- The Washington Times - Tuesday, December 4, 2001

HOUSTON (AP) Enron Corp.'s former would-be savior, Dynegy Inc., yesterday answered the crippled energy trader's accusations of illegally backing out of a takeover with a countersuit aimed at acquiring a large natural-gas pipeline, one of Enron's most prized assets.
Enron on Sunday filed to reorganize under Chapter 11 bankruptcy protection, capping its six-week tailspin with one of the largest U.S. corporate bankruptcies ever. Enron also sued rival Dynegy for $10 billion, claiming the fellow Houston-based company had no grounds to scuttle a proposed buyout.
Dynegy yesterday said it had filed a lawsuit against several Enron subsidiaries not included in the bankruptcy filing.
In its bankruptcy filing, Enron asserted that Dynegy breached a merger agreement by backing out of its Nov. 9 deal to buy Enron less than three weeks later. Enron also said Dynegy had no right to exercise an option on its large Northern Natural Gas pipeline in return for a $1.5 billion investment.
Dynegy Chairman and Chief Executive Chuck Watson called Enron's lawsuit "frivolous and disingenuous," and announced Dynegy had sued several Enron subsidiaries not included in the bankruptcy case to ensure that they would live up to their contractual obligations to the pipeline.
He said Dynegy expects to acquire the pipeline, one of Enron's most prized assets, and he wants it to remain financially healthy until that happens. But the lawsuits likely will drag out that process, Mr. Watson said.
"We have a clear and unambiguous right to Northern Natural Gas," Mr. Watson said in a conference call to analysts. "Until we take control of it, we are protected."
Mr. Watson said Enron's lawsuit was an example of Enron refusing to take responsibility for its decline.
"The reality is, Enron invited Dynegy to participate in merger negotiations. Dynegy entered those negotiations in good faith and provided $1.5 billion in cash to Enron. Despite assurances that Enron's liquidity situation had stabilized, the cash was gone in less than three weeks, and Enron has had difficulty providing an accounting as to where it went," Mr. Watson said.
Despite the bankruptcy filing, Enron shares rose 14 cents to 40 cents in trading on the New York Stock Exchange.
A year ago, Enron shares were trading near $85. Dynegy shares fell $3.18 to $27.17.
Enron listed $24.7 billion in assets; combined with the total assets of the 13 Enron units filing totals just under $50 billion.
Texaco Inc. filed the largest bankruptcy in history in 1987 when it had $35.9 billion in assets, according to BankruptcyData.com. Adjusted for inflation, that amount would be about $56.4 billion today, the Boston-based company said.
Enron listed $13.1 billion in liabilities, with its subsidiaries adding another $18 billion, according to the filing.
Enron would use any proceeds from the Dynegy lawsuit to repay its creditors.
In the meantime, the company said an undetermined number of its 21,000 workers, mostly among the 7,500 in Houston, would be laid off.
This comes on top of 1,100 jobs in London that were cut Friday.
A laid-off worker in human resources, Joann Matson, said yesterday that 4,000 employees were notified.
"This whole thing, it's a nightmare," said Miss Matson, one of several workers seen carting away personal belongings in cardboard boxes.
Enron's bankruptcy and lawsuit were filed in Bankruptcy Court for the Southern District of New York. Dynegy's lawsuit is filed in Harris County District Court in Houston, where both companies are based.

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