enron final oct13

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  • 1. Enron Intro: Herman Marin Early History: Tammekca Henderson Later International History: Calvin Wong Scandal: Rafa Eaton/ Ray Vasquez Recovery: Mina Choi Conclusion: Herman Marin

2. 3. Intro Herman Marin The Enron Scandal : One of the largest bankruptcies in United States history 4. Intro

  • Enron was founded in Omaha, Nebraska in 1985 with the merger of Houston Natural Gas and Internorth.
  • The company headquarters were originally in Omaha but moved to Houston by Kenneth Lay, the new CEO of Enron. Enron was one of the worlds leading electricity, natural gas, pulp and paper, and communication companies.
  • Originally Enron was involved in transmitting and distributing electricity and natural gas through the U.S. then as the company developed they built and operated power plants and pipelines.
  • Enrons wealth grew due to its marketing and its high stock prices. In August 2000 the value of the stock hit its all time high of $90. From1996 to 2001 they were named Americas Most Innovative Company by Fortune magazine as well as 100 Best Companies to Work for in America in 2001. By Aug. 2001 the stock prices fell to $42 and continued to fall and in Oct. it closed at $15 a stock. Then in Dec. 2001 Enron filed for bankruptcy.

5. Early History Domestic Markets Tammekca Henderson

  • Presentation Date: October 6, 2009
  • Macro Economics/ Professor name..

The Enron Scandal : One of the largest bankruptcies in United States history 6. Early History: Domestic Markets

  • Began as Northern Natural Gas Company in Omaha, Nebraska (1932)
  • Reorganized as leading subsidiary ofholding company, InterNorth (1979)
  • InterNorth largest natural gas pipeline in North America headquartered in Omaha, Nebraska

7.

  • Merged with Houston Natural Gas Company, gas utility headquartered in Houston, Texas
  • Former HNG CEO Kenneth Lay became CEO and chairman of merged company, renamed Enron Corporation (1985)
  • In 1998, Enron created the Azurix Corporation, which it part-floated on the New York Stock Exchange in June 1999, retaining 35% ownership.

Early History: Domestic Markets 8.

  • The company was formed with an initial public stock offering (IPO) of $800 million and an opening stock price of $22.00, which fell to $2.00 within two years.
  • Enron sold Azurix North America and Azurix Industrial Operations to American Water Works for $141.5 million.

Early History: Domestic Markets 9.

  • By 1994 Enron became the largest seller of electricity in the United States
  • In 1997 Zond Corporation became subsidiary of newly formed Enron Renewable Energy Corporation
  • May 2000, Enron and its new investors, IBM and America Online, launched the New Power Company

Early History: Domestic Markets 10. International Markets Calvin Wong 11.

  • In an attempt to achieve additional growth, Enron pursued a diversification strategy.
  • By 2001, Enron had become a corporation that both owned and operated gas pipelines, pulp and paper plants, broadband assets, electricity plants, and water plants internationally. The corporation also traded in financial markets for the same types of products and service

International Market 12.

  • Enron is well known for its actions inIndia.
  • Around 1992 India came to theUnited Statesto find energy investors to help India with its energy shortage problems.
  • In December 1993, Enron inked a 20-year power-purchase contract with theMaharashtra State Electricity Board.
  • The contract allowedEnronto construct a massive 2,015 megawatt power plant.
  • Construction would be completed in two phases and Enron would form its own power company to help manage the plant, theDabhol Power Company.
  • The power project was the first step in a $20 billion scheme to help rebuild and stabilize India's power grid.

International Market 13.

  • The plant was to be constructed in two phases. Phase one would burn a fuel callednaphtha, a fuel similar tokeroseneandgasoline.
  • Phase one would produce 740 megawatts and help stabilize the local transmission grid.
  • Phase two would burnLiquefied Natural Gas, or LNG. The LNG Infrastructure associated with the LNG Terminal at Dabhol was going to cost around $1 billion.

International Market 14.

  • The first phase went online May 1999, almost two years behind schedule, and construction was started on phase two. Costs would now ultimately climb to $3 billion. Then everything came to halt.
  • The MSEB refused to pay for all the power, and it became clear that getting the government to honor the guarantees would not be an easy task.
  • Although Maharashtra still suffers from blackouts, it says it does not need and cannot afford Dabhol's power.
  • India's energy sector still loses roughly $5 billion a year. Today, Dabhol, in which Enron had invested some $900 million, sits silent.
  • The plant was taken over by Ratnagiri Gas and Power Private limited in July 2005.

International Market 15. Scandal!Rafael Eaton The Enron Scandal : One of the largest bankruptcies in United States history 16. Decline and Fall

  • Mainly stemmed from false profit reporting
  • Enron was able to obscure its losses for almost five years

The Enron Scandal : One of the largest bankruptcies in United States history 17. Enron

  • Americas Most Innovative Company for six consecutive years
  • -Fortune Magazine

The Enron Scandal : One of the largest bankruptcies in United States history 18. Legislation

  • Scandal resulted in a lot of new legislation that:
  • -reformed accounting practices
  • -heightened the ability of the SEC to
  • investigate accounting fraud
  • Example: Public Company Accounting Reform and Investor Protection Act (2002)

The Enron Scandal : One of the largest bankruptcies in United States history 19. Business as Usual

  • Politicians received millions of dollars in campaign donations from Enron during the period when the federal government deregulated the energy industry
  • -Diane Lindstrom

The Enron Scandal : One of the largest bankruptcies in United States history 20.

  • April 2001:
  • Enron reveals that it is owed more than five hundred million dollars by bankrupt California energy companies
  • October 2001:
  • On the 16th, Enron reports a third-quarter loss of 618 million dollars.
  • The next day, Enron reveals that due to an error in accounting it had overstated the companys worth by a billion dollars.

The Enron Scandal : One of the largest bankruptcies in United States history 21.

  • November 2001
  • Enron restates its earnings for the past 4 years, saying its profits were 568 million dollars less than it had announced previously.
  • December 2001
  • Enron files for Chapter 11 bankruptcy on December 2nd
  • Experts dont expect the company to survive bankruptcy intact.

The Enron Scandal : One of the largest bankruptcies in United States history 22. 23. Recovery Mina Choi 24. To date Estate has returned total $21.428Billion Recovery October 1, 2008 25.

  • Since November 2004, Enron Creditors Recovery Corp. has returned approximately $21,427,900,000 to creditors in twice-yearly distributions
  • Enron will make an additional final distribution to creditors, likely in 2009, of any remaining assets.
  • Enron Creditors Recovery Corp., today announced its twenty-fourth distribution to creditors of Enron and its affiliated Debtor companies. Todays distribution to holders of allowed general unsecured claims and allowed guaranty claims (collectively, creditors) totals approximately $828,900,000, consisting of cash of approximately $740,500,000 and Portland General Electric Company (PGE) Common Stock equivalents (in the form of cash) of approximately $54,400,000, plus interest, dividends and gains of $34,000,000.
  • Today marks another important milestone in our efforts to maximize the distributions to creditors, as we are pleased to announce that all disputed claims have been successfully resolved and today we are returning the remaining funds from the Disputed Claims Reserve to creditors, John J. Ray III, President and Chairman of the Board said.
  • The Board of Directors is gratified by our continued ability to generate value for our creditors, with most now receiving returns approaching 52 cents on the dollar, vastly exceeding original estimates under the plan.

Recovery October 1, 2008 26.

  • Since November 2004, Enron Creditors Recovery Corp. has returned approximately $21,427,900,000 to creditors in twice-yearly distributions
  • Enron will make an additional final distribution to creditors, likely in 2009, of any remaining assets.
  • Enron Creditors Recovery Corp., today announced its twenty-fourth distribution to creditors of Enron and its affiliated Debtor companies. Todays distribution to holders of allowed general unsecured claims and allowed guaranty claims (collectively, creditors) totals approximately