The fund cautiously stayed clear of Enron-Dynegy because it wasn't sure the merger was a go.
Besides debt, the other nearly fatal drag on Dynegy was its infamous trading and marketing division.
There were also fears that the rating agencies might downgrade Enron's debt despite the Dynegy deal.
Enron, Dynegy, El Paso and Reliant all faced legal retribution and later disbanded their trading arms.
Enron is bankrupt, and Dynegy and El Paso are struggling to maintain their bond ratings.
Williamson recently met state regulators and politicians to convince them Dynegy can be trusted again.
To be active in energy trading, Dynegy had to have enough electricity to sell.
"Fighting wastes time and erodes shareholder value, " says a senior Citigroup banker who worked with Dynegy.
As markets plunge, stock gurus buy up shares of stocks like Merck and Dynegy.
As firms like El Paso and Dynegy raced to raise capital, some spun off pipelines into MLPs.
Dynegy never gave the impression of being terribly keen on the deal, despite the bullying by bankers.
Enron's return on capital was only 6.6% in 2000, less than rivals such as Williams and Dynegy.
Regulators are also investigating whether Dynegy's reporting of large volumes of power trades last year was inflated.
If nothing else, the on-off marriage with Dynegy bought time for firms to reduce their exposure to Enron.
He also served on the board of Dynegy (nyse: DYN - news - people ).
"Dynegy is now past the point where the patient will live, " Williamson insists.
After so many cuts Dynegy's general and administrative costs, at 3% of revenues, are the lowest among generating firms.
Enron shares are trading at a 19% discount to their Dynegy value.
Among the biggest buyers of new Dynegy debt were hedge funds, which covered their positions by short-selling the common stock.
"What I have to say counts, " says Mike Kelley, a site safety coordinator for a Dynegy power plant in Minooka, Ill.
Mr. Flexon joined the debt-burdened Dynegy after investors rejected two buyout offers, prompting senior officers and the board to jump ship.
Dynegy's 35-year-old coal plants are "huge capital hogs, " Bergstrom says, that cost ten times as much to maintain as modern gas units.
No one accused Dynegy of malfeasance on the epic scale of Enron.
Dynegy investors count on senior management to deliver results, Mr. Flexon says.
Michael Mauboussin, chief U.S. investment strategist with Credit Suisse First Boston, goes for Enron, suggesting that the acquisition by Dynegy will take place on current terms.
Rogers helped found Natural Gas Clearinghouse, now known as Dynegy, to strike contracts among suppliers, consumers and pipelines and get the gas flowing again.
He shuttered Dynegy's tainted power marketing and trading division and exited a nascent telecom venture, resulting in writedowns of hundreds of millions of dollars.
It owns 27% of Dynegy's stock and for years paid Dynegy to market and transport all its domestic natural gas, until Williamson exited that business.
That scenario sounds unlikely to Stephen Bergstrom , president of Houston-based Dynegy , an energy-trading firm that also owns both coal- and gas-fired power plants.
Dynegy probably has the largest exposure to Enron among energy companies.
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