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ENRON AND EDS EXTEND TECHNOLOGY ALLIANCE; EDS ACQUIRES SHARES OF ENRON COMMON STOCK IN NON-DILUTIVE TRANSACTION

ENRON AND EDS EXTEND TECHNOLOGY ALLIANCE; EDS ACQUIRES SHARES OF ENRON
 COMMON STOCK IN NON-DILUTIVE TRANSACTION
 HOUSTON, July 22 /PRNewswire/ -- Enron Corp. (NYSE: ENE) and Electronic Data Systems Corp. (EDS) today announced the modification of their existing information technology services agreement that will extend their strategic alliance through the year 2001. A three-year extension (1999-2001) has been added to the 6-1/2 years remaining on the original contract which began in early 1989. The new agreement will more closely integrate EDS into Enron's operating structure and improve the flexibility of both organizations to take advantage of evolving technology.
 Separately, EDS purchased 3.5 million shares of Enron Corp. common stock for approximately $149.5 million, or a per share price of $42.70. The price is based upon the average closing price of the last ten trading days. The common stock will pay the normal common dividend, currently $1.30 per share, and will increase Enron's number of common shares outstanding to approximately 114.4 million. The issuance of 3.5 million shares is expected to be non-dilutive to Enron's earnings, reflecting the improvements Enron and EDS will achieve through the cost effective application of information technology. The new equity will reduce Enron's debt-to-total capital ratio by approximately two percentage points.
 As additional compensation for the 3.5 million shares issued, Enron will receive one-half of any gain EDS realizes upon eventual sale of the shares. In consideration for the upside sharing, EDS is to be protected on the downside at the initial purchase price. If such protection is required, Enron has the option to issue additional common shares up to a maximum amount or to make a cash payment. First Boston Corporation has issued Enron a fairness opinion stating that the consideration received for common stock is fair from a financial point of view for the combination of upside sharing and downside protection granted.
 Under the modified and extended contract for services, Enron has made a $150 million payment to EDS for certain amounts payable over the life of the agreement.
 "We are extremely pleased to make this arrangement with one of our largest vendors and believe it reflects not only the successful working relationship the companies have shared since signing an outsourcing agreement 3-1/2 years ago, but also an alignment of our interests to assure that Enron achieves strong operating and financial performance such that both Enron and EDS shareholders benefit from the potential upside," said Kenneth L. Lay, chairman and CEO of Enron Corp.
 According to Ken Scott, president of EDS' Energy and Chemicals business unit, the extension strongly validates EDS' role as a long- term, strategic business partner to Enron.
 "This agreement also reaffirms EDS as a leading information technology provider to the energy industry," he added.
 Enron Corp., America's leading natural gas company with more than $13 billion in annual revenues and about $10 billion in assets, operates the nation's largest natural gas transmission system; markets natural gas liquids, crude oil and refined products nationally and worldwide; owns 84 percent of Enron Oil & Gas Company, one of the country's largest independent (non-integrated) natural gas exploration and production companies; is one of the largest independent developers and producers of electricity in the U.S. and internationally, with extensive experience in combined heat and power installations; and is a leading non-regulated purchaser and long-term marketer of natural gas.
 EDS has operations in 30 countries, employs more than 70,000 people and is the leader in applying information technology to meet the needs of businesses and governments around the globe. Stock reflecting EDS' performance is traded on the New York Stock Exchange under the symbol, "GME." EDS reported revenues of $7.1 billion in 1991.
 -0- 7/22/92
 /CONTACT: Diane Bazelides, 713-853-6285, or E. P. Segner, 713-853-5299 both of Enron, or Roger Still of EDS 214-661-6080/
 (ENE) CO: Enron Corp. ST: Texas IN: OIL SU:


SH -- NY015 -- 1724 07/22/92 09:28 EDT
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Publication:PR Newswire
Date:Jul 22, 1992
Words:658
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