I love Greg's confidence, Long live ENE!
"We are confident that this business can be put back on a solid footing," said Greg Whalley, president and COO.
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Enron flees for Ch. 11 protection
By Jennifer Waters, CBS.MarketWatch.com
Last Update: 5:29 PM ET Dec. 2, 2001
HOUSTON (CBS.MW) - With Chapter 11 its only option, Enron Corp. sought reorganization cover Sunday in the biggest-yet bankruptcy flameout in U.S. history and coupled it with a $10 billion lawsuit against one-time merger partner Dynegy Inc.
The filing staves off creditors of Enron's $13.1 billion in debt, and allows the beleaguered energy-trading and pipeline concern to attempt to regain operational strength.
Enron - which watched as a stunning 85 percent of its value vanished in the heaviest day of trading in the New York Stock Exchange's lifetime last week - listed assets of $24.7 billion in its filing.
For shareholders, the news couldn't be worse. Though they are not technically out of luck - this is a reorganization, not a liquidation - practically speaking, a bankruptcy filing of any sort wipes out shareholder value.
Enron (ENE: news, chart, profile) said, however, it is in "active discussions" with leading financial institutions to place operations of its wholesale energy operations under a new ownership structure in which Enron would have a significant piece.
"We are confident that this business can be put back on a solid footing," said Greg Whalley, president and COO.
Enron will make "substantial workforce" cuts at its Houston headquarters where 7,500 people are employed. At the same time, the energy concern will divest its noncore assets and operations in a sweeping effort to "conserve capital."
In its suit against Dynegy (DYN: news, chart, profile), Enron said that when Dynegy called off the merger, it breached the agreement "when it had no contractual right to do so," according to a press release.
Enron also asked the court to block Dynegy from exercising options to acquire a subsidiary that indirectly owns Northern Natural Gas Pipeline. "Dynegy has no right" to the pipeline "because that option can only be triggered by a valid termination" of the merger, the company said.
Enron traded at more than $80 a share a year ago, but has steadily declined since then. It went into free fall in mid-October.
Enron shares plunged ever father in mid day trading Friday, continuing the steep slide for the destitute company. Enron gave back 10 cents to 26 cents, a 27.8 percent loss.
Volume on Enron was particularly heavy at 173 million shares traded at the close. Enron set a one-day volume record last Wednesday when rode a white-knuckled ride down 85 percent after its deal to merge with Dynegy (DYN: news, chart, profile) fell apart and its debt was downgraded to junk status by three agencies. Dynegy closed at $30.35 Friday, down $3.30.
In Europe, Enron's operations started to close down as its holding company and three trading operations went into creditor protection. PricewaterhouseCoopers announced it was negotiating the sale of Enron's metal business. See full story. PricewaterhouseCoopers is administrator to the European arm of Enron.
In a statement, PWC confirmed it was cutting Enron Europe jobs in the U.K. Company spokesman Palmer confirmed that 1,100 Enron workers in Europe were laid off Friday.
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