4 -4 Enron Corporatio& Conference Call Date: 11/14/2001 KLHIewb hRi KOENIG LAY WHALLEY MCMAHON MAZE FEYGIN * BARONE MORTON CAUSEY TICE FERGUSON FLEISCHER EASSEY BOWEN DONOVAN OPERATOR U' ed 1/11/2006 MARK KOENIG KEN LAY GREG WHALLEY JEFF MCMAHON *WILLIAM MAZE ANATOL FEYGIN RON BARONE BEN MORTON RICK CAUSEY PAUL TICE JIM PE'RGUSON~ DAVID FLEISCHER DONATO EASSEY I RAY BOWEN I 4 1 .1- V I; 'I A -I- I,, 4 4. V I 4 1~ I A BRAD DONOVAN Unknown Female Unintelligible 4. I>. '4 4- '4 I I I t 4, A * 4 9. .4 * * 9 4 t 4 Enron Corporation Conference* Date: 11/14/2001 KLHIewb - Revised 1/1 1/2006 ('F SESSION (BEGINNING OPERATOR - KOENIG II ~'ir It I Call - Lu I ON 11/14/2001) *1 . - Godd morning kteryone, and welco e to the ENRON investor update conference call. Today's call is bern At this time I would like to turn the call over to the, Vice, Exiutive Vice President of Investor Relati&, Mr. MARX KOENIG?'P~1iase go ahead sir. 1 4 Thank you. Uh, before I introduce KEN I'd just like to remind everybody ~ p the call does include, uh, this call will include forwaid-looking statements within the meaning of several sectiols of vtirious Securities Acts of 1933 and 1934. The statements are facts but do reflect ENRON's current expectations, add;i~iHedions All the statements estimates, dxd' contAined in the call which future operating perfonnance, events, or developments that are cx eted to occur m the future are tJ~ forward-looking statements. Alth2u~h we believe that the expectations are based on reasonable assumptions, w6 can give no assurance, of course, S that these goals, will be achieved. I , important factors that could cause I. results to differ materially from thos in the statements include the 4 1 development of, uh, retail and whole~ale natural gas markets, and of course the receipt of regulatory a~pr4('a1s and customary closing * rf 2~ 1> 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 4 A- *1 -w * It4 i 1~ t L Corporation Conference Call ~ Date: 11/14/2001! 1 '4 KLHIewb .tkevi~ed 1/1 1/2006 1 K 1 conditions on PORTLAND GENE I aM tonditions in the capital 2 markets K and equity markets. At this time, I'd like to turn it over to KEN. 3 LAY - Thank you MARK. Uh, good mtlig, this is KEN LAY. Uh, with me 4. today are GREG WHALLEY, ~r'esiLnt and Chief Opetating Officer of I ½ 5 ENRON, ub, JEFF MCMAHON: Executive Vice President and Chief 6 Financial Officer, of course, MARK OSNIG, uh, Ex&utive Vice 7 President of Investor Relations, uh, I Y BOWEN, Executive Vice S President Finance and Treasurer, an RICK CAUSEY, Executive Vice - *.. 'U * omher. 9 President and Chief Accounting Uh, thank you for joining us on 4 i~ 10 the call and webcast to Uh, v$e &'ant to take this opportunity to provide 11 you with an update on the status s~f1ute company, and respond to any 12 questions you have aboutbur bus On Monday we held a conferejice 13 call to discuss the signing of a defrnilive Meiger agreement with SW . 4 .$ . 4 14 DYNEGY. We're excited about the Ipportunities of the new combined * Ii~ 15 coAxpany. Uh, the purposd of today's~ call is to tell you about activities and * 4 'I FU ,~tiI 16 concerns, uh, directly partaining to EfJRON. First of all, let me say that I '4 t4 .4 17 could not have ever contemplated the' events we as a company, and you as 18 a stakeliolder have faced over the few weeks. The ENRON 19 management team is focused on proKting the investment for all investors, 20 and stockholders, bondhdiders, b and other creditors, including 3., iv, '1 $ I, Enron Corporation Conference Call j Date: 11/14/2001 1 KLHIewb - Revised 1/11/2006 I trading counterparties. To maximize the return for all investors, our focus C 4 2 remains on our cred, credit quality d liquidity, which are paramount to 3 the continued success and expansioti of our wholesale business activities.. 4 We believe we've taken many important steps, to address many of the I V I LL 5 . recent concerns in the marketplace .jtiih, before we discuss those steps, let 6 ii 'I 6 me provide you wiih my perspective km how we got, uh,to where we are 7 today. In hindsight, we made some v ry bad investments in non-core 8 . businesses. Our investments in v~riMs international assests such as 9 AZURIX, India, and Brazil, to n~nIL few, have performed far worse than 10 we could ever have imagined When e made these investments. Because m~ttis, 11 of these investments and other uh, ENRON became over-levered. } 12 While the poor performance of our investments Was bad enough, it, the 13 negative impact of these I the company have been t 14 exascerbated through the extensive u e of debt capital both on and off the 15 balance sheet. U1~ we &ntered into related party transactions that produced 16 various conflicts of, of interest, both ~ea1 and perceived. Although we put 17 in place significant, uh, safeguards to protect ENRON and its stakehold&s, 18 . investors still perceived conflicts, an~ the loss of investor confidence from 19 these transactions has been very danJging. We've been criticized 20 regarding.the breakdown of the resik of our various business activities as '4 4' 'A - I.' I A~t vs It *>< Enron Corporation Conference Call Date: 1l!l4f2O01~ ' I KLHIewb - Revised 1/11/2006 1 ~ being opaque and difficult to under d. And on top of it all, we I ~d discovered and disclosed errors in our financial siatenients which will previously' reported, require restatem~iit of our it, financial statements. We frilly understand and regret that e combination of these events has * iAveAor * resulted in the complete loss of confidence. We are frilly comihitted to fi*ing~ the problem remain committed to makingthe I Ii difficult decisions and taking the steps necessary to colketiVely address all ' at a of these matters. lilt, for instanck~i'Y "replaced the two most senior A I La finance individuals in the Company, ~e Chief Financial Officer and the Treasur&r. I've asked the Board of 1) rectors to forM a Special Committee separate outside legal cdunsel and that is wdl underway with investigatedtte~, related party ihaijeis, it and otAside auditors. We want to regain your support an ENRON. OL d trut in core business is still the best franchise in the industty, aievidenc~l by the recent DYNEGY merger announcement. Prior to the events o(tr the last month, our operational business~sJ performance in our core L at all-time highs. However, with the turbulence around the ENRON I a e over the last ,?nonth, the business has been affected. As a result, we are ~zhanging, ahd have initiated an -~ ~lj2 all. * action plan for restoring our operatioAal and fin~xicial momentum, as well a L to the and as regaining investdr confidence We' e getting back basics win WI a 4 5 4 t a - 4 1 2 3 4 5 6 7 S 9 10 11 12 13 14 15 16 17 18 19 20 4 '7 I 1~ Enron Corporatidn Conference Call r K Date: t 11114/2001I A - KLHIewb -Revised 1/11/2006 1 I focus on our core energy businesses ~v1uch continue to pr-, provide ~ ft 2 significant earnings opportunities wi unique competitive advantages. We IL 3 are taking aggressive steps to ration ize our cost structure. We are 4 4 I 4 accelerating the process of divestmg~ hon-core businesses. We've ¾: It, 5 implemented a sound financial strategy to regain our financial health and 6 flexibility, and will continue our irnti tives iii this regard. We're taking 7 aggressive, sweeping action with~ Ilmpkte investigation by the Special 8 Committee of the Board with respect to related'party transactions. We are 9 It;; reviewing and strengthening our corporate governance. Arid finally, we 10 will attempt to regain your confideni with our expanddd disclosure 11 initiatives and focus on transparency~ To lead the company through this 12 period of transformation, GREG W LEY, our President and Chief * 1,11 13 Operating Officer, will be responsibl for focusing the business in the right 14 markets and areas, andJEFF'MCMA ON, Chief Financial Officer,'wilI ' 15 be responsible for restftcturing tli~ iliancial position of the company. 16 Together, GREG, JEFF; and I, along with many of our other colleagues; - 'A 17 will doeverything in 6ur power to f~build investor confidence. I'm sure 18 you have plenty of questibns, as Eve 'merely provided the broad strokes for N. 19 *where we are taking the company. let me assure you there will be 20 plenty of time for your questions. I would tiow like to ask our President 6 * i 4 4 -. I,. Enron Corporation Conference Call I Date: 11/14/2001~ KLHIewb - Revised 1/11/2006 1 and Chief Operating Officer GREG WHALLEY to update you on the 2 business. GREG? provd th an overview and assessment 3 WHALLEY - Thank you, KEN. I'd like to ~ou wi 4 of where we are in the business tddi4. First of all, we've broken ENRON 5 down into three fbndamental gro1ipJ If businesses: core, non-core, and 6 those businesses which we currently onsider under review. So let me 'explain what falls into each . - 7 category~ Core businesses are our consistent B 8 franchise busine~ses in which we bel eve ENRON has a distinct I 9 competitive advantage. These busin~ s~s collectively generate significant It 10 earnings and cash flows for the company. They include our natural gas 11 pipelines, our gas and p~wer businjhs in North America and Europe, our K 12 retail businesses in North America mid Europe, and our coal business. Our 4 13 non-core businesses are businesses which do not provide value to our core 14 businesses. These primarily are pdrt Lir our global assets segment and our 15 broadband division. We have over $8 billion invested in these businesses, 16 and the return from these businesses d investment~ are dismal. 17 Accordingly, we plan to exit these buLinesses in an oiderly fashion, and 18 expect that the sale fth coriHsinesses oese non- will generate billions of 19 dollars in cash that ENRON will use to repay debt and redeploy intoits 20 core businesses. Businesses under re ew are the businesses that we .7 'I Enron Corporation Conference Call Date: 11/14120011 KLHIewb - Revised 1111/2006 I 1 believe have strong future prospects. However, under the current I K 2 environment, we will look closely at each of these businesses' capital 3 requirements, near-term growth pro- prospects of these bu~inesses, both in J *1 4 terms of earnings and cash generation. These businesses are primarily our 5 wholesale businesses outside of gas land power, and include both energy V 6 related as well as our industrial niark'bts activity. With respect to these 7 businesses, we are perf6rming an inWlepth assessment of each business. V 8 We will be making detenninatioris quickly about the resources that we 9 intend to expend in these areas, and Jxactl~ what the ptospects are for each I 10 of these businesses. I would like to ptovide you an update on our energy powl 11 businesses which include gas, , and coal in North America and I 12 Europe. Our recent events have caused what I believe to be a temporary i V 13 but negative impact on our ~ quarter profitability.- We're 14 only about halfway through the quar4r, so it's too early to tell exactly 15 what this, what the impact this difficult market will have on our operating 16 results. Additionally, the quarter is JiLiy to be negatively impacted by 17 severance costs and other restructurilik costs resulting from our ~It is 18 repositioning many of the businessel important to understand that we* 19 are considering these actions now in ~{ider to help us swiftly return to 20 normal business in 2002. 1 remain op mustic that the actions that we have 8 I Enron Corporation Conference Call Date: 11/14/2001 KLHIewb - Revised 1/11/2006 1 j V I taken over the past few weeks have 'ubstantially answered the credit and 2 liquidity questions that our counterp~rties may have had. While working 3 with counterparties has been difficul recently, especially last week, we reIatInshi~ 4 have seen improvement in our with our counterparties and & 5 their Willingness to transact with us w-, as we have moved through this 6 week. Our current transaction levels~ while lower than the recent averages, p 7 have remained strong, ahd there see* s to be growing acceptance to our s-, S to our stability. For the status of oui4on-core businesses, this group of 9 businesses principally consists of oJI international assets held by the 10 global assets segment and the brohdLan6 businesses, together which have a 11 book value over $8 billion. We h~vIL aggressive program in place to ~ ~L 12 divest these assets and our ion i to use the proceeds from these 13 businesses and from the sale of these assets to repay outstanding debt and H 14 redeploy into ourcore businesses have over $800 million in assets 15 already contracted for sale to res;ecl've third parties that are expected to 16 close in the fourth quarter of2aOl. Also, PORTLAND GENERAL, the 17 $2.9 billion sale, is also contracted fit sale and is targeted to close in late 18 2002, pending various regulatory ap2ovals. As for the remaining 19 businesses, as I mentioned, they are ujicler review, and we will be 20 assessitig our approach toward these usinesses in the coming weeks. Now i A A a 4-A Enron Corporation Conference Call - Ji Date: il/14/200i KLH/e*b~ Revised 1/11/2006 1 I r Pdlike to turn the call over toour (2 iefFinancial.Offlcer, JEFF MCMARQN, to 4provide you with aifinancial update. MCMAHON - Thanks, GREG. Urn, I'd first like to; e you through an in-depth - assessment of our current financial position. 1.Jh, but~f~stof~lJ'mgo~a I -4 A -A t~-A tAj~~ ~A 4 pfcivide you with an overview of out~ liquidity situation which is cui-rently At tALl our most acute financial issue. Uh We ye recently taken a number of steps to as~ure that our customers can our, tMt we can fill our -A, A V. commitment, uh, in th~ 6tdinar~ cburse of business of investor 4 ~N]. - uncertainty. Ub, first of all, three.weeks ago, we drew $3 billion on our udd hi coimhftted lines of credit, and proceeds to redeem ENRON commercial A jiLose -~ paper. And this gavets i1nuch more confidence in our access .11 - I - to daily liquidity, uh, by execution risk of flooding the eliminati¶jiie A commercial paper market each day investors were que~tioning our finan-, &ir financial position. ago we announced the signing- m& ajweek of commitment letters for $1 billion of secured credit line&with J* P. -A A - -~ 4 * MORGAN CHASE and CITIGROU~P. Thes'e proceeds will be used to - tr further sujjilement short-term liquidity frorh the committed lines of credit, - --A A SAl. Al ub, previously mehtioned mid to refihh-, and Thfinance maturing -. -A .4 -II obligations. And clearlyour borrowih~ oh a secured basis is not a 4, ~ K preferred way to ~o, but our goal is tb rapidly restore investor and i~A. . -A 4 4 ~ 4 10 A - A 4-A 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 A -~ At At Enron Corporation Conference Call Date: 1l/14/200i I * KLHIewb - Revised 1/1112006 .. I I customer confidence. Then we inte d to return to our normal capital ,1 2 program as quickly as possible, thereby eliminating the need for the 3 secured facility. As you know, y~ste4day te-, we received $1.5 billion in 4 equity from DYNEGY as part o fly announced merger ne9L~Aiquidity 5 agreement. And adding to our profile are over $800 6 million in assets sales scheduled to Aose by year end, as GREG just 7 mentioned. And these include $250 million associated with CEO RIO 8 which isa gas, local distribution company in flrazil, $266 million for ECO 9 ELECTRICA which is a power plan and LNG receiving terminal in from~je 10 Puerto Rico, and $332 million sale of certain oil and gas 11 properties that we own offshore in I dia. In addition, we've also engaged 12 in discussions with various institutilL interested in investing in ENRON 13 equity. We're diligent, diligently pi4uing a program to raise an 14 incremental five hundred million to 6ne billion dollars of private equity 15 from these sourcesiri the near future) And finally, on a longer-term basis, 16 the liquidity and financial profile of ENRON will be greatly enhanced 17 from our previously announced sale Jf PORTLAND GENERAL, which 18 will result in approximately $1.8 b~llLfl in cash proceeds as well as the 19 transfer of $1.1 billion in related debt to the buyer. This sale, this sale is p ft 20 scheduled to close, uh, late next year. Furthermore, additional non-core ~ ft 11 Enron Corporati Date: 11/14/2001 KLH!ewb - Revi 4. I I )fl Conference Call 1/11/2006 asset sales will occur over the next several months, providing us with additional opportunity to de-lev4 th~i company. Now let me move on to the credit rating of ENRON. Umi)~~Lbelieve the liquidity enhancements and scheduled asset sales will str~n~en our balance sheet eventually, and 1 1 helj, maintain our investment grade tating. We continue to meet regularly 1 with all three credit rating agencies, and the concerns th-, that are ~1 expressed by the agencies can be addressed inthe short run as further I progress pertaining to debt refinancing and asset sales becomes demonstrated. An update on the curl mt rating by the rating agencies: MOODY'S has us rated at C doublik 3, under review for further downgrade, FITCH at triple B minus, evolving outlook, and STANDARD AND POOR'S at triple B minus, crI~it watch negative. Also, urn, ment-, or comment on the bank and the ~a~~iL market situation for ENRON. Urn, now that we've stabilized our liquidlik? profile by all the above-mentioned items, we will, beginning with this IL, attempt to mitigate investor concerns associated with our ovefall financial position, as well as certain financial anangemexits that we've entLred intQ over the past several years. 1,1 believe that once everybne fully ilderstands these arrangements and the related repayment plan, their con}zLms will be diminished and we will be able to return to a more normalize bank and capital markets funding 12 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 I t Enron Corporation Conference Call Date: 11/14/2001 KLHIewb - Revised 1/11/2006 1 1 1 program. So with that, let me turn uh the attention of the call for a few finilicing 2 minutes to three of our existing vehicles, ub, namely OSPREY, 3 MARLIN, and the credit-linked notL program that w&ve previously B 4 discussed and disclosed in ENIRON's financial statements. There's been a 4] 5 significant amount of discussion in, kbout these fiflancings so I want to ''I 6 take the time to make sure that eve one has all the facts available to them. 7 For each of these financings, i'nigjikg to start by teuing.you what they 8 are, why they were done, how the'y re intended to work, and very simply 9 and straightforward what the imp&ct ihat we can expect to have, what the .t 2 10 impact of these financings can, uh, have on ENRON going forth. Let me 11 begin with the MARLIN, uh, ub, strhLture. MARLIN is a trust owned by 12 institutional investors that was fO~dlI for the purpose of investing in the 13 ATLANTIC WATER TRUST, whicl} is an entity formed by ENRON and 14 MARLIN for the purposes of aquirixt~ AZJJRIX, which holds the water 15 business of ENRON. MARLIN was ~~ita1ized originally by issuing $915 16 millionof 144A debt and $125 mill4ih of equity. The debt, the MARLIN 17 debt, is supported by the assets of AZtJRIX, and a contingent obli~ation of 1. ENRON to issue additional equity to epay the 144A debt if the assets of 18 -J 19 AZURD( are insufficient to do so. that's what I would call the Ut 20 ENRON top-up obligation. These no s are due July 15, 2003, uli, 13 Enron Corporatic Date: 11/14/2001 KLHIewb - Revi~ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 1 ~n Conference Call I ~ed 1/11/2006 however, they must be defeased i2otaYs prior which is March 17,2003, unless an acceleration event occurs, hich would make the, ub, maturity, uh, more current, urn, if ENRONwJ downgraded to a below-investment- b ii grade credit rating by one major rat7~g agency. Uh, 1-, there's been lots of discussion around this financing but it really is s-, straightforward. Primary asset of AZURIX is~WESSEX, ai4iLated water utility i-, in the U.K. If, at maturity, WESSEX is worth $2.6 billion, there's no top-up, (Ul) obligation for ENRON or any additioLal impact on ENRON's financial statements. Now to give you a little Linsitivity of that, if WESSEX is 11 worth, uh, $1.9 billion at maturity: v4'Ihich is a 25% haircut, ub, to that p earlier number, then there would be ~ $650 million impact to ENRON's income, equity, and cash related to th~ top-up obligation. So that's MARLIN. Let me just address OSPREY briefly. Uh, the OSPREY transaction relates to, ub, another finYiLcing where OSPREY is an investor in a joint venture formed by ENROt{Lfld outside institutional investors to acquire and own certain energy reiatli assets and other asSets. OSPREY was capitalized originally by issuing $2.4 billion of 144A debt and $220 million of equity. This is basically an asset-backed financing again with a top-up obligation by ENRON. Now the OSPREY debt is supported by three things: one, the assets within the vehicle; two, ENRON convertible 14 j.i Enron Corporation Conference Call 2 b stock, which ~ Date: 11114/2001 1 KLI-Ilewb - Revised 1/11/2006 1 - 1 1 into 0 million common shares of 1 ENRON; and thee, a contingent obligation of ENRON to issue additional Li 3 shares if needed to satisfy the debt obligations if the assets and the i. ~l 4 preferred stock are insufficient to retire the 1 44A debt at maturity. So 5 that's the structure of OSPREY. No what's the current status of the 6 financing? Well, if that maturity, thejassets are valued, the assets are 7 . valued with, using a 25% haircut to We book value. This would result in 8 an approximate $600 millionAncrenLintal use of cash by ENRON, and a 9 corresponding reduction in income ~Ad equity related to the top-up 10 obligation. Additionally, the liquidatibn of the vehicle would result in the 11 retirement of the original $1 billion ~refened stock issued to the vehicle, 12 uh, at the origination which is cufrently on our balance sheet. These notes 13 are due January 15, 2003, and, and, kid like MARLIN need to be defeased 14 120 days prior to that which is September 17, 2002, and also like 15 MARLIN, unless an acceleration eviilit occurs related to a below- 16 investment-grade rating by one major rating agency. And finally on the, I~i 17 sh-, it, financings, I wanted to addr~s YOSEMITE and the credit-linked 18 note program. Uh, there's also been considerable confusion in the media, I 19 believe, regarding two other, ub, uh, tie, uh, rel-, ub, regarding these 20 structufes, YOSEMITE and the ENRLLN credit-linked note. Uh, these 15 rt ~ Enron Corporation Conference Call I Date: 11/14/2001 KLHIewb - Revised 1/1 1 /2006 { 4 V 1 instruments are really effectively the same, and allow for certain of 2 ENRON's on-balance-sheet bank obligations to be transferred from the 3 bank market into the capital markethknd these trans~ictions are I predominant related, predominantly telated to commodity transactions 4 lId 5 entered into with large financial inslibutions. And, as I said, the underlying 6 obligations are reflected dnENR balance sheet. Now in all these, the 7 rating agencies, two of our lead banIc~L have worked with us closely over S the last several weeks through this iris15, and DYNEGY have revi5wed all 9 of these obligations and stmctures in~detail and have factored these 10 obligations into their respeciive vAluation and analysis. And just one final 11 iteM, uh, before Iturnit back is that with everything that's 12 occurred over the last week or two, uh, we will be filing our third quarter *i n~ 13 form l0-Q five days late which will ihclude all the details that we've 14 digeussed today as we-, the, as, as Jil as any other, uh, current events that 15 need to be talked about. And wi) tilt let me turn it back to KEN. 16 LAY - All right, thanks, JEFF. All right, wi}l now go to your questions. Ub, I 17 would say we will attempt, of answer all of your questions as coursef~to 18 frilly and candidly as, uh, as we can, Nat if, fJr whatever reason, ub, there 19 is a question tat we're, we cannot aAwer this morning, ub, we'll of 20 course take that question and we'll gel back to you just as soon, ub, ub, as 16 OPERATOR p ~'qflr 1' Enron Corporation Conference Call I Date: 11/14/2001 { KLHIewb - Revised 1111/2006 1 I, we, as possible. And with that, 1&'s pen the line for, uli, questions. I - Thank you gentlemen. The questioni swer session will be conducted electronically. If you do have a q~ieLon, simply press the star key I followed by the digit one on your to ch-tone telephone. We will proceed in the order tat you signal and take4s many questions as time p~rtiiits. Again, that's star one for questiods. t.nd our first question today will j 1 come from WILLIAM MAZE at BANK OF AMERICA. MAZE - Yeah, good morning. Urn, urn, thait for the discussion, it's helpful. Just on the, uh, first off on the, ub, uh, Y1(I)SEMITE. I was wondering is there, ub, urn, any obli.., you didn't talk'abdLt any sort of direct obligation to * ENRON, uh, you know; sort of woAtcase scenario. Is there anythilig, uh, t ;. a-, anything there? - JEFF? - I'm not gure if I quite Understand. ~Th~ there s... MAZE - Well, if, I mean, what, what exactly with YOSEMITE? - Yeah, I mean our obligations are to to Vt - And what's the number associated wit - Well I'm sorry. Maybe I've misudderki 17 LAY MCMAHON MCMAHON MAZE MCMAHON worst case scenario. I mean ~ the obligations of, uh, ENRON here p up any deficiency. h that? nod your question. Did, did you say 1 2 3 4 5 6 7 S 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporatic Date: 11/14/2001 KiLHIewb - Revii MAZE - MCMAHON - MAZE MCMAHON MAZE MCMAHON - V. * in Conference Call I i ~ed 1/11/2006 t *1 OSPREY? I No, Y-, Yo-, YOSEMITE. I 1, No I'm sorry. I'm sony. No, there ar no obligations uh, urn, to ENRON uh related to YOSEMITE. Ub, thXt i~ a uh, ult financing that was done by I moving bank, uh, bank obligatioxis into the capital market. So tat is what it is. , I Okay..'. 4, Fixedobligations. tK And the, uh, and ten of course; '5 been, uh, much to do about CHEWCO and if there's L~ny other, urn, urn, pdrtnerships out there? I mean obviously there's LI 11 and 2. Are your, you know, are you completely, uh, uh, separated from d~t se now? Is there any other contingent liabilities from other ~er his p sp that we should be av~are of? tYjat. Let me tell you where we are on al We, we believe we've identified all the, uh, uh, items related to the e felated party transactions. Urn, you know, they wereill as we know, discLssed in that 8-K that we filed, ub, U about a week ago. lJh, so we're no H of any additional ones, ub, but I tare do want to say that, there is the mv stigation that's ongoing from th& Special Committee. Uh, until tat's cdmplete, urn, you know, we'll see where we are.' But, uh, uh, as far we know, everything was disclosed in 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporation Conference Call Date: 11/14/2001 KLH!ewb - Revised 1/11/2006 the 8-K recently. i MAZE - And can you give us a progress re Is, urn, you know, I mean how cd revisions, et cetera? MCMAHON - Well the investigation is ongoilig. 1* few weeks into its uh, er, uh, origi I work internally and, uh, identified 8-K. But frankly, until the, uh, wo completed, I really can't comment I LAY - I, I, 1,1 will s~y thAt the Special C attentively and aggressively to bri That, tat Special Committee is m -7 k week, eh; some weeks even more. outside legal finn and the outside V days a week, uh, on all of this, An just as quickly as we can. MAZE - Uh, (UL), Is there any sort of time LAY - I, I think we still - it's still going to best We can give you right now. MAZE - Okay, and then just lastly, and Iwo 19 -I Pf 11th ink it's fair to sAy .it's, it's only a p~rogress. Urn, we've done a lot of J items that we, uh, uh, outlined in the Special Committee is on what further items could occur. I~nittee is working very, uh, ub, ~juh. ub, their review to conclusion. eting probably two or three times a Uh, of course we, uh, we have the uditors, uh, working virtually seven we're hying to bring it to a head ri t, ie we can expect or... a few weeks. And that's about the hog up the time here, but you, uh, t on that, uh, internal investigation? lent are you that we won't have further 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 I Enron Corporation Conference Call Date: ll/l4/20Ol~ KLHIewb - Revised 1/11/2006 taWed about, uh, a-, uh, asset sa1~ investment. Urn, you know, as yo writedowns or, or, or how do you MCMAHON - Well I think it's way too early to t-, outlined, uh, we've really moved I And I, I think now putting these basis versus, uh, an integrated busi determine, uh, market value versu too early to tell that frankly. 4 MAZE - Oka~'. Thank you and good luck. LAY - Th~you. OPERATOR - We'll now move on to ANATOL FEYGIN - Good morning everyone. Urn, can OSPREY vehicle and what are the MARLIN? Urn, it's, it's obviously and the Mexican concession that re so to speak, in OSPREY so that, where the 25% haircut is coming MCMAHON - Yeah, urn, ANATOL, uh, what OS~ several of our, ub, European electrii 20 urn, about $8 billion worth of it now, can we expect, uh, II~ ;eC that? 2 tell that frankly because what, as GREG of businesses from core to non-core. Lngs, valuing them on a discrete asset sale strategy is going to take some time to carrying value. So I, I just think it's way FYGIN at J. P. MORGAN. vTolJl provide us with some color on the lyor assets behind there with, with pretty transparent with WESSEX and, 1. mains. Urn, what are the big ticket items ~v{e can have some more color on, on 3REY ended up having in there was jnwer projects, urn, in, uh, both - I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporatio Date: 11/14/2001 KLHIewb - Revis LAY FEYGIN LAY FEYGIN MCMAHON FEYGIN WHALLEY FEYGIN ~1 I n Conference Call ed 1/11/2006 European, uh, sorry, European poi I TRAYKA, urn, urn, and SAR1U)~ variety of, uh, NORTH AMERIICI are typically, uh, debt and equity ii And 'ANATOL, you probably knbt that, uh, JEFF mentioned are two I one at... Sure. ...in ITALY. No, at, at some point it held, urn, a investments or at least a portion of f Yeah, I think it's actually less than I '4 That is still the case. Yeah. Now the merger agreement I urn, I believe its 15% of assets, uh that, uh, ENRON can kind of conti relatively unencumbered? Urn, can you ask that cjuestion agal Yeah GREG. Urn, in the metger a~ yesterday, there's a, uli, overall no-~ 21 r~ ~ww~r' 1$ II I vet projects which would include ITALY. And then there's some kterchant investments, urn, uh, which itluments of, of energy companies. K Ke two, the two large, first, uh, items 4 power plants, one in TURKEY and bokit 47% of, of, uh, your Brazilian that. Is that still the case or... It. I think it's about 25%. ias a no-shop provision that exempts, Ii revenues, et cetera. Is that set up so ~JL this asset divestiture program y1, LNATOL? This is GREG, I... xeirnent that was filed, uh, I guess hip provision, but, uh, there's an 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporati Date: 11/14/200 KLHIewb Revi WHALLEY FEYGIN WHALLEY FEYGIN OPERATOR BARONE LAY jn Conference Call sed 1/1 112006 1 exemption for 15% of, urn, assets 15%of the company can be sold, i DYNEGY as far as I understandi Uhhuh. I ...intended so thatover the course * can go on, urn, relatively unencun Yes. lAb, there is also an annex or uh, specifically virtually all of oui allowed to sell. So we can cohtinu assets, and we need not go to, uh; probably be coordinating with the 1 Great. Thanks very much. 3' We'll now go onto JAY YANELI Good morhing. This is RON BAR 4. KEN, with all due respect, uh, tot can you, urn, shut that dovm or se! secondly, I know it's early in the fi additional guidance as the quarter L-,l-, ub, let let let me answer th~ the broadband question.' But, uh, y 22 4 revenues, meaning that I guess up to I guess without the approval of s that... I ~ o 1the next six, nine months, this process bered? L merger agreement which lists out, international assets, urn, as, as being e down this path to, uh, dispose of these oDYNEGY, although, uh, we will Loughout this process. 0 0I' * ~ii it & at UBS WARBURG. 4E. I'm sitting in with, uh, JAY. Uh, employees of broadband, ub, how fast 7 Uh, it is hemorrhaging money. And Lb quarter, but will we be getting ~olds? St one first and I'll let GREG answer will be getting additional guidance as, V 1 2 3 4 5 6 :7 8 9 10 11 12 13 14 15 16 17 Is 19 20 WI-IALLEY - VI. Enron Corporation Conference Call Date: 11/14/2001 1 KLHIewb Revised 1/1 1/2006 as, uh, asthe quarter unfolds, pro ab But we, nh, uh, were just now of ii of the last ub, month and all oft ,i. 4 occurred during that month. But to wrap up our, our annual budge~~~0 that's done, I think we can give yo 3 GREG? A In, in tenns of, uh, in terms of bro dt ~ ji~ scaled it down to a great degree. U to completely wind it down deped I I * orderly a process that we have. U , the next year without hemorrhagin to substantially wind down, urn, o Okay, thank you. Thankyou. BEN BORT, excuse me BEN MO t BARNEY. Good morning. Yes, my question a tu restatement, urn, specifically, uh, hbx~ statement, urn, whether or not theyj~( 23 I BARONE LAY OPERATOR MORTON r y within the next two or three weeks. tse, uh, ub, evaluating the, the impact li, distractions and so forth'that were, we're beginning to, uh, uh, try wess for next year. And then once me pretty pretty good guidance. and, uh, you know we've already, uh, it would take some period of time, uh, ~ on, uh, how orderly pro-, how would expect that over the course of ~'o much more cash, we would be able etivities in the broadband arena. JN at SALOMON SMITH ally, uh, has to do with the *they flow through the income iu know, hit specific EBIT segments, 4 1 2 3 4 5 6 7 S 9 10 11 12 13 14 15 16 17 18 19 20 ¶ Enron Corporation Conference Call Date: 11/14/2001 KLHIewb - Revised 1/11/2006 urn, and even specifically the wh CAUSEY - Uh, yes, its RICK CAUSEY. I segment principally in the invest investment and other assets bucket so it will be non-core in certain t e not a part of the gas and power b MORTON - Okay. 3 CAUSEY - But it, it could have fallen into t terminology, the investment and o significantly impacted. 3 MORTON - Will we see that in the upcoming 4 CAUSEY - Uh, yes, w-, you'll see that in the uj I new segment, ib, approach that release. 4) MORTON - Right, right. Okay, thank you. OPERATOR - We'll now move onto PAUL TIC I TICE - Uh, morning. Just a few questions urn, if you, it, said on a call bn OSPREY go away before you clos~ outstanding. Now the mechanism 2 24 ale segment. HI urn, uh, they will hit the wholesale and the other category that, uh, urn, ii fin terms of our old thinking. A-, an-, and nJof, uh, the way GREG laid that out. Its ill ~iness moving forward. 2I II pc 4 wholesale investment in using the old assets.) uh, item would be the one most nting Q but more in, in, in the, uh, Id out, uh, uh, in the third quarter at DEUTSCHE BANK. ibout the, the share trust deals. Uh, first, inlay that the plan was to probably have tWe merger, but MARLIN would stay ~~t~at convertible preferred would : 1 2 3 4 5 6 7 S 9 10 11 12 13 14 15 16 17 18 19 20 k I~ I Enron Corporation Conference Call .} U Date: 11/14/2001 KLHIewb - Revised 1/11/2006 1 convert into DYNEGY equivalen MCMAHON - Well, which one are you talking TICE - Yeah MARLIN, assuming that s~ MCMAHON - Yeah, that, I mean, i-, i, it, I, I bel is, is, ENRON turn~ into or if th' e to the equivalent, uh, DYNEGY s & TICE , - Okay: And now, just so I got you're saying that, ub, how, howmW MARLIN bondholder, 1.9 billion?. MCMAITION - Yes, that's about right at the WES EX .2 TICE - Oka$', and, and the total amount is 920 MCMAHON - That's right. lICE - Oka$r, but the, the, deficiency that oii MCMAHON - Well what I said was i-, y-, you WESSEX is worth... * TICE - Mmhmm.. MCMAHON - ...at the end of the day, right? And 0,1 billion, urn, you ended up with the 6~ TICE - And you were saying evaluate an in WESSEX, 25 tares, after the merger? it, MARLIN? outstanding. the agreemehtprovides for whatever an exchange offer, uh, it'll convert it es. nbers straight, JEFF, on, on MARLIN, i debt do you have right now below the orAZURJIX level, right. million of MARLIN bonds? havewas 650 million? :o take a view of what you think if you took WESSEX worth, uh, $1.9 50 million impact to us. g else in, inAZURIX besides 4. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporation Conference Call I 4 Date: 11/14/2001 KLHIewb - Revised 1/1 1/2006 t could you check (liD? MCMAHON - Yeah, there's uh, there's, what is ti there's some North American thi4 CAUSEY - There's still some assets held for s~ S third quarter, those sales are ongoi S MCMAHON - Yeah, and there's cash sifting in A AMERICA got, the, the majority o .1 sold. 4. TICE - That was 140 million bucks? MCMAHON - Yes, 135,.I think, something like U ¶ I TICP - Okay, now, WESSEX is a regulate 4 need from the time you sign a deal regulators? MCMAHON - Uh... TICE - I'm thinking there's 18 months left 4 .4 MCMAHON - Yeah. And, and, and, you know th~ buyer is. Urn, so I mean, uh, I thini be is we would attempt to, uh, if w someone who could, uh, qualify pr prolonged, ub, regulatory process. 26 < tere AGOSBA in, uh, Buenos Aires, and Aft (UI). ale that were adjusted to fair value in the 'g~ So that, that's, uh, also in AZUIRIX. now because NORTH tihe NORTH AMERICA business got at, re~ Ily before, ub, the defeasance. it also, that depends a lot on who the jhere we would,.uh, our view would A4tere to liquidate it, i-, attempt to find 4 fast and not have a, uh, potential Bit typically in the U.K. these things, yeah. .sset. How much lead time would you when you could get it past the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 i Enron Corporation Conference Call Date: 11/14/2001 KLH/ewb - Revised 1/1 1 /2006 S as long as there's, urn, no overlap i gen&ally happen pretty quickly. f TICE - Now I, I know you, you had the, structures you had the topmost be 4 But, I mean it's fair to assume tha you know, is not an option. And I, that other non-core asset sales fro source of cash to pay these deals MCMAHON - Well that plus the equity we're, raising in the future. Urn, I mean I would say is, is, is timing-wise, c we've just got in a billion and a h going to be raising same additiona expect to raise billions of dollars of all of the above, urn, coupled wr mean, that's another option for it. TICE - And I assume the agencies are oka: going on that, you could, paying oI sh-, sh-, shares within the trust rigi MCMAHON - Yeah, I think it's fair to say equity 27 of market share and all, these Things ou, when you went through the the convertible shares that you have. 4 given that you're merging, that that, i tYiinic Monday you did inalce the point n iutside of the trust were a likely ff.]Is that still the plan? 'i already raised, plus the equity we're V Less at the end of the day what I pretty fungible, and, and we're, If of equity from DYNEGY. We're private equity. And we're, and we fiset sales. So, uh, some combination th~ frankly, if the markets can return, I K U 4th that given everything else that's 4th, uh, other than the convertible p-, ~uity to the, uh, rating agencies. I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporatii Date: 11/14/200: KLH/ewb - Revi TICE MCMAI-ION - TICE MCMAHON - TICE MCMAI-ION WHALLEY MCMAHON TICE MCMAHON TICE OPERATOR I n Conference Call sed 1/11/2006 Okay, and one last question on thc around the merger, is there anythui a-half billion dollar litigation, uh, 4 Yeah, the only other real opt out, business. A-, anything specific around that? earnings guidance was iO%to 15~ for them to opt out. Nah, that's, that's not accurate. Okay. And, and one last question~ 4 book value, if I'm doing my numb' north of two billion as the book va now? Yeah, I think that's right, 2.1,2.1 in Excluding the preferred. Exc1udin~ Right, yeah, (UT) just the energy 6.s Just the physical assets. Right. That's correct. Okay, great. Okay, thanks. We'll now move on to JIM FERGI. 28 U 4, Ii 0 1: ito ~rs lue m, on the opt outs that DYNEGY has else specific away from the three-and- :ket that they set up? out is a MAC clause on ENRON's was reported in the FT that if your ITant, that that was a, ub, an option und OSPREY. The 25% haircut to right, that would iMply something for the assets that you have right illion bucks. I'1 the (UI)... sets. That's right. )N at ALLIANCE CAPITAL. I I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 MCMAHON FERGUSON MCMAHON Enron Corporation Conference Call Date: 11/14/2001 KLHIewb - Revised 1/1 1 /2006. - FERGUSON - Good morning. On, uh, YOSEMF to, uh, sell the underlying assets, i. Will those be part of your ongoing - No, not at all. These are, these are uh, ub, effectively ENRON CORE have a term out there that's part of * - ' Okay, but as I understand it, they .~ guaranteed by ENRON that then v just wondering, uh, how they corn pay the notes off. - - Well, it's still at the end of the day unsecured obligation of ENRON C balance sheet and it's in our schedi missing your point. I'm sorry. - Well I guess, uh, one other thing is uh, terms of the swap and other thi Well I mean, ub, again from a bon obligation is; is a senior unsecured backed by CITI as far as, uh, uh, hi marketplace. I mean, I guess what 29 FERGUSON MCMAI-ION dt~ ba 01] vi' ret and the CLNs, will you be trying, i-, sooner than waiting for the maturity? set sales effort? nk obligations that are converted into iii, senior unsecured credit that, that r normal maturity schedule. e bank loans made, it, and swapped with CITIBANK. And I'm ack and would, uh, be able to pay, uh, it' le~ Lonet know if it's allowed under the, igs, to, uh, detail what the assets are. Iholder standpoint, y-, your, your, your oLigation of ENRON tat's effectively w that ultimately will behave in the ['n trying to say and I think that you, ~, it's effectively, uh, senior U'. It's, you know, it's already on the I material. Maybe, JIM, maybe rm 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporation Date: 11/14/200] KLH!ewb FERGUSON - MCMAHON FERGUSON MCMAHON FERGUSON MCMAHON FERGUSON MCMAHON FERGUSON MCMAHON Conference Call - I, I I ii. you saw this when the bonds wer something the bondholder looks t li 1; ENRON's ability to service that d bt nonnal operating cash flow. Right, okay. liii, and that's the cdse i both the YOSEMITE and the CLNs? Yes. Those are all basi~al1y identi al uh, deals. ~ You, you said that they were co ULlity-based transactions. Can, can we have some moreinformation abc) (jhat they are? Yeah, I mean it's, it's part of our set liability management of our entereiit~to commodity books. Uh, we transactions with a variety of counterparties in, in crude market and gas markets. Uh, it's related to the physical movement o~ of commo iti~ s. I Okay So we could end up, ub, at e end w-, owning a swap that ENRON has to perform to physically deliverLil or soniething? N-, no, not as bondholder you wo lit. Oh. But wouldn't that be the ENR P obligation that underlies... Oh, oh, oh, I'm sony, yeah. I me~ , 'eah, okay. You're talking QJI). Were not going to end up with 2 tON bond, uh, or unsecured note? I Well you could end up, that's, that's.a CITIG-, BANK's obligation, uh, 30 I A 4 ~ued;the underlying asset is really not ere. What they're looking to is and pay the maturities from its S - I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporatic Date: 11114/2001 KLHIewb FERGUSON MCMAHON FERGUSON MCMAI-ION FERGUSON OPERATOR FLEISCHER In Conference Call CITIBANK's option on what they I senior unsecure obligation of, of I I Yeah... ...UIL. ...so CITIBANK would have to go i You're not goihg to issue tern not I Well I suppose if we're in that sit4 t anyway. But that's, tat's right. So I there. But a-, anyway, o-, o-, on tbese swaps, rather tan physical delivery of 'en 4 Okay. Thank iou. We'll now move on to DAVID FL] Okay. Ut, let me see if I can fill, fi asked as much. Uh, first of all, uh, and maybe into the third day in ten you can give us a sense for, uh, yot business returning to ENRON, and uh, customers, what they're saying dated, uh, uh, you know, transactio 31 K * Vt- 3 ant to put in there that effectively hi *INRON into the market and buy something. 12L~ you? hon we wouldn't be issuing notes so it's at CITI's option what they put in they would be financially settled, uh, LICHER at GOLDMAN SACHS. I 1 in a couple places tat haven't been iji, I know it's only been two days and, F s of business, GREG, but, uh, maybe I know, what you see in terms of I. particularly the, the willingness of, of, I n terms of coming back to the long- i {uh, you know, structured products, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Is 19 20 4 Enron Corporatic Date: 11/14/2001 KLHIewb WI-IALLEY - FLEISCHER - n Conference Call I I I I uh, risk management services, wh~ 4 update on that please? I Yeah, DAVID, I, I really cant give I customers returning to the long-dat 1 Urn, I can tell you that, ub, tat wc f negotiation at the time. And, uh, a concerned and some of those were out over the hat couple of weeks, with us for term product. What wc make sure that everybody is coinfe * p marketg urn, and that basically ou' 4 continue to, uh, to occur. And at di greater acceptance, uh, beginning t it the U.S. and in Europe. And, uh, ai I people become more comfortable ~ But it, it may be, urn, uh, a couple uh,in terms of, of the comfort of ti Can 3iou tell us then on the shoit-d~ of, you know, willingness of custor business, uh, and, and, you know, Ii 32 ..i. t, uh, what not. Can you give us an I. you much of an update on, uh, on it ed structured products type agreement. ~ {i, you know, deals that were under ciland over the past week, people got it ~ut on hold. I'm sure we'll be finding I .nw comfortable they are in dealing II 7watching at the moment is, uh, is to table dealing with us in the short-dated ii. transaction and flow business can I. s point in time we have seen, uli, :1 (Ic cur in the marketplace, uh, both in cikve're hoping to see progress there as I 4th, uli, with our financial stability. I f weeks before we can give you much, t. I longer-dated customer. I I td, uh, deals that you're doing in terms I iers to come back to old levels of it ave they relaxed their requirement for, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 If .1 Corporation Date: 11/14/2001 KLHIewb WHALLEY - FLEISCHER - * Conference Call for credit letters of credit or othet Urn, there hasn't been a major rela .4 especially given that the requireni were the specific requirements in I with them. Urn, most people are, t '1 change, ub, the terms of our existii people wanting to move to, uh, to~ agreements which we think is prot industry. Urn, we have seen a retu transactions and some of the flows its bean better than Thursday and] continue to monitor and call count ensure that everyone's comfortable, infusion of this, uh, billion and a h 'I urn, other capital tat we have corn see people get much more comfort to see everything return to much m or sometime next. Okay second separate question, it, you, you talked about aggressive, i~ 33 A clung, it, you know, yet? ii :ing of, uh, of any requirements, ii nts that we were operating under, it, iL!contracts that we, that we already had I' i, were seeing very little requirement to Vt ig agreements with the exception of ~et in place, it, master netting i Ll~ a good thing for us and the 3 ~n of, uli, of some of the, same of the I And, urn, I mean, this, early this week, riday last week. And, uh, and we'll 3 rpartxes as necessary, urn, and try to ii I really believe with, urn, with the 3 'If dollars in equity capital along with, 3 ing in the door, ub, that we're going to ible in dealing with us. And I'm hoping re normal levels by, it, later this week ) I ack in your initial comments, KEN, I steps to reduce cost. Uh, i-, is that, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporation Date: 11/14/2001 KLHIewb LAY WHALLEY Conference Call uh, just in the non-core operation r are you talking about, uh, doing I something along those lines in core operations as, as well? And if you 'Ii could, you know, I know that you ~nt be too, too specific about that, but if you could help frame, uh, what Are frying to accomplish, i-, is this is a downsizing of the company for & oiler level of business, or is this just in, trying to cut costs, penod, or is it, ou know, in the, the non-core businesses that you~re mostly talki g about? i 'if Well, I, I, I think it's, uh, in really I of our businesses, DAVID. I mean II we're, we're still developing our p ans. But the, clearly the cuts will be deeper in some of the non-core ar L'than the core areas, and, but, but there is, is an opportunityto also r c~!ice overheads and just generally bring the cost structure down somewhat and not necessarily downsizing the 4 company as much, it's just makin site that we're, uh, conserving cash and, and, and getting the very best performance out of the, out of the businesses that we are going to c forward With. .1 Let me, let me clarify though that our, uh, in our core energy businesses 'F we have, ub, no intentions to do size our business operations there iLn~ whatsoever. Urn, tat the review to be, uh, regarding, uh, I streamlining any processes that we can anywhere as well as a thorough review of, ub, of any of the busine ses while they were, ub, viewed in the 34. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporatic Date: 11/14/2001 KLH!ewb FLEISCHER MCMAHON - n Conference Call II V 1 1 I wholesale business, uli, that are o tsh ; II accordance with, uh, uh, earnings a' it continue those businesses or whe er Okay, let me just ask one final qu hardest one to answer. Uh, you kA A 'LI us a little bit in, in where you thou~g~t or OSPREY in the $600, $650 miyior you know, you know, i-, i-, alto weeks to complete the investigation,) needs that much time. You know, Ia lot of looking, urn, looked under a lot you know, you know, what kind o iJn this point that, you know, you sai *1 there. I juess maybe the question i m' ~t. thoroughly have you looked? Wha mi It know, significant be, being, still If lnj I I, I, you know that's a fair, that's a air tell you, RICK CAUSEY's here as U! I extensive, uh, I shouldn't say fairly a party transactions, urn, that, that w at 35 e of energy, as to whether or not in vth and cash generation, we can we need to scale them down. n then. It's probably a harder, you, you helped, uh, I think, guide the liabilities might be in MARLIN range each it sounds like. Uh, uh, ou re going to take another several cm think the Special Committee rly you've done a lot of work and a if rocks. And I'm just wondering, iviction you can give investors at are not aware of anything else out re how hard have you looked? How ght be the risk of, of something, you out there? question DAVID. And, and I can I, we've, uh, performed, ub, fairly ery extensive review of the related aware of and that we had, uli, I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporaticin Date: 11/14/2001 KLHIewb LAY FLEISCHER OPERATOR EASSEY Conference Call * documentation of between ENRO resulted in the filing of the 8-K an the ultimate, w-, will result in th~ financial statements, earlier finane believe we have certainly done a ~ I everything. Urn, but 1,1,1 do want Committee's not finished its work, investigation. So there are still thu a go-forward basis. But, uh, I can mean, this area, especially over tlv identify for not only the investors lurking out there. And then, and ten let me underse without saying, I mean everything those, those that read the 8-K and still, we, we, as, as JEFF said, we investigation by the Special Coma Okay, thank you. We'll now hear from DONATO E Thank you and, uh, appreciate yo~ 36 I .th 'I 2.ltii jaL La.] I we I gs I I551 I ~1a~ A! ii I. we I a Li' till HI ftte I I 31)5 -1 id the related parties. And, ida, that e, and the, uh, restatement of, of, or nate restatement of, of some of our ;tatements. Um, so 1,1 think we y comprehensive, ub, look at ~ave out the point that the Special rk. The SEC has not completed their ~oing on that could, ub, impact us on we you, we've spent a lot of time, I several weeks, uh, to try and :or our owi sake, well, whats LOO DAVID, it, uh, it probably goes know now, uh, you know, or, or )rth know. So, so we, but, but we are do have the on~oing, uh, uh, and of course the SEC. BY at MERRILL LYNCH. Ling the call as well. DAVID kind of 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporatk Date: 11/14/2001 KLHIewb MCMAHON - In I Conference Call hit upon what I was most interestc not ready, and you got, ub, you kn: before it's out. But what is really ~ satisf~', uh, contracts or whatever? at the end of the quarter? Do we drawn down, you had 1.2 billion Ic commercial paper. You've got this equity with, uh, ub, DYNEGY. Ax if! heard you right, another five hi pursuant as well. I mean, what is,' guess is, is one question? And thex seeing your business book work & the, you know, the DYNEGY infix, Uh, uh, yeah, let me address your I seeing a cash drain. Wh-, what KE company'~ over-levered. And thafl are too high and we need to raise el urn, we teally cannot vase public e so obviously we've gone to other s to, one, get the balance sheet or at] 37 ~2rr A,. I i . And it, it's really, I know the Q's another five days I guess you said ii us ng, you know, the, is it, it, having to at's c-, i-, where's your cash position that yet? And, you know, you've ft er paying off the, uh, ub, [I an -and-a-half billion infusion from the I I w you're talking about another, uh, II rid ed to a billion of private equity 1 'rh 's, what's causing the cash drain I as far as the, as, you're, ub, you're I 'ery ay, uh, is it improving as a result of ML 'lilt ~ Is jj I [Ui JR Li eas comment. I, I, I don't think we're arted out the call with was, ub, the a fact. Urn, our, our debt balances y capital. Uh, in this environment, y capital very, uh, efficiently. Uh, es. So it's really more of a means to,. get on the road to get the balance 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporatic Date: 11/14/2001 KtHIewb EASSEY WHALLEY - MCMAHON - n Conference Call I I sheet to, uh, a, healthier level by g with some asset sales. Urn, and W( time, urn, all these things, ub, will. it back to where We think it ought reason we drew our revolvers dol4 a perception in the market that we wanted to put those concerns to re balance sheet. And, and, uh, sony, It, it, it dealt with the business env you know, since the, ub, (UI) DYI' and you know, following up on thi the cash balance was at the end of As far as the business goes, urn, as better at the start of this week than having had some conversations wi we will be, uh, uh, moving that up we go across the day and hoping tc near future. And as far as cash balances, what, its about a billion dollars we ende 38 ttij Ii fec it am I did I a b' I lyol I [ron ~Ai Lt fi I the at a Is' Iii L ig equity capital and combine that 1, I certainly feel confident that over 1, will de-lever this company and get iught to be. Uh, now we also, the id whatnot is that we, we, there was Vt have access to liquidity. So we r, urn, effectively putting cash on the ir second question, DONATO? ment on a day-to-day trading basis, Y, has it improved? And, urn, and, L5t one, do we have a feel for what ;econd, or third quarter? Thank you. id, urn, we've been, uh, at least were at the end of last. Uh, and Lh, with counterparties, I believe that II think, uli, I'll get an assessment as ye back to normal flow levels in the nk what you guys see in your Q's, third quarter with, which i-, in 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporatic Date: 11/14/2001 KLI-llewb EASSEY MCMAHON LAY MCMAHON EASSEY LAY - KOENIG - OPERATOR DONOVAN - II Conference Call those days actually was.. .unusual 1 uh, commercial paper when we ha And, and, and that would be befot' because that all transpired at'terwa in, you're, you're very liquid, thafla ¶ Yeah, yeah... Very liquid. Very liquid. I guess I probably should have saic Thank you, thank you very much. I, I think we have tiMe for probably KEN, before we take that last ques: investors on the phone, we have, xw information on, urn, MARLIN and financing vehicles. TIM DESPAIN you know, but TIM's available foil uh, we do have a limited amount ol we'll take one more question. And our final question today will c GEORGE WEISS ASSOCIATES. Uh, two quick questions. Urn, one,' 39 Vt 13 4' I A' I m I I I I use we typically pay down, revolv-, at outstanding. y of the draw down obviously So, from a cash standpoint, you're point I'm trying to get? t. Sorry about that. id luck guys. ;t about one more question. I'd, I'd just like to remind all the ii, introduced, it, some new* [ITE WING and other, uh, bank and ur Treasury group, I think many of tions along with my group. Uh, but, e on these lines this morning, so from BRAD DONOVAN at you give a status on the update of 1 2 3 4 5 6 7 S 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporation Date: 11/14/20011 KLHIewb LAY DONOVAN MCMAHON DONOVAN I $ Conference Call .1 two' the SEC investigation? And New York, that they expected to c indicated PORTLAND GENERA year. Does that raise any issues wi PORTLAND GENERAl deal c-, I, I'll take the latter. I, uh, I, I, I dd: been well aware that the schedule GENERAL is late next year. Now may get moved up a little bit, uh, 1 before the transaction with DYNE Okay. And, and as far as the SEC investi, -t we are cooperating a hundred perc certain do&uments obviously. That was a response to certain question * believe need to be in the public do you know, franidy that's a questior everyone is endeavoring to, ub, ge needs to get to the public gets to t1 Okay, thanks guys. 40 4 O5( ii Lit] I 3 ci A1 'I ub I the I hut I 4 I 8-I 'I I. riai AL fiji I Pt NEGY indicated at their meeting in in the middle of next year. Yet you not to close until the end of next xe closing being pushed back 'til the osed? uink so. I mean certainly DYNEGY's uli, close on PORTLAND e is a fairly good chance that that aill unlikely to close before, uh, closes. n goes, urn, it is, it is ongoing. Urn, A'ith the SEC. They've requested filed was, was part of, ub, was a, 'y asked that, that, uh, I wouldn't t Um, and how, long that will take, the SEC. I, I, I think, uh, uh, behind us. So the information that iblic as quickly as possible. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Enron Corporation Date: 11/14/20011 KLH/ewb LAY - OPERATOR - (END OF SESS] j Conference Call Thank you. And I think with that, ~ within our, uh, our limitation on ii1~ uh, participating today and certainiY either online or off-line. Obvious]>' I infomiation out to you that we car. you really do understand, uh, the co and financial position. Uh, so than Ic And that does conclude today's con: participation and have a great day. ON) 41* I ii 'I. I 1~ A I I I 'CI .'.~wr $~ rr ire going to need to wrap it up ties. And, uh, appreciate all of you, Lh, ub, welcome your questions, e want to get, uh, any, any and all th~t in fact, uh, uh, you will feel that rnny's financial, ub, uh, operation u very much. ence. Thank you for your 1 2 3 4 5 6 7 8 9 10