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Enron Corp Organizational Meeting

Enron Corp Organizational Meeting. December 12, 2001 New York, NY.

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Enron Corp Organizational Meeting

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  1. Enron Corp Organizational Meeting December 12, 2001 New York, NY

  2. This presentation contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and that actual results could differ materially as a result of known and unknown risks and uncertainties, including; various regulatory issues, the outcome of the Chapter 11 process, general economic conditions, future trends, and other risks, uncertainties and factors disclosed in the Company’s most recent reports on forms 10-K, 10-Q, and 8-K filed with the Securities and Exchange Commission. - 2 -

  3. Overview • What Happened • Stabilization of the Business • Preliminary Financial Profile • Preliminary Business Realignment - 3 -

  4. What Happened

  5. What HappenedEnron 2001 Share Price - 5 -

  6. What HappenedEnron Daily Share Price 3Q Earnings WSJ Articles Begin Bond Spreads Gap SEC Inquiry Begins CP Market Disappears / CFO Replaced RC Drawdown Pipe Financing Announced 8K Filed 10Q Filed Merger Announced Chapter 11 Filing Credit Downgrade / Merger Terminated DIP Financing Realignment Commences - 6 -

  7. What HappenedRecent Events • Financial statement charges surprised capital markets • Loss of investor and creditor confidence • Financial market reaction resulted in lack of access to capital markets • Without ability to refinance, current maturities greatly exceeded operating cash flow • Too much leverage tied to stock price • Trade credit markets became nervous – wholesale business adversely impacted • Attempt to stabilize business through merger with Dynegy • Dynegy pulls out of merger • Ratings downgraded • Chapter 11 filing - 7 -

  8. Stabilization of the Business

  9. Stabilization of the BusinessSteps Taken to Restore Investor Confidence Pre-Chapter 11 Filing • Change in management • $3.0B revolver drawdown, $1.0B net • $1.0B secured pipeline financing • $1.5B Northern Natural Gas Preferred • Executed Dynegy merger agreement • Private equity initiative • Accelerated asset sale program • Key employee retention program Focus on core business Immediate liquidity for short-term obligations and collateral Long-term financial stability Validate business value Repair the balance sheet Preserve franchise value of the business Chapter 11 filing on December 2, 2001 - 9 -

  10. Stabilization of the BusinessSteps Taken to Restore Investor Confidence Post-Chapter 11 Filing • $1.5B DIP financing completed • Dramatic overhead reductions • Centralized cash conservation program implemented • Business realignment initiated • Maximize cash value of trading book • Debt restructuring plan under development Sufficient liquidity to run operations Reduce “burn rate” Back to basics to preserve value of core business and maximize asset value Generate cash Recapitalize the company - 10 -

  11. Stabilization of the BusinessDebtors in Possession Enron Corp • Enron Corp • PBOG Corp • Smith Street Land Company Transportation & Distribution Wholesale Services Retail Energy Services International Projects • Enron North America Corp. • Enron Power Marketing, Inc. • Enron Metals & Commodity Corp. • Enron Industrial Markets LLC • Enron Global Markets LLC • Enron Broadband Services, Inc. • Enron Gas Liquids, Inc. • Enron Net Works LLC • Enron Transportation Services Company • ENA Asset Holdings, LP • BAM Leasing Company • Enron Energy Services, Inc. • Enron Energy Services LLC • Enron Energy Services Operations, Inc. • Enron Energy Marketing Corp. • Operational Energy Corp. • Enron Engineering & Construction Company • Enron Engineering & Operational Services Company - 11 -

  12. Preliminary Financial Profile

  13. Preliminary Business Realignment

  14. Preliminary Business RealignmentEnron Corp Historical Organizational Structure Enron Corp Transportation & Distribution Wholesale Services Retail Energy Services International Projects • Interstate Gas Pipelines • Electric Distribution • (Portland General) • Commodity Marketing and Delivery • Energy Delivery and Services Outsourcing • Emerging Market Infrastructure Investments - 15 -

  15. Preliminary Business RealignmentEnron Corp Realigned Organizational Structure Third Party Enron Corp North America Energy Trading & Marketing Regulated Businesses Exploration & Production Wholesale & Retail Services Assets To Be Sold X% 1-X% $346 (13%) $2,160 (80%) • Pipelines • Power Assets • North America • International • Maximize cash proceeds of trading book • Asset Rationalization • Creation of Asset-based Business • Emerging Markets Businesses • Azurix • Wind • Merchant Assets Core Businesses - 16 -

  16. Preliminary Business RealignmentNETCO JV Rationale • Wholesale business generated significant cash flows and value prior to loss of counterparty confidence • Reestablishment of trading operation to preserve maximum value for estate • Need to identify third party with strong balance sheet to re-enter trading markets Preliminary Structure • Enron and third party to establish trading venture with shared ownership • Enron to contribute trading expertise and related support systems; third party to contribute strong investment grade balance sheet and working capital • Currently negotiating economic splits and related governance issues - 17 -

  17. Preliminary Business RealignmentPriorities • Frequent and accurate communication with all stakeholders • Focused on value preservation • Enhancing cash flow is a top priority • Significant value creation opportunity with emergence from Chapter 11 Maximization of value through business realignment and asset sales - 18 -

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