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Dynegy in Enron infusion
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November 7, 2001: 4:22 p.m. ET
Energy company in talks to make $2B cash investment in troubled Enron.
By Staff Writer Luisa Beltran
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NEW YORK (CNNmoney) - Dynegy Inc. is in talks to invest about $2 billion in Enron Corp., as a precursor to a full-blown merger, a source familiar with the situation said Wednesday.
A formal transaction could be announced as soon as Thursday, the source said. However, the talks are very fluid and subject to change, said the Wall Street Journal, which first reported the talks.
Dynergy's acquisition would come in the form of a stock swap and at a "modest premium" to Enron's current price, a source told Reuters.
Chevron/Texaco Corp., which owns about a 27 percent stake in Dynegy, is also mulling adding $1.5 billion to the deal to help Enron, press reports said.
Houston-based Dynegy (DYN: down $3.00 to $33.00, Research, Estimates) declined to comment. Chevron declined comment. Enron could not be reached for comment.
Shares of Enron, which have plummeted 89 percent from their 52-week high, shed nearly 8 percent Wednesday and now sit at a nine-year low.
Houston-based Enron (ENE: down $0.62 to $9.05, Research, Estimates) has pitched a transaction to several private firms for a cash infusion. CNNmoney.com reported earlier this week that Enron has held talks with GE Capital, the financial arm of General Electric. Enron has also approached the Blackstone Group, CNNmoney.com has learned.
Enron is lead developer of GE's power plant, Dabhol, in India, but the status of the GE Capital-Enron discussions were unknown.
Warren Buffett's Berkshire Hathaway is also seen as a potential investor. However, Buffett would likely not be comfortable with Enron's exposure and SEC investigation, a banking source said.
A $2 billion investment by Dynegy would have little effect on GE Capital's plans, a source familiar with the situation said. GE Capital is not in the energy business and a Dynegy investment would be a "happy outcome" to Enron's current troubles, the source said.
Enron is currently the subject of an investigation by 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. 
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