Enron Corp. - University of California | Office of The President

Fastow stated to CFO Magazine, "My credit rating is strategically critical." In 10/99, Skilling said
"Retaining a high investment-grade rating is critical to the success of our energy franchises ....
If we were downgraded, we could lose critical market share in North America."
20. By 97-98, Enron had become completely dependent on maintaining its investment
grade credit rating and a high stock price so that Enron could continue to have access to the
capital markets to borrow billions in commercial paper and to enable it to periodically raise
hundreds of millions of dollars of new longer term capital it needed to repay its commercial paper
debt and the short-term loans it was receiving from its banks to sustain its business operations,
and so the stock issuance "triggers" would not be hit which would force Enron into a death
spiral. To secure financing for the entities Enron controlled and was using to structure manipulative
devices to improperly boost its reported profits, Enron had agreed to issue massive amounts of its
common stock or otherwise make payments to those entities if Enron's common stock fell below
certain so-called "trigger" levels – $83, $81, $79, $68, $60, $57, $52, $48, $34 and $19 per share –
and to become liable for the debt of those entities if Enron lost its investment grade credit rating.
Some of the "trigger" prices are listed below:
TRIGGER PRICES
SPE TRIGGER PRICE
Azurix (a)
Azurix (b)
- 17 -
$19
$19
LJM2 $48-$52
Osprey Trust
Osprey I
Talon
Raptor I
Timberwolf
Raptor-II
$60
$81
$57.50
$79