Once-mighty Enron heads toward bankruptcy

US-based Enron Corporation, once the world’s largest energy trader, slid toward bankruptcy in one of the most spectacular downfalls Wall Street has ever seen after its would-be rescuer Dynegy Inc. backed out of an $8.4bn deal to take it over.

Enron’s stock crashed to 61 cents, down from a high of around $90 over a year ago.

The company with a market value of $80bn last year is now worth around $500m.

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.

Analysts said the seventh-largest US company in terms of revenue faces almost certain bankruptcy after a free-fall that began weeks ago with the disclosure that some of its executives had engaged in off-the-books business deals.

‘‘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.’’

Dazed workers trickled out of Enron’s downtown Houston, Texas, headquarters, across the street from the company’s new $200m, 40-storey glass tower. They said they could not predict Enron’s future or their own.

Enron executives were ‘‘exploring other options to protect our core energy businesses’’, said Kenneth L Lay, the company’s chairman and chief executive.

Analysts blamed the company’s fall on a combination of arrogance and a penchant for secrecy. ‘‘They didn’t explain things,’’ said Morgan Stanley Dean Witter analyst Jim McAuliffe. ‘‘They are very cocky and self-assured.’’

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 US. It also marketed coal, pulp, paper, plastics, metals and fiber-optic bandwidth.

In its heyday, Enron lavished contributions on politicians. The company and its employees have been the single biggest group of contributors to President George W Bush’s campaigns.

But political clout could not prevent its apparent downfall. Enron’s money-losing broadband unit and power operations in India and Brazil are up for sale, and analysts said Enron has no other obvious rescuers.

‘‘I’m not sure they have any other alternatives (to bankruptcy), unless banks are willing to siphon more money into a black hole,’’ said Prudential Securities analyst Carol Coale. ‘‘Investors will not buy it.’’

The company was sent reeling by a series of explosive disclosures in the past month.

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 are now under investigation by the Securities and Exchange Commission.

Enron ousted its top financial officer weeks ago and restated its earnings back to 1997, acknowledging it overstated profits by more than $580m over the past four years.

Enron and Dynegy, both based in Houston, had spent the last several days trying to work out a revision to their November 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.

‘‘Sometimes, a company’s best deals are the very ones it did not do,’’ Dynegy chairman and chief executive Chuck Watson said.