GOLD CORPORATE FINANCE WINNER………Just before Hurricane Katrina made landfall last year, New Orleans-based Entergy Corp. evacuated its corporate staff, including treasury, with the expectation that employees would be able to return in a few days. What played out in the weeks that followed exceeded any worst-case scenario company executives had anticipated. The $10.1 billion utility group's operations in Mississippi, Louisiana and Texas were severely damaged by Katrina and then a few weeks later by Hurricane Rita, causing nearly 2 million customers to lose power. Compounding Entergy's woes was the fact that its 40-person treasury staff was forced to scatter across seven states, dealing with their own storm losses. "The piece that had not been imagined was that people not only couldn't go to work at their office, people didn't have their homes either," says Entergy Treasurer Steve McNeal.

Even so, the treasury team soon found itself at the center of the company's efforts to arrange a $1.5 billion emergency financing to begin to address the imperative to restore service and other liquidity needs. Everybody in treasury wanted to help get the operation back on its feet, and by the end of the first week, two-thirds of the staff were already calling in to see what they could do to help. But the situation was about to become even more challenging: A rise in natural gas prices that began prior to Katrina worsened in the storm's wake, requiring significantly more cash to fund purchases of natural gas to fuel generating stations and significantly more bank credit to support the collateral requirements of Entergy's northeastern nuclear businesses. A few weeks later, Rita would rip into the company's Louisiana-Texas service area, adding to the liquidity crunch.

Prior to the hurricanes, the company's strategy was to retain minimal working capital, making external sourcing vital to any recovery plan. It was determined that financing efforts would be guided by two goals: First, the company would strive to maintain its credit ratings at current levels, and second, any financings had to be callable to give the company the flexibility to take advantage of more attractive refinancing alternatives or respond to a reduction in cash needs. "We were determined not to do financings that would be restrictive or have covenants in them that wouldn't have been there before the storm," says McNeal.