Battered Enron in search of $1-billion credit, says report

Washington, Nov 27: Battered by investors and deserted by many former customers, Enron Corp is searching for up to $1 billion in cash from lenders to sustain its once dominant energy-trading business, a report said on Tuesday.

As part of the deal with energy rival Dynegy Inc, Enron received $1.5 billion in cash. But without another large infusion of cash, the company faces what analysts called a “death spiral”, The Washington Post reported.

Dynegy’s offer for Enron caused a brief rally in Enron’s stock price and outlook but that flurry of optimism was halted by a new financial report last week to the Securities and Exchange Commission (SEC) detailing even more serious debt obligations than the company had previously acknowledged.

Enron was able to negotiate a three-week extension on a $690-million note that was coming due this week and finished arrangements on a $450-million line of credit, part of a $1-billion infusion it had previously announced.

However, the $690-million obligation was a very pointed alert to investors about Enron’s growing cash needs, the paper quoted another analyst as saying.

The new details of Enron’s plight announced in last week’s filing before SEC further damaged the credibility of the company’s financial reporting, the report said.

Enron’s board has turned now to an outside commitee to assess the company’s financial condition.

It did so after acknowledging last month that Enron had
overstated earnings by $586 million over the past four years.

— PTI