- The Washington Times - Saturday, January 12, 2002

NEW YORK (AP) Enron Corp. took an important step yesterday in getting its once-influential energy-trading operation running again, as Swiss-owned investment bank UBS Warburg won the bidding to buy a big part of the ailing company.
Terms of the sale, expected to provide UBS Warburg with a majority stake in the trading division, were not disclosed. Enron attorney Martin Bienenstock told a courtroom packed with bleary-eyed lawyers who followed an all-night round of negotiations that details would be made public Monday morning.
Houston-based Enron said it would retain "a residual interest in the income of the business," which generated $101 billion in revenue last year. A company spokesman, Mark Palmer, did not immediately return a telephone message seeking further comment.
In a statement, Enron Chief Executive and Chairman Kenneth L. Lay called the deal "a key milestone as we build the new Enron and work to establish a platform for restructuring the company and emerging from Chapter 11 bankruptcy protection."
UBS Warburg Chief Executive John P. Costas said his company "is excited by the prospect of re-establishing this technology-based trading business" and will not assume any of Enron's past, current or future liabilities or trading positions.
Mr. Bienenstock said the deal includes Enron's traders and the computers it used to capture roughly 25 percent of the market it helped pioneer. Enron collapsed late last year amid revelations of complex partnerships to keep billions of dollars in debt off its books and mask financial problems so it could continue to get cash and credit to run the trading business.
The deal does not include existing contracts Enron has to supply power, valued at between $6 billion and $7 billion. But Mr. Bienenstock said the main value of the trading division "was largely intellectual."
Numerous bids were evaluated, said Enron Chief Financial Officer Jeff McMahon, although he did not name the suitors. By yesterday morning, the field had been narrowed to UBS Warburg and Citigroup Inc., said a source close to the negotiations who spoke on the condition of anonymity. New York-based UBS Warburg is a division of UBS AG, Switzerland's largest bank, and Citigroup is the largest U.S. banking group.
Both banks were interested in Enron's trading arm, anchored by its Internet platform EnronOnline, because "there has to be some value left," said analyst Diana Yates of A.G. Edwards & Sons. She added, however, that it won't be clear how much value is left until the terms of the deal are disclosed.
"There's some trading that has to be done and someone has to take that business," Miss Yates said.
UBS Warburg was selected after intense negotiations during a court-sponsored auction that began Thursday morning and ended more than 24 hours later. Details were still being completed yesterday and officials had not had time to put together all the documentation spelling out the agreement, Mr. Bienenstock said at a hearing in U.S. Bankruptcy Court in Manhattan.
But Enron officials "believe we have arrived at a deal that represents the highest and best offer for our creditors, shareholders and employees," Mr. McMahon said.
Luc Despins, the head attorney for a committee of Enron creditors, said the auction process was "an extremely competitive process" and that members of the committee support the selection of UBS Warburg.
"We believe that significant value has been achieved for the estate and all Enron creditors," he said.

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