Oklahoma pension systems anticipate legal action against Enron
Monday, December 3rd 2001, 12:00 am
By: News On 6
TULSA, Okla. (AP) _ Oklahoma pension systems will likely join anticipated class-action lawsuits to recoup millions of dollars in investment losses arising from Enron Corp.'s financial plunge, retirement system managers said Monday.
On Sunday, Enron filed for Chapter 11 bankruptcy protection from creditors. The move could cost Oklahoma institutional investors and companies almost $150 million, according to early estimates from several pension managers and energy companies.
Investors dumped millions of Enron shares beginning in October after revelations that the Houston-based energy trader inflated its earnings. Enron's stock nose-dived from a 12-month high of $84.87 last December to less than $1 currently.
The Oklahoma Teachers Retirement System counts up to $1.6 million in losses from 74,400 shares in Enron through an S&P 500 index fund, Executive Director Tom Beavers said.
``There's going to be class action lawsuits and we're going to participate in those,'' Beavers said.
The potential loss is well under 1 percent of the system's $5.8 billion portfolio and should not affect overall retirement benefits, he said. But the system hopes to recoup what it can.
The Oklahoma Public Employees Retirement System expects its custodial bank, The Northern Trust Co. in Chicago, to participate in any legal action on behalf of the system, Executive Director Steve Edmonds said.
``Our custodial bank automatically files for us to take part in any class action lawsuit involving our securities, unless we specifically tell them otherwise,'' he said.
OPERS could lose roughly $2 million in Enron. Its entire investment portfolio is worth $4.7 billion. Benefits for 21,000 retirees and beneficiaries will not be affected, Edmonds said.
California's Public Employees' Retirement System, the largest public pension fund in the country, holds roughly 2.8 million Enron shares worth $197 million a year ago. Their value now is about $1.2 million.
Enron's is one of the largest U.S. corporate bankruptcies ever. It comes after revelations in October that its former chief financial officer was running partnerships that allowed the company to keep half a billion dollars in debt off its books.
In early November, Enron restated its earnings since 1997, eliminating more than $580 million in reported income and spurring investor flight.
Tulsa-based Williams Cos. said it could lose up to $100 million on its energy trading and marketing agreements with Enron.
``We certainly will protect the company's interest, but we don't make it a practice to threaten anybody with litigation,'' Williams spokesman Jim Gipson said. ``We'll just make sure we'll do whatever we can to protect the company's interest to the extent that we can.''
Tulsa-based Oneok Inc., which produces natural gas and owns Oklahoma Natural Gas Co., has potential exposure of $40 million tied up in contracts with Enron, spokesman Weldon Watson said.
``All we were doing with putting that number out there is showing you what our maximum number could be,'' Watson said.