Word: watsons
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...Chuck Watson, for the record, is the kind of guy you think of when you imagine someone in the energy business of old. He went to Oklahoma State University, not Harvard, and he's more interested in running pipelines than trading commodities. Dynegy is located in downtown Houston, just a block away from Enron (which, by the way, has plenty of Harvard grads eager to trade in commodities). But the two companies regularly do business together, and their families play together. So while others watched like voyeurs as Enron's value slid, the 51-year-old Watson had a different...
...News of the merger leaked out Nov. 9, when Enron was valued around $9 billion. By Nov. 28th, when the S&P downgraded Enron to junk status, it was worth $2 to $3 billion at most, says Watson, but none of Enron's bankers were willing to put up enough money to soothe his fears about $18 billion in debt coming due in the next few years. In an attempt to keep the deal going, Watson had pulled three all-nighters in the last week of negotiations -something he hadn't done since his college days...
...were in panic mode," Watson told TIME. "We were renegotiating daily because every time I turned around their stock price was falling. It got to the point where there was hardly any equity left in the business. All I got was just 'trust us' from the bankers. They wanted me to go to the market and say okay, Dynegy is here to save 'em again. Maybe it's my Oklahoma upbringing but I'm not going to stand in front of people and say something I don't believe. I'm not going to put my credibility and my company...
...debt, triggered by Enron's troublesome partnerships, had not been in the original merger documents and Watson thinks it was a rude surprise for Enron head Ken Lay and the Enron team as well as Dynegy and its 30-percent owner, Chevron. Enron, he says, had not envisioned all of the possibilities that could trip them up. Operating in "panic mode," Watson's team began trying to sort out the details of the100-page SEC filing the next day, on Nov. 20th, but with a sinking feeling. A week later, on Nov. 27th, after renegotiating the deal almost daily, Watson...
...merger, that put a nail in the coffin," he says. As part of the agreement, he exercised Dynegy's option to take Enron's 16,500-mile pipeline in return for its investment of $1.5 billion plus assumption of $950 million in debt on the Northern Natural Gas system. Watson told TIME that he is confident the deal was "very carefully crafted" to avoid any risk. "It is an entity immune from bankruptcy proceedings. I expect to get the pipeline. Unless Enron gets $1.5 billion - then they can take it right back. I fully expect to get the pipeline...