|
Enron hunts for cash
|
 |
November 6, 2001: 1:24 p.m. ET
Troubled energy trading company approaches GE Capital and firms for cash.
|
NEW YORK (CNNmoney) - Enron Corp. has held discussions with GE Capital, the financial arm of General Electric, for a cash infusion, a person familiar with the situation told CNNmoney.com Tuesday.
The state of the talks was unknown. GE Capital already has close ties to the troubled energy company. Enron is lead developer of GE's power plant, Dabhol, in India.
Enron is currently the subject of an investigation from the Securities and Exchange Commission. The probe covers Enron's transactions with a partnership created by its former chief financial officer, which resulted in a $1.2 billion reduction in shareholder equity.
"Enron is a damsel in much distress," the source said.
Enron could not be reached for comment. GE Capital declined to comment.
Enron's (ENE: down $1.50 to $9.67, Research, Estimates) stock, which has fallen 88 percent from its 52-week high of $84.87, dropped a further 12 percent Tuesday.
Enron has approached private firms Blackstone Group, and Clayton, Dubiller & Rice, and several undisclosed energy trading companies for cash, according to the Wall Street Journal. The report pegged the private infusion at $2 billion.
A capital infusion from GE would make sense, a banking source said. GE is a big power player and large financier and such an investment would have a favorable impact on Enron's credibility, the source said.
Warren Buffett's Berkshire Hathaway is also seen as a potential investor. However, Buffet would likely not be comfortable with Enron's exposure and SEC investigation, a banking source said.
Bain Capital and Kohlberg Kravis Roberts & Co. have also been mentioned as potential investors, a source said.
Berkshire Hathaway could not be reached for comment.
Houston-based Enron is seeking money privately because its previous financing plans are proceeding slower than expected and its access to capital markets is slipping after the major debt-rating agencies cut Enron's unsecured debt to a notch above so-called junk bond status, the WSJ said.
Last week, Enron Corp. secured $1 billion in financing from J.P. Morgan and Salomon Smith Barney. The troubled energy company is using its assets, Northern Natural Gas Co. and Transwestern Pipeline Co., to support the credit lines. The financing will supplement short-term liquidity and refinance maturing obligations. 
|
|
|
|
|
|
|
