron's share price, compared with a 20.6 percent difference when the deal was announced.
Some debts that Enron might have to pay quickly if its bond rating is lowered could be satisfied by selling shares, but such sales would probably reduce the stock price further. And the merger agreement with Dynegy provides that the exchange ratio would be reduced if Enron sold stock at prices below the implied value under the merger - currently $11.71 an Enron share.
In after-hours trading yesterday, after the release of the Enron filing, the share price slipped to $9.
Enron had previously said it was reducing its profits taken in previous years by more than $500 million. Yesterday's filing provided some additional details on Enron's relationships with various related partnerships whose debts Enron could be forced to pay, and it said that additional write-offs could come as early as the current quarter if it concluded that asset values in the partnerships had declined. It said that because Enron's stock value had fallen, one write-down could be $700 million.
The disclosures show that Enron erected complicated financial structures that in some cases seem to have been meant to allow the company to avoid taking losses on assets and in other cases were aimed at keeping debts off its balance sheet.
But the collapse of Enron's stock price has both worsened the situation for some of those entities and greatly increased the cost Enron would face if it needed to pay off the debts. 
"It is not possible to predict," Enron warned investors, whether its asset sales or debt refinancings would be successful. "An adverse outcome with respect to any of these matters would likely have a material adverse impact on Enron's ability to continue as a going concern."
v..porter@enron.com