BELEAGUERED Enron, big Texas energy company, restates earnings; had failed to report deals
Thursday, November 8th 2001, 12:00 am
By: News On 6
NEW YORK (AP) _ Beleaguered Enron Corp. issued revised financial statements Thursday in an effort to address previously unreported deals that sparked an investigation by securities regulators.
The revelations have caused its stock price to plummet nearly 80 percent in the past three weeks.
Enron also said it was holding talks with Houston-based Dynegy Inc. which, according to a New York Times report, is considering buying out its larger hometown rival for as much as $8 billion.
In a filing with the Securities and Exchange Commission, Enron said financial statements from 1997 through the first half of 2001 ``should not be relied upon.'' It said partnerships run by Enron officials during that period should have been consolidated into the financial results of the energy trading giant.
Transactions between Enron and these partnerships _ Chewco Investments, Joint Energy Development Investments, and a unit of LJM Cayman _ led in part to a controversial $1.2 billion reduction in the company's equity.
``We believe that the information we have made available addresses a number of the concerns that have been raised by our shareholders and the SEC,'' said Kenneth Lay, Enron's chairman and chief executive.
By its own assessment, Enron's restatement reduces previously reported profits by roughly $586 million and increases its debt by $2.59 billion. The changes reflect the financial impact of retroactively consolidating the partnerships.
The company also fired two executives on Thursday: Ben Glisan, its treasurer, and Kristina Mordaunt, general counsel for one of its divisions. Previously, Enron had ousted chief financial officer Andrew Fastow, who was in charge of some of the partnerships.
Enron, the nation's top buyer and seller of natural gas and the top wholesale power marketer in the United States, had become one of the nation's 10 largest companies, recording revenue of $100.8 billion in 2000.
But the company has been beset by huge investment losses and questions about its financial stability. In particular, its stock has plunged since Oct. 16, when the company posted a $618 million third quarter loss and revealed that its shareholder equity had been reduced.