Enron stock free-fall continues

Wednesday, November 21st 2001, 12:00 am
By: News On 6

HOUSTON (AP) _ Shares of embattled Enron Corp. continued their rapid decline on Wednesday as analysts and investors expressed more doubt that the once-mighty energy trader could recover lost business and investor confidence.

Analysts are questioning whether Dynegy Inc.'s planned $8.9 billion acquisition of Enron will survive.

Enron shares fell 23 percent Tuesday, then dropped a further $2.25 to $4.74, or 32 percent, on Wednesday in extremely heavy trading on the New York Stock Exchange.

Shares of Dynegy were off $2.55 to $39.15 on the NYSE.

In a report issued Wednesday morning, Goldman Sachs & Co. analyst David Fleischer became the latest to question Enron's future, saying a Securities and Exchange Commission filing by the Houston-based company earlier this week ``raised new issues about liquidity and the ability of the company to even finance itself over the next several months.''

Documents that Enron filed with the SEC late Monday restated the company's third-quarter earnings and said the company may have to repay a $690 million debt by next week because of its decreased credit ratings.

Fleischer said Enron's Nov. 16 cash balance of $1.2 billion is inadequate to meet remaining debt obligations.

Fleischer acknowledged, however, Enron's efforts to renegotiate next week's due date for the $690 million debt. He said there were indications that Enron's banks may be willing to restructure the debt.

Michelle Foss, director of the Energy Institute at the University of Houston, said this latest round of troubles had to raise concerns about whether the Dynegy-Enron deal will be pulled off.

``It doesn't look like it's going to be able to happen,'' Foss said. ``It did look like a decent idea when they proposed the merger, but today I'm sure they'll look at it and see if they can salvage their attempt to buy Enron.''

Representatives of Enron and Dynegy did not immediately return telephone calls for comment Wednesday.

Enron agreed to be bought after its stock price plunged about 80 percent in the weeks after disclosing a $1.2 billion reduction in shareholder equity related to partnerships run by company officers. The arrangements allowed Enron to keep about half a billion dollars in debt off its books.

Those partnerships are being investigated by the SEC.

Earlier this month, Enron said it overstated earnings from 1997 through the first half of 2001 by $586 million and revised its debt upward by $628 million.