The New Power Co., part of a venture formed last year by Enron Corp., America Online and IBM, on Friday filed a Form 8-K with the Securities and Exchange Commission (SEC) reporting that it has revised its master netting agreement with Enron North America Corp., Enron Energy Services Inc. and Enron Power Marketing Inc. that affects the type of collateral that the company will be permitted to post to the Enron subsidiaries.

The NewPower Holdings Inc. subsidiary was formed by Enron Corp., America Online and IBM in May 2000 to take advantage of the states with deregulated electricity (see Daily GPI, May 17, 2000). However, although it has made strides in some deregulated markets, it has not performed well from Enron’s standpoint, and last Tuesday, Enron’s third quarter earnings reflected a write off on the losses of New Power, which totaled $544 million (see related story).

Under the filing with the SEC, the amendment will reduce, through Jan. 4, 2002, the amount of collateral posted to Enron. The first $70 million of posted collateral has to be in the form of cash, while amounts over $70 million may consist of “not more than $40 million of eligible receivables and inventory of NewPower, valued at discounts specified in the amendment, and subject to a $25 million limit for October 2001.” NewPower has already pledged receivables and inventory to secure asset-backed financing.

With the amendment and NewPower’s cost reduction efforts, the SEC filing said, and absent a “similar rate of decline in commodity prices or other significant events,” NewPower said it has sufficient financial resources to “conduct its business until it secures ongoing asset-backed financing.” It said that it “has been and is actively seeking to arrange asset-backed financing with other parties, although to date no such arrangements have been secured.”

NewPower added that it expects to meet its previous third quarter estimate of net loss and loss per basic and diluted share, “however, customer count and revenues are expected to be slightly lower than previously forecast.” NewPower will provide guidance on the fourth quarter and the outlook for 2002 in its third quarter conference call on Nov. 8.

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.