Enron improves liquidity; reaffirms commitment to Dynegy merger

By the OGJ Online Staff

HOUSTON, Nov. 21, 2001 – Enron Corp. said Wednesday it has closed on the remaining $450 million of a previously announced $1 billion in secured credit lines.

The credit was obtained from JP Morgan, the investment-banking arm of JP Morgan Chase & Co., and Salomon Smith Barney, the investment-banking arm of Citigroup Inc.

The $450 million credit facility is secured by the assets of Enron’s Northern Natural Gas Co. A $550 million credit facility, secured by the assets of Enron’s Transwestern Pipeline Co., closed on Nov. 16. Proceeds are being used to supplement short-term liquidity and to refinance maturing obligations.

Enron Chairman Ken Lay also reaffirmed the company’s commitment to the merger with Dynegy Inc. “We continue to believe that this merger is in the best interests of our shareholders, employees, and lenders. It offers the opportunity to create a formidable player in the merchant energy business with substantial growth prospects and a strong financial position.”

Enron also said it is in discussions with its primary lenders on a restructuring of its debt obligations to further enhance liquidity.

Jeffrey McMahon, Enron’s executive vice-president and CFO, said, “We have been in continuous contact with our banks and believe we can identify a mutually beneficial restructuring to enhance our cash position, strengthen our balance sheet and address upcoming maturities.

“For example, we have been informed by the lead bank on the facility that the maturity on our $690 million note payable obligation, disclosed on Nov. 19 in a Form 10-Q filed with the Securities and Exchange Commission, will be extended to mid-December, providing the time necessary to restructure the facility. We expect that extension to be formalized shortly.”

James Lee, vice chairman of JP Morgan Chase & Co., said, “We believe the interests of Chase and Enron’s other primary lenders are aligned in this restructuring effort. We will work with Enron and its other primary lenders to develop a plan to strengthen Enron’s financial position up to and through its merger with Dynegy.”

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