Dynegy settles lawsuit with rival Enron's subsidiaries over natural gas pipeline
Friday, January 4th 2002, 12:00 am
By: News On 6
HOUSTON (AP) _ Dynegy Inc. has settled a lawsuit with Enron Corp. subsidiaries and plans to acquire a prized natural gas pipeline that was part of a dispute between the two energy trading companies.
Dynegy had claimed Enron signed away its right to the 16,500-mile Northern Natural Gas pipeline, running between Texas and the Midwest, in exchange for $1.5 billion invested in Enron before a proposed merger of the two competitors collapsed in late November.
Enron claimed its smaller rival illegally terminated the $8.4 billion deal and therefore had no right to the pipeline. Enron had argued that Dynegy's claim should be part of Enron's massive bankruptcy case filed in federal court in New York.
Dynegy said in a news release late Thursday that the companies have agreed to finalize the transfer of the pipeline by the end of the month. Enron would have the option to buy the pipeline back by June 30.
Dynegy officials said the settlement doesn't affect the companies' bigger battle over the failed merger agreement.
Enron faces bankruptcy following the energy trader's swift downfall from Wall Street superstardom to junk bond status because of questionable accounting practices that the Securities and Exchange Commission and others are investigating.
Enron filed for bankruptcy in New York on Dec. 2 as its stock fell from a high of $90 a share a year ago to less than $1. Dynegy backed out of a deal to buy the company after Enron said it was in worse financial straits than it had originally disclosed.
Chuck Watson, chairman and chief executive officer of Dynegy, said his company recognizes the value of Northern Natural Gas' operations.
``We will be committed to maintaining the same high level of service and safe asset operation that has characterized Northern Natural Gas' management of its business.''
Northern Natural Gas transports and stores gas for its customers and provides transportation between other pipelines.
``This action ensures continuity of quality service to the customers of Northern Natural Gas and stability for the outstanding employees who have run the pipeline carefully and safely over many years,'' said Stan Horton, chairman and chief executive officer of Enron Transportation Services Co.