Dynegy CEO Wants Enron Pipeline, Not $1.5 Bln (Update1)
By Eileen O'Grady
Houston, Nov. 29, (Bloomberg) -- Dynegy Inc. Chairman Chuck Watson said he would rather take over an Enron natural-gas pipeline than get back the $1.5 billion investment that gave Dynegy a claim on the pipeline.
Watson said Dynegy expects to take over operation of the 16,500-mile Northern Natural Gas Co. pipeline system by Dec. 19. ChevronTexaco Corp., which owns 26 percent of Dynegy, gave Enron $1.5 billion to help the cash-strapped company stay in business.
The investment, part of Dynegy's failed plan to buy Enron, was backed by the Northern Natural system. Dynegy backed out of the merger yesterday, and said it would exercise its right to take over the line.
``The pipeline operation is as good as it gets in the industry,'' Watson said. Watson said he hopes that Northern Natural employees won't quit after the takeover.
Enron can buy the pipeline back if it pays Dynegy $1.5 billion, plus interest, within 180 days of the merger's collapse, Watson said. Enron has been unable to raise enough cash to ensure it can pay its debts and is having trouble financing daily operations.
He expects the pipeline transfer to withstand a challenge from other creditors, should Enron file for Chapter 11 bankruptcy, Watson said. ``That pipeline will belong to Dynegy in December,'' he said.
Watson said no single event torpedoed Dynegy's planned acquisition of Enron.
``It was a combination . . . that culminated in the downgrading'' Enron's credit rating to junk-bond status yesterday morning, he said.
``No one was more of an advocate of this deal than me,'' said Watson. ``I wanted this to happen.''
The merger's prospects were killed in part by an inability to find financing for Enron's short-term needs and questions about the liabilities on the company's long-term balance sheet, he said.
Because of changes in Enron's operations after the merger was announced Nov. 9, Watson said he didn't believe either firm must pay the $350 million break-up fee in the original agreement.
Dynegy shares fell $2.32 to $33.65. They are down 40 percent this year. Enron fell 25 cents to 36 cents. It shares have fallen more than 99 percent this year. |
