Enron reorganization plan, complete with disappearance of Enron name, proposed to creditors
Friday, May 3rd 2002, 12:00 am
By: News On 6
HOUSTON (AP) _ Enron Corp.'s proposed strategy for emerging from bankruptcy _ including a plan to shed the Enron name _ was outlined during a closed-door meeting in New York between the company and its creditors.
The company envisions itself as a mover of electricity and natural gas with operations in the United States and South America, according to the plan unveiled Friday.
Interim Enron chief executive Stephen Cooper said the creditors, whose support is crucial for the plan to succeed, received the proposal 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 the energy trading company out of bankruptcy, told reporters during a conference call.
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.
The company has no plans to go back into the energy trading business, which Enron developed and turned into its most profitable unit.
The process allows Enron to shed money-losing assets and shape a new company that could generate income for creditors, said Anthony Sabino, a professor at St. John's University who specializes in bankruptcy and energy law.
``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 current worldwide work force of about 23,000 would be pared to 12,000. He said he expected about 2,000 employees of bankrupt businesses 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.
The reformulated Enron would 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 non-energy core businesses.
Foremost among 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.
Sabino said Cooper's presentation is the first step in a long process to gain creditor approval before Enron presents a formal reorganization plan to U.S. Bankruptcy Judge Arthur Gonzalez in New York.
``He's got a long way to go, and no matter what he says, it's going to be a hornet's nest,'' Sabino said. ``A lot of people will knock it down.''