150 lines
7.2 KiB
Plaintext
150 lines
7.2 KiB
Plaintext
Message-ID: <13302462.1075861339651.JavaMail.evans@thyme>
|
|
Date: Wed, 14 Nov 2001 19:26:42 -0800 (PST)
|
|
From: chairman.ken@enron.com
|
|
To: dl-ga-all_enron_worldwide1@enron.com
|
|
Subject: Overview of Investor Conference Call
|
|
Mime-Version: 1.0
|
|
Content-Type: text/plain; charset=us-ascii
|
|
Content-Transfer-Encoding: quoted-printable
|
|
X-From: Ken Lay - Office of the Chairman </O=ENRON/OU=NA/CN=RECIPIENTS/CN=MBX_KLAYOFFICECHAIR>
|
|
X-To: DL-GA-all_enron_worldwide1 </O=ENRON/OU=NA/CN=RECIPIENTS/CN=DL-GA-all_enron_worldwide1>
|
|
X-cc:
|
|
X-bcc:
|
|
X-Folder: \FERMIS (Non-Privileged)\Ermis, Frank\Inbox
|
|
X-Origin: Ermis-F
|
|
X-FileName: FERMIS (Non-Privileged).pst
|
|
|
|
Today, Enron hosted a conference call to give investors a current overview =
|
|
of the company. Here's an update of what we discussed during the call.
|
|
|
|
We told investors that we're doing everything we can to protect their inter=
|
|
ests and to regain their confidence. Our focus remains on our credit qualit=
|
|
y, balance sheet and liquidity, which are essential for our continued succe=
|
|
ss and expansion of our wholesale businesses.
|
|
|
|
It took more than a few weeks to get where we are today. Here's a snapshot =
|
|
of significant events that led to our current situation:
|
|
|
|
-- In hindsight, we definitely made some very bad investments in our non-co=
|
|
re businesses over the past several years. Those include investments in Azu=
|
|
rix, India and Brazil. They have performed far worse that we could have eve=
|
|
r imagined when we made these investments;
|
|
|
|
-- Because of these bad investments, we've become over-leveraged as a compa=
|
|
ny. The negative impact of those investments was exacerbated through the ex=
|
|
tensive use of debt capital both on and off our balance sheet;
|
|
|
|
-- We also entered into related party transactions that led to a loss of in=
|
|
vestor confidence, which has been very damaging;
|
|
|
|
-- We've been criticized for our lack of transparency and our hard-to-under=
|
|
stand financial and operating disclosures; and
|
|
|
|
-- On top of it all, we discovered errors in our financial statements, as d=
|
|
iscussed in our 8-K filing last week, that required a restatement of previo=
|
|
usly reported earnings.
|
|
|
|
We've taken a new look at our businesses and have separated them into three=
|
|
areas: core businesses, non-core businesses, and businesses under review.
|
|
|
|
Core Businesses
|
|
|
|
Our core businesses remain strong and consistent sources of significant ear=
|
|
nings and cash flows for the company. They're our competitive advantage. Th=
|
|
ese include:
|
|
|
|
-- Natural gas pipeline businesses;
|
|
|
|
-- Gas and power businesses in North America and Europe;
|
|
|
|
-- Retail businesses in North America and Europe; and
|
|
|
|
-- Coal businesses in North America and Europe.
|
|
|
|
The events of the past few weeks have had a temporary negative impact on ou=
|
|
r projected fourth quarter profitability. It's too early to tell at this ti=
|
|
me what impact this might have on our operating results. We are considering=
|
|
these actions now so that we can quickly return to normal business in 2002=
|
|
.
|
|
|
|
I also remain optimistic that the actions we've taken over the past couple =
|
|
of weeks have addressed our customer and counterparty credit and liquidity =
|
|
concerns. According to our business unit leaders, we have definitely seen i=
|
|
mprovement in our counterparty relationships.
|
|
|
|
Non-Core Businesses
|
|
|
|
Our non-core businesses include our global assets group and our broadband d=
|
|
ivision. We have invested more than $8 billion in these businesses, and the=
|
|
return from them has been dismal.
|
|
|
|
We have an aggressive program in place to exit these businesses and expect =
|
|
that the sale of these businesses will generate billions of dollars in cash=
|
|
that we can use to repay debt and reinvest in our core businesses. We alre=
|
|
ady have more than $800 million in assets contracted for sale this year. Th=
|
|
ey include CEG Rio, a gas LDC in Brazil; EcoElectrica, a power plant and LN=
|
|
G receiving terminal in Puerto Rico; and asset sales of offshore oil and ga=
|
|
s properties in India. The approximately $2.9 billion Portland General sale=
|
|
is also on target to close in late 2002 pending regulatory approvals.
|
|
|
|
Businesses Under Review
|
|
|
|
These businesses are comprised of those operations outside our power and ga=
|
|
s wholesale businesses and include global and industrial markets. While sev=
|
|
eral of these businesses have very strong future prospects, we need to dete=
|
|
rmine if their capital requirements and near-term growth prospects are suff=
|
|
icient enough in terms of earnings and cash generation.
|
|
|
|
Reviewing our businesses this way will help determine where we need to make=
|
|
reductions to our work force. More information will follow as soon as it b=
|
|
ecomes available.
|
|
|
|
Credit Rating/10-Q Filing
|
|
|
|
We continue to meet regularly with credit rating agencies and believe that =
|
|
our liquidity enhancements and scheduled asset sales will strengthen our ba=
|
|
lance sheet and maintain our investment grade credit rating. Our current cr=
|
|
edit ratings by the three major rating agencies are as follows:
|
|
|
|
-- Moody's at Baa3 "Under Review for Further Downgrade"
|
|
|
|
-- Fitch at BBB- "Evolving Status"
|
|
|
|
-- S&P at BBB- "CreditWatch Negative"
|
|
|
|
We also discussed our existing financial vehicles, including Osprey, Marlin=
|
|
and Yosemite, in further detail. We told investors that we will file our 1=
|
|
0-Q five days late due to our current activities. It will be filed on Nov. =
|
|
19.
|
|
|
|
We will continue to have updates with investors over the coming weeks as we=
|
|
ll as our frequent updates with you. The full transcript of our conference =
|
|
call will be filed with the Securities and Exchange Commission in the next =
|
|
few days. It will also be posted on our web site at www.enron.com/corp/inve=
|
|
stors under "SEC Filings."
|
|
|
|
=20
|
|
|
|
=20
|
|
|
|
In connection with the proposed transactions, Dynegy and Enron will file a =
|
|
joint proxy statement/prospectus with the Securities and Exchange Commissio=
|
|
n. Investors and security holders are urged to carefully read the joint pro=
|
|
xy statement/prospectus regarding the proposed transactions when it becomes=
|
|
available, because it will contain important information. Investors and se=
|
|
curity holders may obtain a free copy of the joint proxy statement/prospect=
|
|
us (when it is available) and other documents containing information about =
|
|
Dynegy and Enron, without charge, at the SEC's web site at www.sec.gov. Cop=
|
|
ies of the joint proxy statement/prospectus and the SEC filings that will b=
|
|
e incorporated by reference in the joint proxy statement/prospectus may als=
|
|
o be obtained for free by directing a request to either: Investor Relations=
|
|
, Dynegy Inc., 1000 Louisiana, Suite 5800, Houston, TX 77002, Phone: (713) =
|
|
507-6466, Fax: (713) 767-6652; or Investor Relations, Enron Corp., Enron Bu=
|
|
ilding, 1400 Smith Street, Houston, TX 77002, Phone: (713) 853-3956, Fax: (=
|
|
713) 646-3302.
|
|
|
|
In addition, the identity of the persons who, under SEC rules, may be consi=
|
|
dered "participants in the solicitation" of Dynegy and Enron shareholders i=
|
|
n connection with the proposed transactions, and any description of their d=
|
|
irect or indirect interests, by security holdings or otherwise, are availab=
|
|
le in an SEC filing under Schedule 14A made by each of Dynegy and Enron. |