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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Monty C who wrote (12858)	12/13/2001 7:01:45 AM
From: puborectalis	Read Replies (1) \| Respond to of 99280

Creditors get report from Lay Back-to-basics Enron will emerge, he says By RALPH BIVINS Copyright 2001 Houston Chronicle NEW YORK -- Enron Corp. Chairman Ken Lay, after expressing sadness over laying off thousands of employees, promised creditors Wednesday he would work as hard as possible to rebuild the Houston energy company and pull it out of bankruptcy. Lay and other Enron executives told a large crowd of creditors, attorneys and onlookers at a creditors meeting here that the company hoped to reorganize its debts and emerge from bankruptcy within one year. The company's plan calls for selling $6 billion worth of far-flung assets and concentrating on a back-to-basics approach -- its pipeline business and exploration and production. Enron laid off 4,200 employees Dec. 3, the day after the company filed for Chapter 11 bankruptcy, and 300 shortly afterward. The $50 billion bankruptcy is the largest Chapter 11 case ever. Before the creditors meeting began, Lay told the Houston Chronicle that the layoffs caused him personal grief. "I feel sad about it. It's been very brutal," Lay said. "It's hurt a lot of people." Lay said he hoped the initial rounds of layoffs had been sufficient, but he said he could not promise that more layoffs could be prevented. Lay told an audience of about 500 creditor representatives at the New York Hilton hotel that he will work to resuscitate Enron in short order. "My commitment to you and to other stakeholders is: I will work with every ounce of energy, intellect and persuasion that I have to restore as much value as possible, as quickly as possible," Lay said. Lay had been asked to appear Wednesday in Washington before a congressional committee examining the demise of Enron, which fell from being one of the biggest companies in America into bankruptcy within weeks. But Lay said in comments during a break in the creditors meeting that he decided to miss the congressional hearing to appear before creditors. Jeff McMahon, Enron's chief financial officer, outlined a plan to sell $6 billion worth of assets, including its troubled water company, Azurix Corp. The company also proposed selling its wind turbine power business, power plants and other assets in Asia and South America. Another part of the plan calls for forming a joint venture with another company to operate its energy trading business, McMahon said. Enron would contribute its expertise and systems to the new trading venture, and the other company would contribute the financial heft that Enron now lacks. Moving quickly to find a joint venture partner for the trading operation is critical because traders will leave the company if the process drags on, he said. Financial firm UBS is preparing to make a bid to create a joint venture that would take over Enron's trading and marketing operations, a source familiar with the situation said Monday. Enron also has talked to J.P. Morgan Chase & Co. and Citigroup about the trading deal. With the trading business in the hands of a joint venture and the other branches of the company pruned away, Enron would look much like it did in the 1980s when it was more of a pipeline company than a trader of commodities. "We need to get back to basics. We think we are extremely good at managing energy assets," McMahon said. At this point, however, it is only a proposal. U.S. Bankruptcy Court Judge Arthur Gonzalez of New York and the creditors committee will have considerable sway. Enron has a long list of creditors and liabilities in excess of $30 billion. The largest creditor is Citibank, which is owed $3 billion, according to bankruptcy documents. As a result, Citibank has a seat on the creditors committee, created Wednesday under the direction of U.S. Bankruptcy Trustee Carolyn Schwartz. Other groups named to the committee are Duke Energy and Trading, Williams Cos., J.P. Morgan Chase, Credit Suisse First Boston, Credit Lyonnais, Wells Fargo Bank, St. Paul Fire and Marine Insurance and Silvercreek Management. At the meeting, which ran smoothly, creditors lined up to ask detailed financial questions of McMahon and Enron's bankruptcy attorney, Martin Bienenstock of the Weil, Gotshal & Manges law firm. Enron executives, who were lambasted on Wall Street for not disclosing details about the company's finances, sometimes resorted Wednesday to saying they were unsure of how to answer questions or promising to provide an answer at a later date. However, Houston attorney David Burns, who represents several creditors, said the company's proposed path back to its fundamental ways of making money was welcome. "The good news is," Burns said, "they are prepared to focus on their core business and let go of some of the more exotic efforts." Return to top