Great investment advice.....head it hear first!!!

[The Wicked Wop]

http://www.msnbc.com/news/911390.asp?0dm=C13MB

Enron to form new company

Firm to use international energy infrastructure assets

ASSOCIATED PRESS

HOUSTON, May 9 — Enron Corp. announced plans Friday to cluster 19 international power and pipeline assets in a new company as part of its Chapter 11 reorganization, ending efforts to sell the businesses after they did not draw satisfactory bids.

THE COMPANY, TEMPORARILY dubbed “InternationalCo.,” is one of two in which creditors will have shares when Enron’s massive bankruptcy wraps up. Most of the assets are in South and Central America, including a Brazilian power plant used in a sham sale to pump up profits at the energy company.

Enron, which filed for bankruptcy in 2001 amid massive accounting fraud, began seeking bids on its North American pipeline assets and international holdings last year. Enron spokesman Eric Thode said the offers the company received were too low.

“Certainly none of the bids reached a point where it was in the best interests of the estate and our creditors to accept,” Thode said.

Enron said the company would have an independent board of directors and would be insulated from liabilities associated with the bankruptcy.

The second company, known for now as “PipeCo.,” will include Enron’s all or part interest in three North American natural gas pipelines. Both have the blessing of major creditors and need approval from U.S. Bankruptcy Judge Arthur Gonzalez in New York, who is overseeing the Chapter 11 case.

“That makes a lot of sense, as a business decision,” said Anthony Sabino, a St. John’s University professor specializing in energy and bankruptcy law. “If you’re going to segregate assets, you might as well do it on national boundaries.”

The Brazilian power plant in Cuiaba is noted in a 109-count indictment against former Enron chief financial officer Andrew Fastow and others.

Federal prosecutors allege Fastow arranged in September 1999 for his LJM partnership to pay $11.3 million for Enron’s interest in a company that was building the 480-megawatt power plant. The indictment alleges the sale was a sham because LJM wasn’t independent of Enron and the energy company bought back the interest at a profit in a secret 2001 deal.

Fastow is among several former Enron executives charged with participating in or running schemes to beautify Enron’s books while skimming kickbacks from shady deals and selling stock when share prices were artificially inflated.

The assets headed for InternationalCo also include the half interest in a Korean gas distributor acquired in a 1998 deal led by Sherron Watkins, who later gained fame for privately warning former Enron chief Kenneth Lay about the accounting tricks and impending scandal.

SK-Enron Co. is the largest gas distributor in Korea that also imports and markets liquefied natural gas. Enron splits ownership of the operation with SK Corp., a member of the South Korean conglomerate SK Group.

The international assets also include Elektro, a Brazilian electricity distribution company Enron bought in 1998 for $1.3 billion, a bid that beat its highest competitor by $300 million. Power plants in Poland, Guam and Turkey also are earmarked for the new company.

Right now, there’s a buyer’s market for such holdings because energy companies squeezed by a weak economy are selling assets to strengthen their finances, Sabino said.

“Enron is showing a little strength here by pulling back,” he said. “If they were truly desperate, they would be compelled to sell everything at these bargain-basement prices.”

Enron still intends to sell other assets, including Portland General Electric, the Pacific Northwest utility Enron acquired in 1997 that serves more than 700,000 customers.

[redman]

Actually, it's a "cluster" of only 2 companies, but unEnron's counting it as 19.

[Yomar]