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Enron auction negotiations continue
Company hopes to announce results Friday
By Greg Morcroft, CBS.MarketWatch.com
Last Update: 10:01 PM ET Jan. 10, 2002
NEW YORK (CBS.MW) - Officials with bankrupt energy trader Enron said
the company now hopes to have a conclusion Friday morning on the
winner of bidding for its wholesale trading operations.
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"Since the sealed bids were received on Monday, we have been negotiating with the
parties," said Enron Chief Financial Officer Jeff McMahon in a statement.
"These discussions are expected to continue into the night. We hope to have a
conclusion Friday morning, which would be announced when Enron plans to make a
recommendation to the Bankruptcy Court."
The extended talks come as Enron's bankruptcy drew Justice Department scrutiny and an
admission from the White House that company officials contacted the Bush
Administration in the weeks before it went under seeking suppo
rt. See full coverage.
The auction process is being conducted at the New York offices of Enron's main law
firm Weil, Gotshal & Manges. Enron (ENE: news, chart, profile) had been expected to
announce the results on Thursday.
The sale is important for Enron and its creditors, because until the firm hooks up
with a partner with a sterling credit rating, the status of its positions in the
market and its ability to meet its financial obligations
remain in doubt.
The auction is widely viewed as a contest between Citigroup (C: news, chart, profile)
and Switzerland's UBS, both major Enron creditors, but other offers may emerge.
B.P. Amoco (BP: news, chart, profile) has been reported as a bidder, as well, however
the company said earlier this week that its bid was just for the trading platform, not
its book of business. It's expected the hardware
assets will attract more bids than the trading positions, said to be worth up to $7
billion on paper.
The winner will be determined by Enron's lawyers, in conjunction with the 15-member
Enron creditors' committee, which includes Citigroup and UBS.
Following the auction, the company is scheduled to go before federal bankruptcy Judge
Arthur Gonzalez for approval of the sale, which would make the winner a 51 percent
owner of the trader's most profitable business.
Enron's trading operation generated almost 90 percent of the firm's $101 billion in
2001 revenue.
Most industry insiders expect the judge to clear the deal, despite objections of
several creditors. The creditors are concerned that any proceeds from the sale not be
diverted to the trading operation, but be disbursed to
them.
On Wednesday, more than 15 creditors asked the court to either postpone or oppose the
sale on concerns about how the proceeds would be distributed.
But, with the value of the business largely tied up in energy contracts, any proceeds
generated by the ongoing business are not likely to show up immediately.
Dynegy (DYN: news, chart, profile), a creditor and former merger partner with Enron,
said Wednesday it had not taken any action to delay the sale.
However, Dynegy, along with many other creditors, is seeking to have the bankruptcy
court move the case to Texas, Enron's home state, from New York.
Enron shares, some of the NYSE's most active on Thursday, slipped 9 cents, or more
than 11 percent, to 70 cents.
Greg Morcroft is New York news editor of CBS.MarketWatch.com.
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