Houston-based El Paso Corp. announced today that an internal review of its accounting has prompted the company to restate quarterly earnings from 1999 to 2003. El Paso noted in its announcement that stockholders’ equity would be reduced by the move, but that “cash flow” would not be affected. As if this latter assurance is going to make creditors any more willing to provide credit to El Paso!
It has not been a good year for El Paso, which has been the subject of an overstatement of reserves scandal and multiple resulting investigations. Here are the previous posts on El Paso’s troubles.
The restatement will result in increases and decreases in El Paso’s quarterly earnings at its merchant energy and production units, and that earnings at the parent company level will also be restated. El Paso also noted that it had received waivers under its $3 billion revolving-credit facility giving it a Sept. 30 deadline to file its 2003 10-K, which the company believes it will be able to meet. An El Paso spokesperson contended that the restatements would not cause the company to default on any debt covenants.
The bankruptcy watch for El Paso continues, and there is nothing in this latest announcement that indicates that such a result is any less likely.