Houston Enron Corp., once the world's largest energy trader, slid toward bankruptcy Wednesday in one of the most spectacular downfalls Wall Street has ever seen after its would-be rescuer, Dynegy Inc., backed out of an $8.4 billion deal to take it over.
Enron's stock crashed to a little more than a dollar, down from a high of about $90 over a year ago. The company with a market value of $80 billion last fall now is worth about $500 million.
Dynegy pulled out after Wall Street lowered Enron's credit rating to junk status, triggering an obligation to repay billions of dollars in debt that Enron probably cannot cover.
The seventh-largest U.S. company in terms of revenue faces almost certain bankruptcy, analysts said, after a free-fall that began weeks ago with the disclosure that some of its executives had engaged in off-the-books business deals.
Enron, which was formed in 1985, once was the world's top buyer and seller of natural gas and the largest electricity marketer in the United States. It has 20,000 employees.
A series of explosive disclosures in the past month sent the company reeling.
Enron revealed that partnerships run by its executives had allowed it to keep losses off its books and enabled the executives to profit from the arrangements. The partnerships now are under investigation by the Securities and Exchange Commission.
Enron and Dynegy, both based in Houston, had spent the last several days trying to work out a revision to their Nov. 9 merger agreement, which valued Enron stock at more than $10 per share. Dynegy finally scuttled the deal, saying some aspects of the takeover agreement had not been met.
On the New York Stock Exchange, Enron plunged $3, or 73 percent, to $1.11. It broke the record for heaviest trading ever on the stock exchange, with more than 339 million Enron shares changing hands. Dynegy dropped $4.08, or 10 percent, to $36.81.