Investments

Bank Of America Investment As lawmakers expressed outrage over how the company could collapse so quickly with so little warning, Enron sought protection from some of its creditors in Europe yesterday and allowed traders to dissolve positions through its online unit.

While InfoUSA's CEO Vin Gupta lauded its third quarter results in an announcement October 25th in which Gupta was quoted as saying, "We continue to maintain our sales pipeline, " many in the investment community expected more after recent changes in the bankruptcy laws were perceived to have created a spike in demand for consumer and business data. Gupta said the company' based data service were demonstrating good results, pointing ot InfoUSA's deferredrevenue for the period of $51.5 million.

Investment Opportunity With business a sliver of its level just weeks ago, Enron, once a giant energy trading company, was desperately looking for ways to restructure, most likely in a bankruptcy filing within days.

Diversification . A larger pool of funds allows the fund manager managing the unit trust to purchase a wider range of investments. Rather than concentrating an investment portfolio into one or two investments or shares, a portfolio of market securities can be held. The wider the spread of investments, the less volatile (i.e. variable) the investment returns will be. In simple terms, not putting all your eggs in one basket.

Banc Of America Investment The ripples were felt from Houston, where edgy employees at the company's headquarters ran a gantlet of photographers and braced themselves for anticipated layoffs, to Brazil and India, where jockeying began over control of Enron properties. Financial companies, trading partners and governments rushed to calculate how much they were owed by Enron and what their losses might be.

" If you drop a pebble in the water, it creates ripples and the ripples spread, " said Mabrucco.

Banking Investment Tensions mounted between Enron and Dynegy, which withdrew its offer for the company on Wednesday. Litigation appeared increasingly likely over Dynegy's decision to walk away as well as its plan to take one of Enron's most prized assets, the Northern Natural Gas pipeline, under a previous agreement.

Investment Solution Strategic In Washington, lawmakers announced plans to investigate Enron's collapse. Representative Billy Tauzin, the Louisiana Republican who is chairman of the House Energy and Commerce Committee, ordered hearings and an investigation. His Senate counterpart, Jeff Bingaman, Democrat of New Mexico, did the same.

. For the individual investor, it is sometimes difficult to gain exposure to a particular asset class. For instance, if an investor with USD3, 000 wanted to gain exposure to the property market, global equity markets and bond market, it would be impossible to simultaneously hold a direct investment portfolio in all of these markets. With unit trust investments, it is possible to spread your money around to all of these asset classes at the same time, so that the investor can gain the investment exposure he requires.

Investment Banking Services "How a company can sink so far, so fast, is very troubling," Mr. Tauzin said though his spokesman, Ken Johnson. "We need to find out if the company's accounting practices masked severe underlying financial problems." Mr. Johnson said hearings would probably be held by early next year.

Bank Investment Enron, which was the world's largest trader of electricity, natural gas and other commodities, is widely expected to file for bankruptcy-court protection by next week unless creditors force it into court before then. The company says options other than a reorganization under Chapter 11 are being considered, but it did not say what those were. Investors have factored in a bankruptcy filing, pushing Enron's stock, which peaked at $90 last year, down 25 more cents yesterday, to 36 cents.

Alternative Investment Moody's Investors Service said that it was considering a downgrade of Dynegy's credit rating because of potential liabilities from litigation with Enron. Shares of Dynegy closed at $33.65, down 8.4 percent, or $3.08.

Online Investment Services "It remains uncertain whether or not the company will face legal challenges from Enron," Moody's said, adding that it "will continue to monitor any potential consequences of the merger termination and any subsequent impact on Dynegy's capital structure and liquidity."

Accompany Essential Investment Just a few weeks ago, Enron's Internet-based trading platform, EnronOnline, was the most powerful force in world energy markets. Other energy traders were wary of making deals without first checking what prices were offered on natural gas and electricity and even on such obscure contractual bets as how hot it would get next summer.

Investment Company EnronOnline offered a warning yesterday on its screens. "While transactions may be available, customers entering into transactions should carefully evaluate their positions and Enron's current credit status before transacting," it said.

Investment Management Solution Traders were exiting contracts with Enron and managing Enron credit exposure. The online unit did about 850 trades yesterday, compared with more than 5,000 daily before the financial crisis that turned Enron into a penny stock and potentially the nation's largest bankruptcy.

Investment Management Services In London, the accounting firm PricewaterhouseCoopers was appointed the administrator in the reorganization of Enron's energy trading operations in Europe. Led by banks and energy trading firms, American companies said they might lose more than $1 billion in the wake of Enron's tumble.

Guide Investment Stock Enron's American advisers, including lawyers from Weil Gotshal & Manges, a leading bankruptcy-law firm, and executives from the Blackstone Group, an investment firm specializing in restructuring, met with Enron creditors to discuss a so- called prepackaged bankruptcy filing, according to executives close to the talks.

Investment Manual Solution Such a filing, in which creditors and management agree to a restructuring plan in advance, would identify what assets Enron still has that could be used to partly repay lenders and other creditors. One proposal, according to executives close to the talks, was for Enron's lenders to forgive some loans in exchange for a part of its trading portfolio.

Investment Stock Aside from its core energy-trading business, once its most profitable franchise, Enron has a number of tangible assets. Many have had dismal performance of late and have attracted few expressions of interest until now. Others with steadier cash flow serve as collateral on Enron's loans, raising questions about how easily they can be used to satisfy the company's debts.

Essential Investment Solution Enron's most significant businesses include the Northern Natural Gas Company, the Transwestern Pipeline Company, and a 50 percent stake in the Florida Gas Transmission Company all major natural gas pipelines. It also has an indirect stake in the Northern Border Pipeline Company, an interstate pipeline system. It owns the Portland General Electric Company, a local electric utility in Oregon that it has agreed to sell, and a stake in a partnership that trades and transports crude oil.

Citicorp Investment Services Enron also has big stakes in numerous properties overseas, including a large power plant in India; a water company in Britain; natural gas pipelines in Argentina, Bolivia and Columbia; and power plants in China, Guam and the Philippines.

Fool Guide Investment Motley Enron also owns a new business that trades telecommunications bandwidth, or high-speed long-distance capacity, but that investment has produced giant losses as the steep downturn in that industry.

Fidelity Investment Services As part of the merger plan, Dynegy invested $1.5 billion in Enron for preferred stock in the Northern Natural Gas pipeline that can be converted into ownership. Dynegy says it now plans to exercise that option.

Investment Management A person close to Enron asserted yesterday that Dynegy delayed the renegotiation of the merger, and the delay contributed to the deterioration of Enron's core energy-trading business. He also said Dynegy sharply curtailed trading with Enron last week, and that further hurt Enron's business as word leaked to other energy traders.

Francisco Investment San Interviewed yesterday on CNBC, Chuck Watson, Dynegy's chairman, reiterated that Dynegy has a clear right to acquire the pipeline, and he said Dynegy kept trading with Enron until Wednesday, though it had curtailed its exposure to the company.

Mellon Investment Services Enron stopped short of saying it would sue Dynegy. But executives close to the company say lawyers have been preparing documents for a possible lawsuit that would seek damages of more than $350 million, the amount of the breakup fee in the merger agreement if either party walked away from the deal for reasons other than a material adverse change in the business. Mr. Watson has said he does not believe either side owes the fee.

Finance Investment Around the world yesterday, other energy traders and investors licked their wounds from Enron's collapse. Many traders said they stood to lose $50 million or more from dealings with Enron, and a number of banks disclosed exposures of several hundred million dollars. In New York, the $112 billion state Common Retirement Fund lost roughly $50 million to $60 million from the decline in Enron stock.

Investment Manual Science By Richard A. Oppel Jr. and Andrew Ross Sorkin
New York Times - 11/30/2001

Topic: Petroleum Industry

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