11/28 11:14
Dynegy to Pull out of Enron Purchase, Person Says (Update1)
By Mark Lake
New York, Nov. 28 (Bloomberg) -- Dynegy Inc. plans to abandon its proposed purchase of energy trader Enron Corp. after Standard & Poor's Corp. cut Enron's credit rating to junk status, said people familiar with the situation.
Bankers representing Enron and Dynegy last night failed to line up $1.5 billion funds the company needed to operate until Dynegy could complete the acquisition. The lack of funds and the prospect of a downgrade contributed to decision, people said.
``The reality is Enron's going bankrupt,'' said Michael Willingham, a risk manager at Itochu International Inc. ``Enron touted themselves as the king of risk management, but it desn't look like they've mansaged their risk very well.''
Enron shares plunged $2.41, or 59 percent, to $1.7, its lowest level in 19 years. The stock was the most active on U.S. exchanges, trading 69 million shares by 11 a.m. Enron's 6.4 percent bonds, which mature in 2006, fell to 44 cents on the dollar down from 53 cents yesterday. At that price the bonds yield 29 percent.
Bankers led by J.P. Morgan Chase & Co. Vice Chairman James B. Lee tried for for two weeks to raise the cash Enron needed. They failed because of concern Enron wouldn't be able to meet its obligations. That concern was heightened after Enron disclosed a $690 million payment due this week.
Trading Doubts
Enron faced a cash crunch in part because some trading partners lost confidence the company would have the cash to pay bills and either demanding more collateral to trade or restricting trading with the Houston-based company.
Mirant Corp. traders won't sell natural gas or power to Enron, though the Atlanta-based energy trader will buy from the company, said James Peters, Mirant spokesman. Aquila Inc.'s business with Enron also is ``all on the buy side,'' said Al Butkus, an Aquila spokesman.
Wall Street analysts also slashed earnings estimates, contributing to the share decline. Prudential Securities analyst Carol Coale cut her profit forecast for Enron today, to $1.35 from $1.80 for this year, and to 77 cents from $2.10 next year. The average estimate of analysts surveyed by Thomson Financial/First call are $1.65 for this year and $1.61 for next.
Goldman, Sachs & Co. and UBS Warburg cut their 2002 earnings forecasts last week on concern Enron won't recover lost trading business. Coale maintained her ``hold'' rating on the stock.
Verkaufen, auch wenn es weh tut. ene ist DEFINITIV Pleite, wenn der Deal nichts wird.
füxlein
|
1 |
2
Thread abonnieren
