Associated Press
HOUSTON — Enron Corp. on Friday unveiled its proposal to emerge from bankruptcy as a mover of electricity and natural gas, with operations stretching from the United States to South America.
Enron’s name would disappear under the proposal outlined during a closed-door meeting with creditors in New York, said interim chief executive Stephen Cooper. Their support is crucial for the success of the plan, and Cooper said the creditors received it favorably.
"I think they are open to working hand in hand with us to reach the common objectives," Cooper, a restructuring specialist hired in late January to lead Enron out of bankruptcy, told reporters during a conference call.
"I assured them what we proposed today was no attempt to jam them or put them in a box. I am relatively confident they are prepared to objectively evaluate the process we proposed," Cooper said.
The new company or companies, under the working title OpCo Energy Co., would have more than 15,000 miles of pipeline, $10.8 billion in total assets and projected earnings in excess of $1.3 billion in 2003 before interest, income taxes, depreciation and amortization. A permanent name will be chosen later, Cooper said.
The company has no plans to go back into the energy trading business, which Enron developed and turned into its most profitable unit.
"The objective is to substitute for the creditors … value, whether that be in the form of cash or common stock or any intermediary instruments, for the businesses and hard assets that we would like to take out from under the overhang of bankruptcy," Cooper said.
The process allows Enron to shed money-losing assets and shape up a new company that could be sold, merged or run on its own, said Anthony Sabino, a professor at St. John’s University who specializes in bankruptcy and energy law. Creditors could pocket most of the proceeds from a sale or merger or own stock in an ongoing business.
"A slimmed-down Enron could be an attractive player in the energy field," Sabino said. "Cooper recognizes that what would have appeal for other players are the very hard, very tangible assets."
Cooper said Enron’s worldwide workforce of about 23,000 would be pared down to 12,000. He said he expected about 2,000 employees of bankrupt companies to be laid off over time. Another 9,000 who work for businesses and assets for sale would likely work for the buyers, he said.
Cooper said the proposal to bring Enron out of bankruptcy was an effort to create a strong company that, in his words, resembled a Clydesdale more than a Shetland pony.
The reformulated Enron will look just as it did when it was formed in 1985 through the merger of Houston Natural Gas and Omaha, Neb.-based InterNorth.
In January, the investment banking division of Swiss bank UBS AG acquired Enron’s energy trading operation. Cooper said Friday the new company would focus on power plants and pipelines that aren’t part of the company’s bankruptcy, and would sell off nonenergy core businesses.
Foremost among those assets to be retained is the network of pipelines in the United States and South America in which Enron has full or partial ownership. In Brazil, the company is majority owner of Elektro, an electric utility.
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