In the several documents filed with the U.S. Securities and Exchange Commission (SEC) on Tuesday, Enron Corp. spelled out specifically the terms of its $23 billion merger with Dynegy Corp., noting in one filing that until the merger closes as expected in the third quarter of 2002, “we will continue to deal with one another on a commercial level as competitors, just as we have done in the past,” including its operation of EnronOnline, the leading electronic trading platform in the world.

Enron also announced that its anticipated 10Q statement, which is expected to provide more details of its related-party transactions and income losses, is scheduled to be filed with the SEC on Wednesday. Enron also has scheduled an investor update conference call at 9 a.m. EST through its web site, www.enron.com.

Enron noted in one of the SEC filings that EnronOnline will continue operations until the transaction closes. As far as the impact on counterparty trading with Dynegy, Enron said that until the deal closes, Dynegydirect and EnronOnline will “remain separate companies and will keep confidential trading information confidential.” Once the merger is completed, Dynegy COO Stephen Bergstrom said Monday during a conference call that he thought that the new company would use a hybrid of the two electronic trading platforms.

“EnronOnline is larger than Dynegydirect,” said Bergstrom. “We expect to use the best of both.” The EnronOnline platform, which has, since its inception in November 1999 been the market leader, has become the backbone of the trading industry around the world. IT handles an average $2.5 billion in natural gas, power and crude oil transactions daily. In the third quarter of this year, Dynegydirect reported $10 billion in notional transactions.

The SEC filings also disclosed that Enron’s broadband business has been written down, “so what remains is the $600 million network. These assets are included in the transaction with Dynegy.” It also disclosed in the filings that it plans to complete its headquarters building in downtown Houston, which would fall into Dynegy’s hands when the transaction is complete.

As far as what happens once the merger is completed, Enron noted that the new company could possibly split its regulated and deregulated businesses, but said that was still to be determined. Also, “some elimination of positions is almost inevitable in this type of merger, and one of the key tasks will be to identify the optimal structure and resourcing of the merged company.” Enron added that it hopes to “address any need for employment reductions through attrition and reduced hirings. We cannot rule out involuntary separations, but we have not targeted a specific number at this time.”

One of the filings, an e-mail to Enron employees by Chairman and CEO Kenneth Lay dated Nov. 9, the day of the announced merger, Lay said, “I ask you to consider the enormously bright future of the newly formed company,” Lay wrote. “Rather than closing doors, we are opening new ones, as this deal enables the customers and shareholders of both companies to participate in the tremendous benefit of the combined enterprise, including our market reach, financial strength and industry experience. Together, we will be a new merchant powerhouse.”

In another SEC document, Enron notes that the management team considered the Dynegy merger the “best deal for shareholders,” disclosing that the board had considered “numerous options — stand-alone execution, private equity infusions, strategic partner infusion and a merger with a strategic partner. The Enron Board felt that the merger with Dynegy, coupled with the $1.5 billion equity investment, was the best opportunity for continued growth and shareholder value.”

If other entities are interested in acquiring Enron, the SEC filing notes that “if the Enron Board receives an unsolicited offer that it determines is better for its shareholders than this transaction, Enron may terminate this transaction, pay the break-up fee, and pursue the competing bid.”

However, in certain circumstances Dynegy may also call the deal off — but still gain a handsome piece of Enron’s company. In return for Dynegy’s $1.5 billion investment through its shareholder ChevronTexaco, Dynegy has the right to acquire Enron’s pipeline subsidiary, Northern Natural Gas. If it cancels the deal without citing any material adverse change in Enron’s business, Dynegy might lose $350 million as provided in the merger agreement. However, the $1.5 billion investment would stand and Dynegy could take the pipeline regardless.

Under certain circumstances, Dynegy may convert its equity stake in Northern Natural Gas into an equity stake in Enron, instead of its right to purchase an indirect 100% interest in Northern Natural Gas. Enron noted, “Northern Natural Gas will remain an important member of the Enron family. If the merger is terminated, Dynegy has a right to acquire Northern Natural Gas, subject to a repurchase right of Enron.” Dynegy will own preferred stock in Northern Natural Gas “unless and until the merger is terminated and Dynegy exercises its right under certain circumstances to purchase 100% of Northern Natural Gas.”

The transaction could be terminated in limited circumstances: failure of the shareholders of either party to approve the transaction; failure to obtain regulatory approvals; the occurrence of a material adverse change; and the mutual consent of the parties. A majority of Enron shareholders must approve the transaction and two-thirds of Dynegy shareholders must approve the transaction.

“We expect customers to benefit significantly from this combination,” it said in the filed document. “This combination provides a wider and more diverse platform to meet the energy needs of our customers with reliable delivery and predictable pricing. Customers will also benefit from broader supply-sources of the two companies.” Enron also notes that the merger has had a preliminary assessment by the credit ratings agencies, which have been “positive.”

Regarding both companies’ exposure in California, a filing noted that “Dynegy and Enron have adequately reserved for any potential exposure from utilities in California”…and “are also active members of PG&E’s creditors committee. As these exposures are adequately reserved, the companies do not expect the outcome to have any material impact on either companies’ ability to meet earnings.”

In a related SEC filing Tuesday, a document disclosed the terms of Chairman Lay’s ability to gain at least $60.3 million in severance if he waits to leave his positions after his company’s sale with Dynegy Corp. is completed. According to Schedule 14A documents filed with the SEC, Lay, scheduled to retire in December 2005, would be entitled to receive a lump sum plus any related tax penalties for an “excess parachute payment.”

An Enron employment contract with Lay, amended twice in the last two years, provides for employment through Dec. 31, 2005, and notes that in the event that Lay terminates his employment within 60 days of a “change of control,” he may receive a lump sum payment equal to the number of full calendar years remaining under the term of the agreement multiplied by $20.2 million.

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