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Downgrade could kill merger

Wednesday, Nov. 28, 2001 | 9:46 a.m.

HOUSTON -- Embattled Enron Corp.'s credit rating was downgraded to junk status today, triggering immediate payment of billions of dollars in debt and likely killing its crucial buyout by smaller rival Dynegy Inc.

Standard & Poors lowered its rating of Enron, citing a loss of confidence that the deal will be consummated and that Dynegy's willingness to go through with the buyout has been compromised by continued erosion in investor confidence and Enron's core energy trading business.

"This kills any chance of the original deal going through and even the restructured deal going through," said A.G. Edwards & Sons analyst Mike Heim.

Enron stock plunged 72 percent to $1.15 this morning on the New York Stock Exchange.

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