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CNN Live Sunday

Enron Files for Bankruptcy

Aired December 02, 2001 - 18:20   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DONNA KELLEY, CNN ANCHOR: Word today that energy company Enron has filed for bankruptcy protection. CNNfn's Chris Huntington is following the story, and joins us from New York -- Chris.

CHRIS HUNTINGTON, CNN FINANCIAL NEWS CORRESPONDENT: Donna, this is -- the bankruptcy itself is not unexpected, many had seen this coming late last week. But the fact that Enron is also turning around and suing Dynegy, the company that had proposed a merger that would have rescued Enron, that indeed is, if you will, kind of going down swinging. Enron saying that it is suing Dynegy for wrongful termination of their merger agreement and seeking damages of $10 billion.

Now, Enron -- you may not be immediately familiar with the company, but it was a high-flying energy trading company, ranked number seven on the Fortune 500 as recently as a year ago. Had market capitalization in excess of $70 billion when it stock price was above 90. On Friday, the Enron stock closed at 26 cents a share, virtual a collapse of a massive company. The company today in its filing saying that it will be laying off some people, but that it intends to rebuild its operations under the protection of the bankruptcy courts -- Donna.

KELLEY: Chris, can they try and so some layoffs and try and sell part of the company but try to continue on with their business. And you mentioned, the stock price, horrible news for people who hold it if they know it; but there are a lot of folks who may have Enron and not even know it in their portfolio?

HUNTINGTON: Absolutely right. Enron is a very a widely held stock. It was part of the Standard & Poor's 500 index, which meant that a lot of very big mutual funds, very well known mutual funds, held big stakes in Enron stock. Some of those funds, of course, had sold out in the last couple of weeks, but many still left holding an awful lot of Enron shares. You might want to check your 401(k) when you get to the office on Monday.

KELLEY: Enron is an energy business, and it says one of -- the chairman and CEO of Enron, Kenneth Lay, says they're going to include their pipelines and utilities, and from an operational standpoint they're going to try and conduct normal operations, and continue to do so. What about consumers? Could consumers see bills go up if something -- if they're not able to continue, if Enron is not able to operate normally? HUNTINGTON: In all likelihood, Donna, no. The energy markets have seen this coming for really at least a month, and many of the supply lines or the energy trading that Enron was engaged in has been absorbed by the rest of the market. It's, however, a bold statement to say that they will -- that Enron will try to conduct business as usual. This is a company that has suffered a massive crisis of confidence. No confidence on Wall Street. There are bond holders who are holding bonds worth just pennies on the dollar. This company has an awful lot to do to restructure itself and get back on its feet.

KELLEY: From our sister network, CNNfin, Chris Huntington. Glad to have you help us understand that better. Thank you very much.

HUNTINGTON: You're welcome.

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