Enron on brink of bankruptcy after Dynegy backs away from $8.4 billion buyout plan

HOUSTON (AP) -- Enron Corp. was pushed to the brink of bankruptcy after the once-mighty energy trading company's credit collapsed and its main rival backed out of an $8.4 billion buyout plan.

News that Enron was being spurned by Dynegy Inc. sent its stock price spiraling 85 percent to close at 61 cents on Wednesday. Just a year ago, stock of the nation's largest buyer and seller of natural gas traded at $85 per share.

The meltdown made bankruptcy seem inevitable for a company that just months ago was the country's seventh biggest in revenue -- but crumbled after revealing questionable partnerships and admitting it overstated profits for four years.

"It's the end of Enron, no question about it," said Gordon Howald, an analyst at Credit Lyonnais Securities in New York. "I don't know who else could step in."

In quick succession Wednesday, two rating agencies dropped Enron's credit rating, forcing it to pay billions of dollars in debt it probably can't afford. Dynegy immediately backed out of its acquisition plan after several days of efforts to renegotiate the deal.

Investors unloaded 339 million shares on the New York Stock Exchange -- a record for one day -- and sent Enron stock plummeting.

Enron was valued at $80 billion little more than a year ago and in 1999 the company agreed to spend $100 million over 30 years to put its name on Houston's major league ballpark. By Wednesday night, the company was worth about $500 million -- and one Enron share was worth less than one-sixth the price of a $4 hot dog at Enron Field.

"I don't think that you see such a well-thought-of company falling down this quickly," Robert Christmas, a bankruptcy lawyer with Nixon Peabody LLC in New York, said of Enron's freefall over the last few weeks. "I can't think of one in recent history where it was this fast."

Enron, which was formed in 1985 and has 20,000 employees, was once the world's top buyer and seller of natural gas and the largest electricity marketer in the United States. It also marketed coal, pulp, paper, plastics, metals and fiber-optic bandwidth.