- The Washington Times - Saturday, December 1, 2001

From combined dispatches
NEW YORK Enron Corp. struggled to retain control over its future yesterday as former suitor Dynegy Inc. warned that bankruptcy will not protect one of the floundering energy trader's most lucrative assets from being acquired.
The warning from Dynegy, whose decision Wednesday to pull out of its planned bailout of Enron shook the one-time king of deregulated markets, was a sign of the protracted legal proceedings ahead.
Insiders in Texas said Enron aimed to file for Chapter 11 bankruptcy proceedings in the United States early next week to seek temporary protection from creditors. Lehman Brothers, the financial adviser to Dynegy in its failed takeover bid, said a bankruptcy will take years to sort out.
Dynegy said its ownership of $1.5 billion of preferred stock in Northern Natural Gas, which it acquired as collateral for an emergency cash infusion in Enron, precludes its rival from seeking bankruptcy protection for the prized asset.
"As a result of this purchase, Northern Natural Gas cannot take certain actions, including seeking bankruptcy court protection, without the consent of Dynegy as a preferred stockholder," Dynegy said.
Enron wouldn't comment on its plans, nor about Dynegy's stance on the pipeline stretching from northern Texas to the upper Midwest. The pipeline was the core asset when Enron was formed in 1986.
"There are smart people at Dynegy and they are entitled to their opinion," said Vance Meyer, a spokesman for Enron.
Enron shares, the most visible sign of the company's spectacular collapse, took another tumble, falling 10 cents to 26 cents when trading ended yesterday.
Wall Street financial firms, banks in Europe and Asia, and pension funds from California to New York stand to lose billions of dollars from Enron's collapse.
"This is having a ripple effect across the world," said Robert Penaloza of Aberdeen Asset Management Asia in Singapore.
Dominion Resources Inc. of Richmond said its pretax credit exposure to Enron is $11 million for past sales. Potomac Electric Power Co., the largest power company in the Washington area, said Enron owes it about $2 million.
"But that is about the same amount we owe [Enron], so it's a wash," a Pepco spokesman said.
Chris Baker contributed to this article.

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