================================================================= ENRON BANKRUPTCY NEWS Issue Number 1 ----------------------------------------------------------------- Copyright 2001 (ISSN XXXX-XXXX) December 2, 2001 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 609-392-0900 FAX 609-392-0040 ----------------------------------------------------------------- ENRON BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 24 Perdicaris Place, Trenton, New Jersey 08618, on an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtor's case. Each issue is prepared by Peter A. Chapman, Editor. Subscription rate is US$45 per issue. Any re-mailing of ENRON BANKRUPTCY NEWS is prohibited. ================================================================= IN THIS ISSUE ------------- [00000] HOW TO SUBSCRIBE TO ENRON BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF ENRON CORP. [00002] ENRON'S SEPTEMBER 30, 2001 CONSOLIDATED BALANCE SHEET [00003] ENRON DEBTORS' CHAPTER 11 DATABASE [00004] DEBTORS' STATED FINANCIAL CONDITION AT OCTOBER 31, 2001 [00005] ENRON METALS' 20 LARGEST UNSECURED CREDITORS [00006] ENRON CORP.'S 20 LARGEST UNSECURED CREDITORS [00007] ENRON NORTH AMERICA'S 20 LARGEST UNSECURED CREDITORS [00008] ENRON POWER MARKETING'S 20 LARGEST UNSECURED CREDITORS [00009] SMITH STREET LAND'S 20 LARGEST UNSECURED CREDITORS [00010] ENRON BROADBAND SERVICES' 20 LARGEST UNSECURED CREDITORS [00011] ENRON ENERGY SERVICES OP'S 20 LARGEST UNSECURED CREDITORS [00012] ENRON ENERGY MARKETING'S 13 LARGEST UNSECURED CREDITORS [00013] ENRON ENERGY SVCS. INC.'S 20 LARGEST UNSECURED CREDITORS [00014] ADVERSARY PROCEEDING -- Enron v. Dynegy KEY DATE CALENDAR ----------------- 12/02/01 Voluntary Petition Date 12/17/01 Deadline for filing Schedules of Assets and Liabilities 12/17/01 Deadline for filing Statement of Financial Affairs 12/17/01 Deadline for filing Lists of Leases and Contracts 12/22/01 Deadline to provide Utilities with adequate assurance 01/31/02 Deadline to make decisions about lease dispositions 03/02/02 Deadline to remove actions pursuant to F.R.B.P. 9027 04/01/02 Expiration of Debtor's Exclusive Plan Proposal Period 05/31/02 Expiration of Debtor's Exclusive Solicitation Period 12/01/03 Deadline for Debtor's Commencement of Avoidance Actions Organizational Meeting with UST to form Committees Bar Date for filing Proofs of Claim First Meeting of Creditors pursuant to 11 USC Sec. 341 ----------------------------------------------------------------- [00000] HOW TO SUBSCRIBE TO ENRON BANKRUPTCY NEWS ----------------------------------------------------------------- ENRON BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtor's case. The subscription rate is US$45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Re-mailing of ENRON BANKRUPTCY NEWS is prohibited. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. To continue receiving ENRON BANKRUPTCY NEWS, please complete the form below and return it by fax or e-mail to: Bankruptcy Creditors' Service, Inc. 24 Perdicaris Place Trenton, NJ 08618 Telephone (609) 392-0900 Fax (609) 392-0040 E-mail: peter@bankrupt.com We have published similar newsletters tracking billion-dollar insolvency proceedings since 1990, starting with Federated Department Stores. 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Please enter my personal subscription to ENRON BANKRUPTCY NEWS at US$45 per issue until I tell you to cancel my subscription. Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- ENRON BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtor's case. The subscription rate is US$45 per issue. Newsletters are delivered via e-mail; invoices, transmitted following publication of each newsletter issue, arrive by fax. Re-mailing of ENRON BANKRUPTCY NEWS is prohibited. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. ----------------------------------------------------------------- [00001] BACKGROUND & DESCRIPTION OF ENRON CORP. ----------------------------------------------------------------- ENRON CORP. 1400 Smith St. Houston, TX 77002-7369 Telephone (713) 853-6161 Fax (713) 853-3129 http://www.enron.com Enron Corp. (NYSE: ENE) is enormous by every measure. If Enron were a sovereign nation, its annual revenues would rank it as the 30th largest country in the world (between Egypt and Malaysia). Provided its reported revenues are real, Enron accounts for nearly 2% of the United States' gross domestic product. Stated as simply as possible, Enron does three things: (A) Enron markets electricity and natural gas. (B) Enron delivers energy and other physical commodities; and (C) Enron provides financial and risk management services to customers around the world. Enron's business is divided into three core areas: (1) Enron Wholesale Services encompasses Enron's global wholesale businesses. This core area is divided into five business units: (a) Enron Americas includes the company's wholesale merchant businesses related to natural gas and power across North, Central and South America, including trading, marketing and new asset development activities in these regions. (b) Enron Europe is the company's wholesale merchant business across all commodities in Europe, Australia and Japan. This business unit also includes Enron Metals. Enron's European activities were established in 1989, with the development and subsequent construction of the 1,875 MW combined cycle gas turbine power plant at Teesside following the liberalization of the U.K. electricity market. Since 1996, Enron has become a leading participant in the liberalized U.K. and Nordic energy markets and is now one of the leading new entrants in the liberalizing Continental electricity and gas markets. Across Europe, the company is developing, partially owns and/or operates power stations in Italy, Poland, Turkey, Spain and the UK, representing a combined capacity of 5,974 megawatts. (c) Enron Global Markets includes commodity businesses in crude and related products, coal, weather, freight, foreign exchange, and agricultural products. (d) Enron Net Works extends Enron's business model to new wholesale commodity markets across a broad range of industries using eCommerce as a platform to pursue new market opportunities for Enron. Some of Net Works' eCommerce initiatives include EnronOnline. (e) Enron Broadband Services combines the power of its global broadband network, the Enron Intelligent Network, with a suite of customized bandwidth options and streaming media applications to fundamentally improve the online experience. EBS is also involved with bandwidth intermediation and content and application services. (2) Enron Energy Services (EES) is the Company's retail arm, offering companies a way to develop and execute their energy strategies. "We are the largest provider of energy services to commercial and industrial companies, signing contracts valued at $16 billion in 2000," Enron says. "We use our scale and Enron's key capabilities -- commodity price risk management, information technology, engineering and capital solutions -- to obtain maximum benefits for our customers. The volatility of energy prices across the United States and in parts of Europe has heightened the value of energy management. We focus on the customer's primary concerns: managing energy prices and consumption. Our unique skills, experience, depth and versatility enable us to provide a comprehensive solution to address uncertain, rapidly changing markets." Enron Energy Services offers four major services: (a) Commodity Management -- Enron is the largest marketer of natural gas and electricity, and EES leverages this capability to build and manage an optimal energy commodity portfolio for its customers. Customers look to EES for a predictable price for their energy and for opportunities for them to profit from changing market conditions. (b) Energy Asset Management -- offering assessments of a customer's existing energy infrastructure and workplace to find ways to increase energy efficiency and reduce consumption, analyzing the cost-benefit of upgrading, replacing or monitoring energy assets and systems, including boilers, heating, cooling and lighting. (c) Monitoring Performance -- gathering data through on- site and remote monitoring capabilities to identify and adjust abnormal energy usage patterns quickly. The Performance Measurement Center then uses this real-time data to analyze and improve energy procurement practices and operations. (d) Capital Solutions -- Upgrading and monitoring equipment requires investment. Enron offers innovative financial solutions that allow companies to upgrade energy infrastructure without diverting capital from their core businesses. Enron Direct offers low-commodity prices and superior customer services to small and medium-size businesses. Launched initially in the U.K., Enron Direct sells retail electricity and natural gas to more than 100,000 enterprises such as restaurants and stores. The Enron Direct model is being adapted to other countries, such as Spain, the Netherlands and the United States. Often small to mid-size businesses lack the means to manage their energy costs, yet for many, energy is one of their largest expenses. Retail Solutions helps customers with energy management issues. (3) Enron Global Services is Enron's asset-based businesses. The EGS portfolio includes: (a) Enron Transportation Services (ETS), an integral part of EGS, operates one of the US' largest gas transmission systems. ETS oversees Enron's regulated, interstate natural gas pipelines. ETS' four pipelines: * Northern Natural Gas, * Transwestern Pipeline, * Florida Gas Transmission, and * Northern Border Partners, L.P., span approximately 25,000 miles and have a peak capacity of 10.1 billion cubic feet per day (Bcf/d). Enron transports 15% of U.S. natural gas demand, and Connects to the major supply basins in the United States and Canada. (b) Portland General, a wholly owned subsidiary of Enron, serves more than 1.4 million people in Oregon through its Portland, Oregon-based electric utility, Portland General Electric. Electricity sales are growing along with Portland General's service territory of 3,000 square miles. The utility is expected to continue to be one of the best performers during the energy crunch in the West. (c) Enron Global Services - International manages Enron's energy assets and operations (power plants, pipelines and distribution companies) outside the North American continent. The international division has offices and operations in approximately 20 countries and territories: (d) Enron Wind is a leader in the wind power industry. Enron Wind is a fully integrated wind power company that designs and manufactures state-of-the-art, 600- kilowatt to 1.5-megawatt wind turbines in the United States and Europe. The company also provides power plant design and engineering, project development, financing, and operation and maintenance services. Enron Wind has developed or sold more than 4,500 wind turbines, for total generating capacity of 1,600 megawatts, worldwide. (e) EOTT Energy Partners, L.P. is a major independent marketer and transporter of crude oil in North America. EOTT transports most of the lease crude oil it purchases via pipeline, which includes 8,200 miles of active intrastate and interstate pipeline and gathering systems, and a fleet of 285 owned or leased trucks. In addition, EOTT owns and operates a hydrocarbon processing plant; a natural gas liquids storage facility; and a 240-mile liquid pipeline grid system. EOTT Energy Corp, a wholly owned subsidiary of Enron Corp., is the general partner of EOTT Energy Partners, L.P. with headquarters in Houston. The Partnership's Common Units are traded on the New York Stock Exchange under the ticker symbol "EOT." (f) Azurix was formed in 1998 by Enron Corp. Azurix is a global water company engaged in the business of owning, operating and managing wastewater assets, providing water and wastewater related services and developing and managing water resources. (g) Wessex Water. In September 1998, Azurix, an Enron Company, acquired Wessex Water services operator in Bristol. The company supplies 375 million liters of water services per day to 1.2 million customers in southwest England. Wessex treats on average 480 million liters of wastewater per day from a population of approximately 2.5 million. ----------------------------------------------------------------- [00002] ENRON'S SEPTEMBER 30, 2001 CONSOLIDATED BALANCE SHEET ----------------------------------------------------------------- ENRON CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET At September 30, 2001 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 1,001,000,000 Trade receivables (net of allowance for doubtful accounts of $437,000,000) 9,208,000,000 Other receivables 1,231,000,000 Assets from price risk management activities 9,041,000,000 Inventories 836,000,000 Deposits 2,543,000,000 Other 987,000,000 --------------- Total Current Assets 24,847,000,000 --------------- Investments and Other Assets Investments in and advances to Unconsolidated affiliates 7,131,000,000 Assets from price risk management activities 9,687,000,000 Goodwill 3,548,000,000 Other 5,655,000,000 --------------- Total Investments and Other Assets 26,021,000,000 --------------- Property, Plant and Equipment, at cost Natural gas transmission 6,311,000,000 Electric generation and distribution 3,589,000,000 Fiber-optic network and equipment 728,000,000 Construction in progress 1,135,000,000 Other 2,860,000,000 --------------- 14,623,000,000 Less accumulated depreciation, depletion and amortization 3,708,000,000 --------------- Net Property, Plant and Equipment 10,915,000,000 --------------- Total Assets $61,783,000,000 =============== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $ 7,787,000,000 Liabilities from price risk management activities 8,893,000,000 Short-term debt 6,434,000,000 Customers' deposits 1,770,000,000 Other 2,121,000,000 --------------- Total Current Liabilities 27,005,000,000 --------------- Long-Term Debt 6,544,000,000 --------------- Deferred Credits and Other Liabilities Deferred income taxes 1,947,000,000 Liabilities from price risk management activities 9,847,000,000 Other 3,552,000,000 --------------- Total Deferred Credits and Other Liabilities 15,346,000,000 --------------- Minority Interests 2,387,000,000 --------------- Company-Obligated Preferred Securities of Subsidiaries 903,000,000 --------------- Shareholders' Equity Second preferred stock, cumulative, no par value 115,000,000 Mandatorily Convertible Junior Preferred Stock, Series B, no par value 1,000,000,000 Common stock, no par value 8,132,000,000 Retained earnings 2,495,000,000 Accumulated other comprehensive income (1,527,000,000) Common stock held in treasury (477,000,000) Restricted stock and other (140,000,000) --------------- Total 9,598,000,000 --------------- Total Liabilities and Shareholders' Equity $61,783,000,000 =============== ----------------------------------------------------------------- [00003] ENRON DEBTORS' CHAPTER 11 DATABASE ----------------------------------------------------------------- Lead Debtor: Enron Metals & Commodity Corp. Debtor Affiliates Filing Separate Chapter 11 Petitions: Enron Corp. Enron North America Corp. Enron Power Marketing, Inc. PBOG Corp. Smith Street Land Company Enron Broadband Services, Inc. Enron Energy Services Operations, Inc. Enron Energy Marketing Corp. Enron Energy Services, Inc. Enron Energy Services L.L.C. Enron Transportation Services Company BAM Leasing Company ENA Asset Holdings, L.P. Bankruptcy Case Nos.: 01-16033 through 01-16046, inclusive, to be Jointly Administered under Bankruptcy Case No. 01-16034 Petition Date: December 2, 2001 Bankruptcy Court: United States Bankruptcy Court Southern District of New York Alexander Hamilton Custom House One Bowling Green, 5th Floor New York, New York 10004-1408 Telephone (212) 668-2870 Bankruptcy Judge: Not Yet Assigned Debtor's Bankruptcy Counsel: Martin J. Bienenstock, Esq. Brian S. Rosen, Esq. WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Telephone (212) 310-8000 Fax (212) 310-8007 and Melanie Gray, Esq. WEIL, GOTSHAL & MANGES LLP 700 Louisiana, Suite 1600 Houston, Texas 77002 Telephone (713) 546-5000 U.S. Trustee: Carolyn S. Schwartz Office of United States Trustee 33 Whitehall Street, 21st Floor New York, NY 10004 Telephone (212) 510-0500 ----------------------------------------------------------------- [00004] DEBTORS' STATED FINANCIAL CONDITION AT OCTOBER 31, 2001 ----------------------------------------------------------------- In their Voluntary Chapter 11 Petitions, the Debtors disclose financial data, saying these numbers are "the latest available information and refer[] to the [Debtors'] financial condition on October 31, 2001:" Legal Entity Assets Liabilities ------------ ------ ----------- Enron Metals & Commodity Corp. $265,622,903 $175,529,804 100% owned by Enron Trade Holdings, Inc. Enron Corp. $24,759,295,677 $13,151,751,966 Holding Company (NYSE: ENE) Enron North America Corp. $13,743,023,203 $8,840,215,034 100% owned by Enron Corp. Enron Power Marketing, Inc. $3,388,506,507 $2,599,567,644 100% owned by Enron North America Corp. PBOG Corp. $0 $0 Ownership undetermined Smith Street Land Company $248,346,962 $243,619,798 100% owned by Enron Corp. Enron Broadband Services, Inc. $1,391,247,000 $1,456,053,000 100% owned by Enron Communications Group, Inc. Enron Energy Services Operations, Inc. $1,498,570,258 $1,880,617,033 100% owned by Enron Energy Services, LLC Enron Energy Marketing Corp. $375,610,734 $455,919,157 100% owned by Enron Energy Services Operations, Inc. Enron Energy Services, Inc. $2,502,266,331 $2,117,306,675 100% owned by Enron Energy Services Operations, Inc. Enron Energy Services L.L.C. $476,595,543 $0 98.16% owned by Enron Corp. Enron Transportation Services $3,349,114 $49,355,645 Company 100% owned by Enron Operations L.P. BAM Leasing Company $241,126,374 $267,345,538 100% owned by Enron Corp. ENA Asset Holdings, L.P. $880,954,894 $100 Ownership not disclosed All amounts reported as liabilities do not reflect off-balance sheet and contingent obligations. ----------------------------------------------------------------- [00005] ENRON METALS' 20 LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature Of Claim Claim Amount ------ --------------- ------------ Al Rajhi Saudi Arabia Financial $101,343,685.67 Southern Peru Copper Corp. Surcursal Del Peru AV. Caminos Del Inca Lima 33, Peru Trade 230,670.35 Cero Wire & Cable Company P. O. Box 91163 840 S. Canal St. 3rd Floor Chicago, IL 60693 Trade 874,191.42 Mitsubishi Materials Corporation P1-51 Ohtemachi Chiyaoda-KA Tokyo 100-8117 Japan Trade 874,191.42 Asarco Incorporated 2575 Camelback Phoenix, AZ 85016 Trade 1,871,733.99 Doo Young Kim 7FL Daegun Bldg. 732-19 Yeoksam-Don Kangnnam-GU Seoil 135-080 Korea Commission 99,143.86 Yonack Iron & Metal Co. 1839 W. Commerce Dallas, Texas 75208 Trade 18,316.18 Longhorn Metal P.O. Box 831065 San Antonio, Texas 78283 Trade 27,000.00 Apex Transportation, Inc. P.O. Box 534 Montgomery, PA 18936 Trucker 32,962.00 Wallach Iron & Metal Company 6670 St. Charles Rock Rd. St. Louis, MO 63133 Trade 23,5412.31 [sic.] S.J. Stewart Company P.O. Box 31877 Charleston, SC 29417-1877 Trade 46,517.73 DLA-Cobalt-006 Contract No. 5P00833-97-5 Depot Summerville, NJ Trade 528,360.56 Mexicana De Cobre, S.A. De CV Dorn Fiscal Avenida Juarez No. 4 Cananea Son C.P. 84620 RFC MGA 90061-K92 Trade 112,522.25 Bare Wire Products 91163 Collections Ctr. Dr. Chicago, IL 60693 __________ 113,372.98 Metal Processors Incorporated P.O. Box 23309 Jackson, MS 39225-3309 Trade 29,424.67 Progress Rail Service P.O. Box 1037 Albertville, AL 35950 Rail 57,845.77 Alfred Knight Eccleston Grange Prescot Rd St. Helens Merseydide SA 103BQ UK Trade 40,794.04 Impexmetal Sa ul Tucka 7/9 00-842 Warszawa Trade 163,854.41 Tucker Companies P.O. Box 7777-w-5450 Philadelphia, PA 19175 Shipping 25,247.00 Aluminum Recycling Center 1628 E. Napoleon Sulphur LA 70663 Trade 40,655.00 ----------------------------------------------------------------- [00006] ENRON CORP.'S 20 LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature Of Claim Claim Amount ------ --------------- ------------ Chase Manhattan Bank Institutional Trust Svcs. 600 Travis Street Houston, TX 77002 Phone: (713) 216-6877 Fax: (713) 577-5200 Note $1,907,698,000.00 Citibank, N.A. Bank Loan 1,750,000,000.00 Citibank, N.A. Bank Loan 1,250,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: (212) 896-7140 Note 500,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: (212) 896-7140 Note 325,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: (212) 896-7140 Note 250,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: (212) 896-7140 Note 250,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: (212) 896-7140 Note 250,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: (212) 896-7140 Note 222,500,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: (212) 896-7140 Note 200,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: (212) 896-7140 Note 200,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: (212) 896-7140 Note 150,000,000.00 Bank of New York Attn: Beata Hryniewicka 5 Penn Plaza, 13th Floor New York, NY 10001 Phone: (212) 896-7140 Note 100,000,000.00 John L. Wortham & Son, LLP P.O. Box 1388 Houston, TX 77251-1388 Phone: (713) 526-3366 Fax: (713) 526-2757 Trade Debt 3,687,068.43 Arthur Andersen, LLP 711 Louisiana St., #1300 Houston, TX 77002 Phone: (713) 237-2323 Fax: (713) 237-2786 Trade Debt 1,987,261.00 SAP America, Inc. 600 East Las Colinas Blvd. Suite 2000 Irving, TX 75039 Phone: (972) 868-2154 Fax: (972) 868-2001 Trade Debt 1,712,528.28 CAP Gemini Ernst & Young US LLC 1221 McKinney Street Houston, TX 77010 Phone: (713) 750-1500 Trade Debt 886,711.00 Digital Consulting & Software One Sugar Creek Center Blvd., Suite 500 Sugar Land, TX 77478-3556 Phone: (281) 243-2400 Fax: (281) 243-2506 Trade Debt 434,435.77 Source Net Solutions Inc. 1212 North Post Oak Houston, TX 77055 Phone: (713) 548-3300 Fax: (713) 548-3333 Trade Debt 411,149.36 Planners Services 6605 Cypresswood Drive Suite 300 Spring, TX 77379 Phone: (281) 586-8181 Fax: (281) 880-1988 Trade Debt 373,569.59 ----------------------------------------------------------------- [00007] ENRON NORTH AMERICA'S 20 LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature Of Claim Claim Amount ------ --------------- ------------ Barclays Bank PLC - London 54 Lombard St. London EC3P 3AH Trade Debt 126,071,170.00 The Chase Manhattan Bank One Chase Manhattan Plaza New York, NY 10017 Phone: 212/270-6000 Fax: 212/552-4910 Trade Debt 113,262,221.17 UBS AG 299 Park Avenue New York, NY 10171 Trade Debt 74,301,346.58 The Chase Manhattan Bank, London 357C Chaseside Bournemouth DO, BH7 7DB Trade Debt 71,856,071.76 Credit Suisse First Boston London 5 World Trade Center New York, NY 10048-0928 Phone: 212/325-2000 Trade Debt 70,651,405.96 Dynegy Marketing and Trade 1000 Louisiana, Ste. 5800 Houston, TX 77002-5050 Phone: 713/507-6460 Fax: 713/507-6353 Trade Debt 44,208,951.20 The Toronto-Dominion Bank 55 King St. W Toronto ON, M5K 1A2 Phone: 416/982-8222 Fax: 416/982-6796 Trade Debt 35,325,702.98 El Paso Merchant Energy, LP 1001 Louisiana, Ste. 2600 P.O. Box 2511 Houston, TX 77002 Phone: 713/420-5000 Fax: 205/327-2413 Trade Debt 33,781,256.02 Bank of Montreal 1st Bank Tower Toronto ON, M5X 1A1 Phone: 514/877-7110 Trade Debt 20,721,509.04 Coral Energy Resources, LP P.O. Box 200921 Houston, TX 77216-0921 Phone: 713/230-3849 Fax: 713/767-5644 Trade Debt 20,136,666.20 CXY Energy Marketing 2400, 205 - 5th Ave SW Calgary AB, T2P 2V7 Phone: 403/509-5200 Fax: 403/509-5219 Trade Debt 15,442,574.04 Williams Energy Marketing & Trading Co. P.O. Box 2848 Tulsa, OK 74101-9567 Phone: 918/573-2000 Fax: 918/594-1935 Trade Debt 15,305,799.34 El Paso Merchant Energy - Gas, L.P. P.O. Box 2563 Birmingham, AL 35202-2563 Phone: 713/420-2131 Fax: 205/327-2291 Trade Debt 14,605,208.02 PanCanadian Energy Services Inc. 1200 Smith, Ste. 900 Houston, TX 77002-4501 Phone: 713/331-5000 Fax: 713/331-5333 Trade Debt 13,899,849.80 CMS Marketing Services & Trading Co. Philadelphia, PA 19170 Trade Debt 13,591,019.92 CalPX Trading Services, a division of the California Power Exchange 200 S. Los Robles Ave. Ste. 400 Pasadena, CA 91101 Phone: 626/537-3100 Fax: 626/537-3191 Trade Debt 13,160,554.19 The Royal Bank of Canada 1 Place Ville Marie Montreal, Quebec H3B 4A7 Phone: 514/874-2110 Trade Debt 10,000,000.00 J. Aron & Company 85 Broad St., 5th Fl. New York, NY 10004 Phone: 212/902-4186 Fax: 212/902-4193 Trade Debt 9,885,989.50 Goldman Sachs Capital Markets, L.P. 85 Broad St. New York, NY 10004 Phone: 212/902-1000 Fax: 212/902-0996 Trade Debt 9,737,755.95 Mirant Americas Energy Marketing, L.P. 1155 Perimeter Center W, Ste. 130 Atlanta, GA 30338-5416 Phone: 678/579-5000 Fax: 281/584-3905 Trade Debt 9,680,670.29 ----------------------------------------------------------------- [00008] ENRON POWER MARKETING'S 20 LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature Of Claim Claim Amount ------ --------------- ------------ California Power Exchange 1000 S. Fremont Ave. 5th Floor Alhambra, CA 91803-4737 Phone: 626/537-3100 Trade Debt 35,543,479.73 Morgan Stanley Capital Group Inc. 1585 Broadway - Commodities 4th Floor New York, NY 10036-8200 Phone: 212/761-4000 Fax: 212/761-0292 Trade Debt 31,785,712.98 Duke Energy Trading and Marketing 10777 Westheimer, Ste. 650 Houston, TX 77042-3455 Phone: 713/260-1825 Trade Debt 24,210,779.44 Bonneville Power Administration P.O. Box 491 Vancouver, WA 98666-0491 Phone: 503/230-5101 Fax: 503/230-7463 Trade Debt 11,257,364.55 Mirant Americas Energy Marketing 1155 Perimeter Center W Ste. 130 Atlanta, GA 30338-5416 Phone: 678/857-5000 Fax: 281/584-3905 Trade Debt 7,211,128.35 PJM Interconnection, L.L.C. 955 Jefferson Avenue Norristown, PA 19403-2497 Phone: 610/666-8980 Fax: 610/666-4284 Trade Debt 4,432,417.77 City of Austin P.O. Box 1088 Austin, TX 78767 Phone: 512/499-2000 Fax: 512/322-6627 Trade Debt 2,886,384.79 The California Independent System P.O. Box 639014 Folsom, CA 95763-9014 Phone: 916/351-4400 Trade Debt 2,372,259.84 CES - American Electric Power 1 Riverside Plaza Columbus, OH 43215 Phone: 614/223-1000 Fax: 614/324-4596 Trade Debt 2,367,960.00 ISO New England Inc. One Sullivan Rd. Holoyoke, MA 01040-2841 Phone: 413/535-4000 Trade Debt 1,832,312.40 Willamette Industries, Inc. P.O. Box 339 Albany, OR 97321 Phone: 503/227-5581 Trade Debt 1,688,468.36 Powerex Corp. 666 Burrard St., Ste. 1400 Vancouver, BC V6C 2X8 Phone: 601/891-5028 Fax: 604/891-5045 Trade Debt 1,412,185.00 Valley Electric Association, Inc. 800E Hwy. 372 Pahrump, NV 89041 Phone: 775/727-5312 Fax: 775/727-6320 Trade Debt 1,265,322.79 United Illuminating Company P.O. Box 1564 New Haven, CT 06506-0901 Phone: 203/499-2000 Fax: 203/499-3617 Trade Debt 1,130,483.80 Statoil Energy Trading, Inc. 2800 Eisenhower Avenue Alexandria, VA 22314-4578 Phone: 703/317-2300 Fax: 703/317-2604 Trade Debt 1,090,650.00 Wheelabrator Martell Inc. 11901 Ampine Fibreform Rd. Sutter Creek, CA 95685-9665 Phone: 209/223-4581 Fax: 209/223-1586 Trade Debt 974,644.38 Tosco Refining Company P.O. Box 1919 Martinez, CA 94553 Phone: 925/370-3304 Fax: 925/372-3012 Trade Debt 960,564.11 Los Angeles Dept. of Water & Power P.O. Box 10208 Van Nuys, CA 91410-0208 Phone: 213/367-3411 Fax: 818/771-6510 Trade Debt 875,618.04 Northeast Utilities Service Company P.O. Box 270 Hartford, CT 06141-0270 Phone: 860/665-5000 Fax: 860/665-2266 Trade Debt 603,300.00 Williams Energy Marketing & Trading Co. P.O. Box 2848 Tulsa, OK 74101-9567 Phone: 918/573-2000 Fax: 918/594-1935 Trade Debt 514,559.71 ----------------------------------------------------------------- [00009] SMITH STREET LAND'S 20 LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature Of Claim Claim Amount ------ --------------- ------------ Clark Contractors Inc. 5949 Sherry Lane Dallas, Texas 75225 Attn: J. L. Herndon Fax: 214-363-6093 and Clark Contractors, Inc. 7500 Old Georgetown Road 3rd Floor Bethesda, Maryland 20814 Attention: Steve Holt, Esq. Fax: 301-272-1916 Real Estate Contract 40,000,000.00 Berger Iron Works 1411 Bonner Houston, Texas 77007 Real Estate Contract 675,000.00 Hines Interests Limited Partnership Pennzoil Place 711 Louisiana South Tower, Suite 2200 Houston, Texas 77002-2720 Attn: Charles M. Baughn and Hines Interests Limited Partnership 2800 Post Oak Blvd. Houston, TX 77056-6118 Attn: Jeffrey C. Hines Fax: 713-966-2020 Real Estate Contract 385,000.00 Kendall/Heaton Associates, Inc. 3050 Post Oak Blvd. Ste. 100 Houston, TX 77056 Attn: William D. Kendall Fax: 713-877-1360 Real Estate Contract 200,000.00 Shen, Milsom & Wilke, Inc. 417 Fifth Avenue Fifth Floor New York, NY 10016 Real Estate Contract 160,000.00 I.A. Naman & Associates, Inc. Two Greenway Plaza Suite 700 Houston, TX 77046-0296 Real Estate Contract 150,000.00 M. Arthur Gensler, Jr. & Associates, Inc 700 Milam Ste. 400 Houston, TX 77002 Real Estate Contract 140,000.00 Cesar Pelli & Associates, Inc. 1056 Chapel Street New Haven, CT 06510 Real Estate Contract 85,000.00 Walsh/Lowe/Constantin Group, LLC 47 Newark Street P. O. Box 2078 Hoboken, NJ 07030-1309 Real Estate Contract 70,000.00 Walter P. Moore & Assoc. Inc. 3131 Eastside, Second Floor Houston, TX 77098 Real Estate Contract 30,000.00 CBM Engineers, Inc. 1700 West Loop South Suite 830 Houston, TX 77027 Real Estate Contract 24,000.00 Peter M. Muller, Inc. 1523 Beachcomber Lane Houston, TX 77062 Real Estate Contract 23,000.00 Cini-Little International, Inc. 2275 Research Blvd. #700 Rockville, MD 20850 Real Estate Contract 9,000.00 HMA Consulting, Inc. 2727 Osborn Lane Bryan, TX 77802 Real Estate Contract 9,000.00 Clark Condon Associates, Inc. 5177 Richmond Avenue Suite 1075 Houston, TX 77056 Real Estate Contract 8,000.00 Persohn/Hahn Associates, Inc. 908 Town & Country Suite 120 Houston, TX 77024 Real Estate Contract 6,500.00 Quentin Thomas Associates, Inc. Two Hillcroft Avenue Douglaston, NY 11363 Real Estate Contract 5,000.00 Baker's Safe & Lock Co., Inc. 5612 Fondren Road Houston, TX 77036 Attn: Randy Simpson Real Estate Contract 0.00 Walker Parking Consultants/ Engineers, Inc. 708 Congress Avenue Suite 100 Austin, TX 78701 Real Estate Contract 2,500.00 GraphTec, Inc. 8411 Rannie Road Houston, TX 77080 Attn: Mr. Dillard R. Grafty Real Estate Contract 0.00 ----------------------------------------------------------------- [00010] ENRON BROADBAND SERVICES' 20 LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature Of Claim Claim Amount ------ --------------- ------------ Level 3 Communications, LLC 1025 Eldorado Boulevard Broomfield, CO 80021 1-877-653-8353 Various 7,248,671.89 360 Networks 121010 Airport Way Broomfield, CO 80021 Dark Fiber 4,006,590.33 MA MORTENSON 700 Meadow Lane North Minneapolis, MN 55442 __________ 2,434,553.72 Metromedia Fiber Networks 360 Hamilton Avenue White Plains, NY 10601 Roger Duran Colocation and 914-421-7658 Access Fees 2,338,161.14 THE BENTLEY COMPANY P.O. Box 842553 Dallas, TX 75284-2553 __________ 1,420,072.97 EPIK Communications 3501 Quadrangle Boulevard Orlando, FL 32817 407-482-8400 Dark Fiber 1,241,441.91 LUCENT TECHNOLOGIES INC. P.O. Box 200776 DALLAS, TX 75320-0776 __________ 399,600.46 PRO BUSINESS COMERICA BANK - CALIFORNIA 201 SPEAR ST, 2ND FLOOR SAN FRANCISCO, CA 94105 __________ 392,854.54 Worldcom P.O. Box 856059 LOUISVILLE, KY 40285-6059 and 6929 N Lakewood Tulsa, OK 74117 Bill Stears 918-590-5369 Circuit 364,176.40 VINSON & ELKINS L.L.P. P.O. Box 200113 HOUSTON, TX 77216-0113 __________ 338,576.98 MCI Worldcom PO Box 10023 Pasadena CA 91189 Jim Bynum 918-590-3452 Circuit 336,836.09 AT&T Communications, Inc. P.O. Box 10226 Newark, NJ 07193-0226 and 32 Ave. of the Americas New York, NY 10013 John D'Agostino 212-387-5400 Circuit 315,047.52 Qwest P O Box 12480 Seattle, WA 98111-4480 and 1801 California St. Denver, CO 80202 Eric Nance 303-793-6371 Circuit 222,707.64 AT&T P.O. Box 78214 PHOENIX, AZ 85062-8214 and P O Box 78225 Phoenix, AZ 85062-8225 Telephone 216,404.00 TELPLEXUS INC 925 S.CHURCH ST BLDG C-200 MURFREESBORO, TN 37130 __________ 207,400.00 Genuity PO Box 101765 Atlanta, GA 30392-1765 Alex Rozhitsky 414-329-4323 and 225 Presidential Way Woburn, MA 01801-1060 Circuit 178,101.36 ITXC Corp 600 College Rd. E Princeton, NJ 08540-6636 Patti Dupree 609-750-3249 Minutes 164,645.54 Adventis 10 St. James Avenue 17th Floor Boston, MA 02116 Lauren Orlandino 617-421-9990 x235 Consulting 150,000.00 American Power Systems 26507 706th Ave. South Kent, WA 98032 Repairs & Maintenance 136,530.00 ----------------------------------------------------------------- [00011] ENRON ENERGY SERVICES OP'S 20 LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature Of Claim Claim Amount ------ --------------- ------------ Pro Business Comerica Bank - California 201 Spear Street San Francisco, CA 94105 Trade Debt $1,521,356.31 TXU Electric P. O. Box 660409 Dallas, TX 75266-0409 Trade Debt 1,263,933.67 Avista Advantage, Inc. P. O. Box 2440 Spokane, WA 99210-2440 Trade Debt 588,607.27 New York City Public Utility 110 William Street, Room 400 New York, NY 10038 Trade Debt 466,842.91 SRP P. O. Box 2950 Phoenix, AZ 85062-2950 Trade Debt 457,604.57 Hartford Steam Boiler P. O. Box 73720 Chicago, IL 60673-7720 Trade Debt 416,666.67 Sun Microsystems Inc. c/o Nations Bank of Georgia CS Drawer 198330 Atlanta, GA 30384-8330 Trade Debt 413,681.71 Southwestern Public Service P. O. Box 35000 Amarillo, TX 79120-5000 Trade Debt 404,961.03 Corestaff Services 4400 Post Oak Parkway Ste. 2000 Houston, TX 77027 Trade Debt 339,199.79 GPU Energy P. O. Box 600 Allenhurst, NJ 07709-0600 Trade Debt 330,227.12 The United Illuminating Co. P. O. Box 2936 Hartford, CT 06104-2936 Trade Debt 282,175.31 COMED Bill Payment Center Chicago, IL 60668-0001 Trade Debt 261,331.75 PSE&G P. O. Box 14444 New Brunswick, NJ 08906 Trade Debt 225,344.73 Bracewell & Patterson LLP South Tower, Pennzoil Place 711 Louisiana, Ste. 2900 Houston, TX 77002-2781 Trade Debt 214,156.10 Trizechahn Allen Center LP Two Allen Center P. O. Box 2186 Houston, TX 77252-2186 Trade Debt 212,155.74 Peco Energy Company Lou Naylor 2301 Market St. Philadelphia, PA 19101 Trade Debt 200,702.40 Merant Inc. P. O. Box 631691 Baltimore, MD 21263-1691 Trade Debt 188,172.27 United Computer Group 7110 Brittmore, Ste. 300 Houston, TX 77041 Trade Debt 170,993.58 City of Hartwell P. O. Box 309 Hartwell, GA Trade Debt 150,396.42 Valtech Technologies Inc. Trade Debt 145,554.92 ----------------------------------------------------------------- [00012] ENRON ENERGY MARKETING'S 13 LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Entity Nature Of Claim Claim Amount ------ --------------- ------------ Massachusetts Electric Co Woburn, MA 01807-0005 Trade Debt 698,623.78 San Diego Gas & Electric Customer Remittance Proc. Svcs. 1801 S. Atlantic Blvd. Monterey Park, CA 91754 Trade Debt 146,935.89 NStar Electric P. O. Box 4508 Woburn, MA 01888-4508 Trade Debt 119,299.56 Southern California Edison P. O. Box 600 Rosemead, CA 91770 Trade Debt 91,369.65 Verizon Wireless P. O. Box 225630 Dallas, TX 75222-5630 Trade Debt 1,697.92 Nicor Gas P. O. Box 632 Aurora, IL 60507-0632 Trade Debt 955.81 AT&T Wireless Services P. O. Box 78110 Phoenix, AZ 85062-8110 Trade Debt 485.77 Verizon California P. O. Box 30001 Inglewood, CA 90313-0001 Trade Debt 312.30 Kerman Telephone Co. P. O. Box 245 Kerman, CA 93630 Trade Debt 44.46 Evans Telephone Co. 4818 Taylor Ct. Turlock, CA 95382 Trade Debt 31.42 Southern California Gas Co. Monterey, CA 91756 Trade Debt 28,351.75 Mississippi River Transmission US St. Louis, MO 63150-2161 Trade Debt 104.16 PPL Utilities US Lehigh Valley, PA Trade Debt 611.31 ----------------------------------------------------------------- [00013] ENRON ENERGY SVCS. INC.'S 20 LARGEST UNSECURED CREDITORS ----------------------------------------------------------------- Risk Management & Trading Corp. 1400 Smith Houston, TX 77002-7327 Trade Debt $126,208,622.65 Enron North America Corp. Acct: 375-049-4099 Houston, TX 77002 Trade Debt 107,475,154.89 EAH Rho - October Trade Debt 9,874,059.00 Commodity Rho - October Trade Debt 8,000,000.00 Southern California Gas Co. 555 W. Fifth St. Los Angeles, CA 900013-1011 Trade Debt 909,155.68 Enron Canada Corp. 400 - 3rd Ave. SW Calgary, AB CA T2P 4H2 Trade Debt 501,230.14 Mass Electric Processing Center Woburn, MA 01807-0005 Trade Debt 423,670.53 San Diego Gas and Electric Customer Remittance Proc. Svcs. 1801 S. Atlantic Blvd. Monterey Park, CA 91754 Trade Debt 348,968.23 ENA Upstream Company LLC 1400 Smith St. Houston, Texas 77002 Trade Debt 293,833.38 Pacific Gas & Electric Co. 123 Mission St. San Francisco, CA 94106 Trade Debt 226,149.44 Public Serv. of New Mexico Alvado Square 414 Silver Avenue SW Albuquerque, NM 87158 Trade Debt 157,102.05 Niagara Mohawk Energy Marketing, Inc. P. O. Box 3427 Buffalo, NY 14240-3427 Trade Debt 94,874.46 Baltimore Gas & Electric Co. P. O. Box 1431 Baltimore, MD 21203-1431 Trade Debt 41,300.58 Gallatin Public Utilities 239 Hancock Street Gallatin, TN 37066 Trade Debt 36,332.06 Consolidated Edison 4 Irving Place, Room 1730 New York, NY 10003 Trade Debt 24,347.26 GPU Energy P. O. Box 600 Allenhurst, NJ 07709-0600 Trade Debt 22,392.52 TXU Electric Customer Information P. O. Box 100001 Dallas, TX 75310-0001 Trade Debt 37,811.97 Orion Petro Corporation P. O. Box 609 Mount Vernon, IL 62864 Trade Debt 18,576.20 Morristown Utilities 441 West Main Street Morristown, TN 37814 Trade Debt 16,575.84 Southern California Edison P.O. Box 600 Rosemead, CA 91770 Trade Debt 14,277.41 ----------------------------------------------------------------- [00014] ADVERSARY PROCEEDING -- Enron v. Dynegy ----------------------------------------------------------------- Seeking (i) no less than $10 billion in damages against Dynegy Inc. and Dynegy Holdings, Inc., for their wrongful termination of the merger agreement dated November 9, 2001; (ii) a declaration that Dynegy breached the Merger Agreement through that unlawful termination; and (iii) a declaration that Dynegy and certain affiliates have no right to exercise a purported option to buy control of the Northern Natural Gas pipeline, Enron Corp., Enron Transportation Services Co., CGNN Holding Company, Inc., and MCTJ Holding Co. LLC, as plaintiffs, commenced a lawsuit in the U.S. Bankruptcy Court for the Southern District of New York. Rather than acting in good faith to make the merger deal happen, Dynegy "concocted reasons to terminate and took affirmative action to weaken Enron," the Debtors complain to the Bankruptcy Court. Martin J. Bienenstock, Esq., Greg A. Danilow, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, lay-out the story for the Bankruptcy Court from Enron's perspective: Dynegy agreed to the merger, Enron says, with full knowledge of Enron's well-publicized financial crisis and after conducting two weeks of extensive due diligence. Dynegy knew that Enron was in a precarious financial condition, was on the verge of dropping to a non-investment grade credit rating, and was in no small measure dependent on the successful completion of the Merger for its very survival. In executing the Merger Agreement, Dynegy obligated itself to complete the Merger. In exchange, Dynegy obtained the ability to acquire Enron, including its premier energy trading operations that Dynegy desperately coveted, at a steep discount to historical value, and precluded Enron from pursuing other alternative transactions. Dynegy Knew What it Was Getting Into As Dynegy understood and publicly acknowledged, Enron continues, its ability to terminate the Merger Agreement was severely circumscribed. Indeed, as Dynegy itself has stated, its ability to terminate even due to a so called "material adverse change" was very limited and could only be invoked in the event of a "substantial, substantial material change." In fact, certain of the limitations on Dynegy's ability to terminate were dictated by the credit rating agencies in order to assure that Dynegy lived up to its bargain. As Dynegy was aware, Enron's ability to preserve its energy trading business was dependent on Enron's credit ratings not being downgraded to "below investment grade." Dynegy further understood that the agencies who assign such ratings -- Moody's, Standard & Poor's, and Fitch -- only agreed to maintain Enron's ratings at an above investment grade level based on Dynegy's assurances that the Merger would come to fruition and agreement to contractual concessions limiting Dynegy's ability to terminate the Merger Agreement. Dynegy Takes Advantage Then, Enron complains, after signing the Merger Agreement and obtaining an option on Enron's valuable Northern Natural Gas Pipeline assets, Dynegy consistently took advantage of Enron's precarious condition to further its own business goals. Enron charges that by terminating the Merger Agreement, Dynegy sought to put an end to Enron as a competitive force. Enron points to an admission by Dynegy's Chief Executive Officer, Chuck Watson, that "since Dynegy and Enron are competitors, Enron's problems have created an opportunity for Dynegy to seize the market share of its largest and most successful competitor." Dynegy Created Marketplace Uncertainty Enron is convinced that Dynegy, in violation of its contractual obligations, took affirmative action, through on the record and off the record comments, to create substantial doubt and uncertainty concerning its willingness to consummate the Merger. Enron believes that Dynegy then created further uncertainty by proposing, and later reneging, on a series of amendments to the Merger Agreement. Enron notes that Dynegy went so far as to draft and circulate a press release concerning these amendments and affirming Dynegy's commitment to the Merger, only to renege at the last minute after Dynegy tried to threaten Enron's lenders into agreeing to further concessions, and after the ratings agencies had been informed that the amendment was imminent. "As Dynegy fully understood and anticipated, its refusal to proceed with the promised amendments caused the rating agencies to further reduce Enron's credit rating," Enron complains. Enron alleges that Dynegy's announcement that it had terminated the Merger Agreement falsely cited to Enron's alleged "breaches of representations, warranties, covenants and agreements in the [M]erger [A]greement, including the material adverse change provision." Because it had no good faith basis for terminating the Merger Agreement, Dynegy did not point to a single specific misrepresentation or other contractual breach by Enron. In public comments, however, Dynegy's Chairman and Chief Executive Officer, Chuck Watson, has stated that Dynegy is relying on the claim that Enron failed to disclose prior to the execution of the Merger Agreement the acceleration of a repayment obligation with respect to a $691 million note payable, which obligation was triggered by a ratings event. This assertion by Dynegy cannot have been made in good faith. In fact, as Dynegy well knows, the ratings downgrade which triggered the repayment obligation occurred after the Merger Agreement was signed, and the rating event itself did not constitute a material adverse event under the Merger Agreement. Dynegy Had No Basis to Back Out Stated simply, Enron says that Dynegy had no contractual basis to terminate. Further, the only adverse changes to the business suffered by Enron were caused in large part by Dynegy itself, as a result of the uncertainty that Dynegy created as to whether it was truly bound and legally committed to the Merger. As a result, Dynegy is precluded from relying on any such changes as a basis for terminating the Merger Agreement. "The reasons offered by Dynegy for its termination of the Merger Agreement were mere pretexts to provide legal and public relations cover for its decision to renege on a binding contractual obligation," Dynegy says . . . and Dynegy's "conduct has torn a hole in Enron's business and caused Enron to suffer billions of dollars in damages." Didn't Dynegy Invest $1.5 Billion? Not ignoring the fact that Dynegy sunk $1.5 billion real dollars into the Enron enterprise, Messrs. Bienenstock, Danilow and Rosen relate how that transaction arose: Because of the severity of Enron's liquidity problems, the lawyers explain, at the time the agreement was executed, Dynegy agreed to immediately invest $1.5 billion in equity in Enron in the form of preferred stock in an Enron subsidiary which owned the Northern Natural pipeline. The preferred stock carried the right, under certain circumstances, including in the event that Dynegy properly terminated the Merger Agreement, to acquire all of the ownership interests in an entity which indirectly owns all of the common stock of Northern Natural. In an effort to seize these valuable assets from Enron, immediately after Dynegy wrongfully terminated the Merger Agreement, Dynegy Holdings also purported to exercise the right to acquire Northern Natural, setting a closing date of December 12, 2001. However, Enron's lawyers advise, since Dynegy's termination of the Merger Agreement was wrongful and in breach of the Agreement, Dynegy Holdings has no right to acquire the stock of Northern Natural. Dynegy's Conduct Was Wrong . . . And They Know It Enron complains that by leading the credit rating agencies and Enron's trading partners to believe it was walking away from the Merger Agreement, Dynegy created severe uncertainty in the markets, which, in turn, deterred counterparties from trading with Enron and provided the excuse for Dynegy's announcement that it was terminating the Merger Agreement and exercising the Northern Natural "option." Immediately after the Merger Agreement was signed, Enron says, Dynegy's senior management acknowledged to the marketplace that the Merger "injects confidence and credibility into the energy marketplace . . . ." Soon after entering into the Merger Agreement, Dynegy began to falsely imply that it had a "due diligence" out of the Merger Agreement. Dynegy's management also began to create the illusion that it had entered into a one way option with no downside and had the legal right to walk away from the Merger owning Enron's Northern Natural pipeline for the discounted price of $1.5 billion it already had paid to Enron. Dynegy also knew that its own energy trading business, which already was benefiting from traffic that previously would have gone to Enron, stood to gain dramatically if Dynegy could push Enron into a collapse. Thus, by creating instability for Enron, Dynegy seized on the opportunity to grab a substantial portion of the enormous market share of Enron as the company was incapacitated by its ongoing liquidity problems. Dynegy thus began to tell reporters that it was conducting due diligence, including the review of information set forth in Enron's final Form 10-Q for the three months ended September 30, 2001, filed with the SEC on November 19, 2000, even though there was no such concept in the Merger Agreement. To the contrary, Dynegy was bound and had no due diligence out. Nevertheless, its spokesman's repeated statements in response to media inquiries that it was conducting due diligence led the market to believe that Dynegy had the ability to terminate the Merger Agreement if it learned new information that was not true (absent circumstances constituting a Material Adverse Event). By doing so, Dynegy unsettled the market, because it created the concern that Dynegy would walk away from the deal. On November 21, 2001, in order to maximize the uncertainty in the market among Enron's counterparties, and thus undermine the safety net the Merger was supposed to provide to Enron, Dynegy issued a press release that reiterated the falsehood that Dynegy was conducting due diligence, and that the information in Enron's Form 10-Q was part of that due diligence. The press release and oral statements by Dynegy on this subject were misleading because those statements suggested that the Merger contained a due diligence out. In truth, however, Dynegy's due diligence was completed before the Merger Agreement was executed. These statements also were misleading because they created the impression that the Merger Agreement provided Dynegy with a termination right that was not contained in the Merger Agreement. Dynegy's Tactics Worked Dynegy's tactics worked because the market was fully aware that if Dynegy terminated the Merger Agreement, Enron's ability to continue as a going concern was in doubt. As stated by Fitch, one of the credit rating agencies, "If Dynegy steps away entirely from the merger, Enron's credit situation seems untenable with a bankruptcy filing highly possible." Enron's financial condition and daily results continued to deteriorate as a result of Dynegy's misleading statements; thus, Enron's stock price also continued to slide. This created an expectation in the market that the parties would renegotiate the Exchange Ratio to reduce the stock that Dynegy would have to pay to acquire Enron. Having created this situation, Dynegy jumped in with both feet, Enron's legal team says. Dynegy opened negotiations with Enron to amend the Merger Agreement in a situation where Enron knew that, if Dynegy raised any greater doubts about the Merger being completed, the ratings agencies would downgrade Enron's debt and Enron could be forced into bankruptcy. The parties, along with Enron's leading banks, commenced almost around the clock negotiations that continued throughout the Thanksgiving holiday and subsequent weekend. Each time Enron and the banks succumbed to Dynegy's demands, Dynegy would demand more. Dynegy created further uncertainty in the market -- and thus increased financial pressure on Enron -- by, Enron charges, "leaking to the press that it was seeking amendments to the Merger Agreement, which created the expectation of a new deal being announced." Enron says that it and the banks were so confident that they had a deal with Dynegy that they met with the ratings agencies to convince them to maintain Enron's essential investment grade credit rating. By going to the ratings agencies, and working to gain their acceptance of the proposed amendments, only to have those proposals taken off the table by Dynegy at the last moment, Enron lost an enormous amount of credibility with those agencies. Dynegy's conduct was wrong, Enron says. Dynegy should pay damages and the Court should block Dynegy's ability to exercise the now-tainted option to acquire the Northern Gas Pipeline at a bargain price. *** End of Issue No. 1 ***