Calpine, El Paso Tumble on Enron Fears
Shares of two leading energy companies fell Tuesday on fears that their businesses or accounting practices may mimic those of fallen Houston energy trader Enron Corp., which faces scrutiny today by two House panels.
Calpine Corp. of San Jose declined $2.29, or 13%, to a two-year low of $15.50 in trading on the New York Stock Exchange. The stock fell for a second day after the leading independent U.S. power producer said it might have to issue new stock or sell natural gas reserves for cash if it can’t complete refinancing next month.
The latest tumble followed a 17% drop after a key analyst downgraded the stock and a New York Times article drew parallels between the energy trading businesses of Calpine and Enron--a comparison Calpine executives furiously rejected.
El Paso Corp.’s shares fell $2.73, or 6.5%, to $39.17 on the NYSE after Bloomberg News reported that the company used partnerships to keep debt off its balance sheet. Enron also had off-balance-sheet debts, which contributed to its collapse.
El Paso said its partnerships were much different from Enron’s and contain assets that produce enough cash to service the debt of the partnerships. Some of Enron’s partnerships were money losers and forced the company to restate more than four years of earnings.
Enron’s astounding disintegration in less than seven weeks is being investigated by federal and state regulators and Congress.
But Enron is declining to send any executives to hearings today by two subcommittees of the House Financial Services Committee. Joseph F. Berardino, chief executive of Big Five accounting firm Arthur Andersen, which is Enron’s longtime auditor, and Robert Herdman, chief accountant of the Securities and Exchange Commission, are appearing as requested by the lawmakers.
In fact, congressional investigators can’t even locate Enron’s former chief financial officer, Andrew S. Fastow, who ran two of the off-balance-sheet partnerships. He was ousted in October by Enron in a frantic attempt to restore investor confidence in the company.
The investigators, through aides, said they have made several futile attempts to contact Fastow and may use Congress’ subpoena powers to compel his testimony and that of other Enron executives.
“We’re troubled by his unresponsiveness so far,” said Ken Johnson, a spokesman for Rep. W.J. “Billy” Tauzin (R-La.), chairman of the House Energy and Commerce Committee.
Elsewhere Tuesday, J.P. Morgan Chase & Co., one of Enron’s biggest creditors, sued the troubled energy trader, seeking more than $2.1 billion in assets contained in financing vehicles involving accounts receivable not included in Enron’s record Chapter 11 bankruptcy case, filed Dec. 2.
The bank claimed in a suit filed in U.S. Bankruptcy Court in New York on behalf of itself and related parties that it has rights to the Enron assets in the vehicles, which were used to quickly turn Enron’s uncollected bills into cash.
Enron has refused the bank’s demand to return funds or provide information on the composition of the assets in the financing vehicles, the suit said. A bank spokeswoman said the suit seeks reassurance that the investments are adequately backed by assets, and, if they are not, the suit seeks damages.
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Times staff writers Nancy Rivera Brooks and Richard Simon contributed to this report, which was compiled using Bloomberg News, Associated Press and Reuters.
