In a shareholder letter sent on Friday to Enron Corp.’s board of directors, the AFL-CIO and the Amalgamated Bank called on the struggling company to expand the mission of its newly created special committee, urging the board to adopt a package of reforms to restore investor confidence. The union trade group and the bank said they sent the letter because “America’s working families are significant shareholders of Enron stock through their pension, health and welfare benefit funds.”

When the dust had finally settled on Friday, Enron’s stock had reached another new low to end the week at $11.21. It began the month of October at $29.15 and began the year on Jan. 2 at $79.87.

Enron, which is being formally investigated by the U.S. Securities and Exchange Commission (SEC) regarding several related-party transactions, formed a special committee last week charged with communicating with the SEC and to recommend “any other actions it deems appropriate.” The Enron board also elected a new member, William Powers Jr., who is dean of the University of Texas School of Law in Austin (see Daily GPI, Nov. 1).

Meanwhile, Enron’s troubles may be putting upward pressure on gas prices,” analyst Adam Sieminski, with Deutsche Banc Alex. Brown said. Short-covering by Enron, and by any of its counterparties seeking to neutralize their transactions with Enron, could be strengthening the buy side of the market, he said.

A marketer said he had heard some traders were limiting their trade with Enron to a “buy only” basis. However, the majority, betting the company will eventually hit the comeback trail, are advising “don’t turn your back on Enron. They will emerge from this and they have long memories.”

Questioned as to possible buyers of Enron, Sieminski suggested there might be a market for pieces of the company, but anyone who bought the whole company “would be buying its liabilities too.”

As Enron wades through its current troubles, one analyst recalled former President Jeff Skilling’s comment that “‘assets are not important.’ I bet Lee Raymond at Exxon is laughing every time he reads the paper these days.” As to hard assets, beyond Northern Natural and Transwestern, the two pipelines backing the company’s latest line of credit, Enron owns a share of Northern Border Pipeline and a share of Florida Gas Transmission. On the power side, besides Portland General Electric which Enron is in the process of selling for $1.8 billion, the company also owns a number of generating units around the world, including a share of the troubled power generation project in Dubai, India.

One source told Daily GPI the word on the steet is that Enron is trying to sell its forward book for 2003 through 2006, which the company says is worth about $100 million, for a discounted price of $82 million to gain an infusion of capital. Since Enron records the gains from all forward transactions in the year the contract is signed, a discounted sale would involve a charge against earnings.

The AFL-CIO shareholder letter urged the Enron board to expand the special committee’s mandate to do the following:

“The special committee’s mandate is far too narrow to address the current crisis,” said Richard Trumka, secretary-treasurer of the AFL-CIO. “In light of Enron’s recent balance sheet write-downs, share price decline, and credit rating deterioration, the special committee must be forward looking and consider sweeping governance reform measures.”

Gabriel Caprio, CEO of the Amalgamated Bank, added, “in this time of crisis, outside directors must reform Enron’s traditional lack of transparency and communicate directly with shareholders. This is particularly important since several outside directors have apparent conflicts of interest that compromise their objectivity.”

AFL-CIO affiliate unions sponsor benefit funds with more than $400 billion in assets and they hold an estimated 3.1 million Enron shares. The Amalgamated Bank is the trustee of the LongView Funds, which hold 251,304 shares of Enron. The Amalgamated Bank’s Longview Funds are collective investment trusts that manage equity assets on behalf of workers’ benefit funds.

A copy of the letter sent to Enron’s board is available online at www.shareholdervalue.org.

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