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USA: Enron Puts Assets Up for Sale

CNN/Money
August 27th, 2002

NEW YORK -- Bankrupt energy trader Enron Corp. started taking bids Tuesday for 12 assets, including electric utilities and natural gas pipelines, that make up a large portion of Enron's total holdings.

The Houston-based company said it had opened a formal process for selling the businesses and that it was inviting potential buyers to visit electronic data rooms with information on what it called 12 of its most valuable businesses. It also said it could add other assets to the list later.

"This process continues our efforts to maximize value and enhance recovery for our creditors," interim CEO Stephen Cooper said.

But that process, if it results in all 12 assets being sold, would also end Enron as a going concern and keep it from restructuring, anonymous sources told Reuters.

Enron spokesman Mark Palmer said it was too early to speculate about the potential outcome of this process, since Enron reserved the right to not sell any or all of the assets if it's not satisfied with the bids it gets. He also pointed out that the company had discussed this scenario in May and that Tuesday's announcement should not surprise anybody.

But he also essentially admitted that the sale of all 12 assets would leave it without a core around which to build a business, an outcome the company is willing to accept if it means creditors get the most money possible.

"A company that would emerge from this bankruptcy would probably be centered around these core energy assets, and we've always talked about putting them on the auction block," said Enron spokesman Mark Palmer. "If all of them sell, we would be looking at winding down the rest of the estate to maximize the amount of value for the creditors."

Any of the core assets it kept would be merged to form a new company, tentatively called OpCo. In May, Enron said OpCo could have up to $10.8 billion in assets, compared with the total $24.8 billion in assets Enron owned when it filed for bankruptcy in December 2001.

OpCo would also have about 12,000 employees, and Palmer said one of Enron's goals was making sure those employees kept their jobs, something that would be possible even if the assets are sold.

If the potential bidders are interested, they must let Enron know by October and place a bid by November. Enron said it has executed confidentiality agreements with the potential bidders.

The 12 assets for sale include:

  • Portland General Electric, an Oregon electric utility with more than 740,000 retail customers;

  • Transwestern Pipeline Co., which includes a 2,600-mile natural gas pipeline from Texas to California;

  • A 50 percent share of Citrus Corp., the holding company for Florida Gas Transmission Co., which includes a 5,000-mile natural gas pipeline system from Texas to Florida;

  • Northern Plains Natural Gas Co., which includes 70 percent interest in a 1,250-mile natural gas pipeline from Canada to the midwestern United States;

  • Elektro Electricidade e Servicos S.A., an electricity distribution company in Brazil with more than 1.7 million customers;

  • Cuiaba, a Brazilian integrated energy company that includes natural gas pipelines;

  • Bolivia to Brazil Pipeline/Transredes, which includes South America's largest inter-country natural-gas pipeline;

  • Sithe/Independence Power Partners LP, which owns a power plant in Scriba, N.Y.

  • A 47.5 percent interest in the Eco-Electrica Project in Penuelas, Puerto Rico;

  • A 96 percent interest in Mariner, an exploration company focusing on the Gulf of Mexico;

  • Compagnie Papiers Stadacona, a forest products company in Quebec City, Quebec; and

  • A 50 percent interest in the Trakya Project, a power plant in Marmara Ereglisi, Turkey.

Enron, once the seventh-largest U.S. company, filed for bankruptcy in December 2001 after revealing massive debt it previously had hidden in off-balance-sheet partnerships.

The scandal surrounding that collapse was the first in a long series of corporate scandals that shook investor confidence and hit U.S. stock prices, and the evaporation of Enron's stock value cost its investors and some employees millions of dollars.

On Monday, the firm's creditors filed suit seeking to seize $12 million forfeited by former executive Michael Kopper as part of a plea agreement. Kopper pleaded guilty to federal criminal charges that he had helped Enron hide debt and had personally profited from acts of fraud he committed while working at Enron.

A hearing in that suit is scheduled for Wednesday.





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