HOUSTON - Enron Corp. will sell its Oregon utility to a newly
formed entity backed by investment funds for $1.25 billion in cash,
the bankrupt energy company said Tuesday.
The sale of Portland General Electric, pending approvals from
Oregon and federal regulators and U.S. Bankruptcy Judge Arthur
Gonzalez, means Enron plans to emerge from one of the most
expensive and complex bankruptcies in history as two separate
pipeline and power plant companies rather than three.
The buyer, Oregon Electric Utility Co. LLC, is backed by
investment funds managed by Texas Pacific Group and will assume
$1.1 billion in debt and preferred stock, Enron spokesman Mark
"As we have said all along, we will not break up PGE," said
Stephen Cooper, a restructuring specialist and chief executive of
Enron. "This transaction supports that commitment."
The proceeds will go into a pool of cash that eventually will be
distributed to creditors, Palmer said. Not including the PGE sale,
Enron has raised about $8 billion in asset sales and closing out
contracts since going bankrupt in December 2001, he said.
The bankruptcy court will conduct an "overbid" process to let
other potential buyers submit higher bids, the company said. If
none are submitted and once Gonzalez approves the sale, the parties
will seek approval from the Oregon Public Utility Commission and
federal regulators. The creditors' committee in Enron's bankruptcy
supports the deal.
"Anything that would close the deal of Enron here would be
welcome by us if the deal is solid," said Lee Beyer, chairman of
the OPUC. "It will be up to the purchasing company to demonstrate a
Once approvals are secured, the deal is expected to close in the
second half of 2004.
The approximate sale price will be determined on the basis of
the utility's financial performance between January and the closing
of the deal. Palmer said Enron expects to receive another $180
million at that time.
In return, Oregon Electric will receive all of PGE's outstanding
shares, giving it complete control of the company.
Upon closing, Oregon Electric's general partners will include
former Oregon Gov. Neil Goldschmidt and Gerald Grinstein, former
chairman and CEO of Burlington Northern and a director of Delta Air
Lines. Oregon Electric will appoint members of PGE's board, which
is expected to include Goldschmidt as chairman and Grinstein.
"We are excited for Portland General to be an independent,
locally based company with the backing of strong financial
investors," said Goldschmidt, Oregon's governor from 1987-1991. He
also served as transportation secretary under President Jimmy
Texas Pacific Group's investors consist mainly of institutions,
including the Oregon Public Employees Retirement Fund.
Relations between the state of Oregon and Enron have been rocky
ever since the Western energy crisis of 2000-2001. Oregon is
seeking $448 million from Enron for penalties from unlawful
electricity trades and losses on stock by the state's public
employees retirement fund, according to claims filed in the
Enron bought Portland General for $3 billion in 1997 - a nearly
50 percent premium for the utility's shareholders - as part of the
company's foray into electricity trading. The utility serves
740,000 customers in the Pacific Northwest, mostly in Oregon.
The company has been up for sale since Enron began seeking bids
for its largest assets in August 2002.
In March, Enron announced the company would keep those assets
and cluster them in two new companies to emerge from bankruptcy
with new names. Portland General remained for sale, though Enron
said it would be a third independent company if a buyer wasn't
Of the remaining two companies, the domestic business
CrossCountry Energy Corp. will have Enron's full or partial
interest in three North American natural gas pipelines. The second
company, to be called Prisma Energy International Inc., includes 19
international power and pipeline holdings.
Enron's proposed reorganization plan says most creditors will
receive about one-fifth of the approximate $66.4 billion they're
owed in cash and stock in the new companies. However, opposition to
the plan is mounting from some creditors, notably those from
Enron's former trading unit, Enron North America.
A hearing for Gonzalez to give preliminary approval to the plan,
originally slated for Tuesday, was postponed to Monday to allow the
company time to address those objections.
AP Business Writer William McCall in Portland contributed to
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