| -Caveat Lector-
July 11, 2003, 5:36PM Enron files its reorganization planCreditors discover how much they'll getBy ERIC BERGERCopyright 2003 Houston Chronicle
lminating 19 months of work on the costliest and most complex bankruptcy
ever, Enron filed its plan of reorganization early this morning.
The plan details the recovery in cash and stock in selected assets that more than 350 classes of creditors will receive for their claims against Enron. Unsecured creditors of Enron Corp. itself, the corporate parent for the company, will receive 14.4 cents on the dollar for their debt. Holders of priority tax claims, including Harris County and some local school districts, will receive full payment in cash for their debts, but the payments will come over six years. Creditors with fully secured claims with a loan against a hard asset, such as a pipeline, will also receive full payment. Beyond that the higest rate of return was 75 cents on the dollar. Among the larger classes of creditors, Enron North America received 18.3 cents on the dollar and Enron Broadband Services 12.7 cents on the dollar. Of all the classes of creditors, holders of 1.2 billion Enron stock shares
and other equities are at the very end. They will recover no money at all.
Shareholders potential objection to the plan -- that Enron has enough money
to pay off all creditors and thus has extra for shareholders -- is
untenable.
Enron will distribute assets to creditors from several different sources.
The noncash assets include stock in two new companies that will represent the remaining embers of a once red-hot corporation. The companies are CrossCountry Energy, with 9,900 miles of pipelines, and another company holding 19 international energy assets, including interests in pipelines, and electric and natural gas power plants. Enron also has about $5 billion in cash on hand from the sale of commodity contracts negotiated prior to the bankruptcy filing, the sale of its new office tower in downtown Houston and other assets, from its art collection to a wind-turbine business. Additionally, Enron has several major energy assets still on the auction block, the biggest of which is the Portland General electric utility, which could fetch around $2 billion. Local governments in Oregon have threatened to condemn the utility if Enron does not sell it to them, but Enron says it may choose to keep Portland General and distribute shares to creditors as it is doing with its two other holding companies. Enron will not determine the combined value of its cash and holding company stock for at least another month, although the figure could be as high as $20 billion. Enron estimates that valid claims against it range from $60 billion to $100 billion. About 175 Enron entities, including Enron Corp., have filed for bankruptcy. The recoveries for each have been weighted so that, in general, the more solvent an entity, the higher the value of a claim against it. One of the biggest fights in the bankruptcy has raged between creditors of Enron North America, which owned the commodity trading business, and the rest of the creditors. At stake is the billions of dollars Enron has recovered by selling off long-term contracts to other providers for energy and other commodities. Enron North America creditors claim that money belongs to them rather than all creditors. Enron has been negotiating with this vocal creditor group for several months and says it has reached an agreement in principle. The deal would provide Enron North America creditors a better return than many others. However, this week an Enron North America creditor said negotiations were ongoing and there is no final deal. For the reorganization plan, Enron already has the blessing of its official creditors committee. If it can get Enron North America on board, its path to approval would be greatly eased and surely less rancorous. A company in a large bankruptcy can take three to five years to complete a reorganization plan, so bankruptcy experts say 19 months is not overly long. As professional fees in the case are approaching $500 million, creditors have had ample reason to settle their issues with Enron to bring the case to a close as quickly as possible. Enron hopes to gain approval of the plan by year's end, but it could take longer. Its legal costs should slow at that point, but the bankruptcy will not be over. Among the major hurdles remaining are a settlement with the large investment banks who negotiated questionable financial deals with Enron. These banks are also among Enron's biggest creditors, and the settlement will almost certainly affect their claims against the company. Finally, Enron is still in the process of sorting through the 20,000-plus claims filed against it. Some claims will be dismissed by a judge at Enron's request, but others that the company deems to be invalid could be mired in long court fights. The process of settling or liquidating all the claims could take two or three years. At that point, there will be just one step left for Enron before its name is no more: It must pay its creditors.
HoustonChronicle.com -- http://www.HoustonChronicle.com | Section: Business This article is: http://www.chron.com/cs/CDA/story.hts/topstory2/1989530 Let us please be civil and as always, Caveat Lector. ======================================================================== Archives Available at: http://www.mail-archive.com/[EMAIL PROTECTED]/ <A HREF="">ctrl</A> ======================================================================== To subscribe to Conspiracy Theory Research List[CTRL] send email: SUBSCRIBE CTRL [to:] [EMAIL PROTECTED] To UNsubscribe to Conspiracy Theory Research List[CTRL] send email: SIGNOFF CTRL [to:] [EMAIL PROTECTED] Om |
