1/27/03

Texas Genco Holdings (TGN)

Update from The Jackal

Speculators’ Note: The Jackal is a friend of ours who knows his way around the market.

We published his recommendation of TGN on our site on Jan. 6. The stock has risen a nice 47% since then.

TGN hosted their first conference call today.

The key "takeaway" points from the call were:

1. The stock rose 8.2% to $14.5

2. Goldman Sachs, Merrill Lynch, Deutsche Bank, and Jefferies were

asking questions. Aside from about 45 min. of other questions that they cut

off at the end.

3. YOY results have improved dramatically, almost entirely due to the

rise in gas pxs.

4. The $1.1 - $1.3 expectation is CONSERVATIVE and is based on their

selling of the remaining 26% of unsold capacity for somewhat LESS than the

prevailing pxs.

5. They currently have about $100m of debt, up from $75m at the time of

the last filing. All of it is intercompany to CNP. They expect to

refinance this soon, as well as add a little more liquidity to get to a

Total Debt range of $150 - $200m. This will still leave them with a very

comfortable Debt / Equity ratio of 3% / 97%.

6. There is $196M of D&A, so on a CF basis, there is an ADDITIONAL

$2.45 per share.

7. The 3400 MW of capacity that they have mothballed, they expect to

use for peak capacity only (summer months) for the foreseeable future.

8. RRI will maintain the dvd for a period of at least one year after

they exercise their option, assuming TGN finances support it. I don't know

what this means for RRI buying out the minority.