Enron Corp.’s emergence from bankruptcy would put it back into the mix as a North American natural gas pipeline operator, according to the bankruptcy plan filed Friday in New York. Similar to the preview detailed last March (see Daily GPI, March 20), Enron would spin off two separate companies, one holding its North American interests, the other its international businesses. Portland General Electric (PGE) would be the third entity, although a sale is still possible.

The massive plan still requires the approval of U.S. Bankruptcy Judge Arthur Gonzalez, who is overseeing Enron’s bankruptcy, however, creditors indicated they had tentatively approved of the plan in late June (see Daily GPI, July 1).

Under the proposed restructuring, Enron would spin off CrossCountry Energy Corp., an entity announced in June, to hold its North American natural gas pipelines. This would include Enron’s interests in the Texas-to-California Transwestern Pipeline system, Citrus Corp. and Northern Plains Natural Gas Co, along with some related service companies that provide pipeline support. Enron has a 50% ownership in Citrus, which is parent to the 4,900-mile Florida Gas Transmission (FGT) pipeline. The Northern Plains asset includes several Midwest pipes: Northern Border Pipeline, Midwestern Gas Transmission, Viking Gas Transmission and Guardian Pipeline.

Prisma Energy International Inc., introduced in the court documents on Friday, would include Enron’s international operations. PGE, its third entity, could be sold before Enron emerges from bankruptcy, said the company. If the Oregon utility is sold, the plan calls for creditors to obtain stock in only the two remaining entities, CrossCountry and Prisma.

The entire bankruptcy filing and related documents are available on Enron’s web site at www.enron.com/corp/por/.

“This is a good day in what has been a very complicated process,” said Stephen F. Cooper, Enron’s acting CEO and chief restructuring officer. “We have, with the support of our Creditors’ Committee and the Enron North America Examiner, filed a plan that maximizes recovery for our stakeholders, creates platforms to distribute value and preserves jobs through the creation of our new business entities.”

Cooper noted that “having reached agreement with a broad base of our economic stakeholders, we can expedite this process and hopefully avoid lengthy bankruptcy maneuvering and the associated legal expenses.”

During a conference call on Friday, Cooper called the bankruptcy plan “a middle-of-the-road solution,” which would not please everyone but would offer something to many of the creditors owed the most. “We are relatively comfortable with the cash value of our assets, but we still have a lot of work to do,” he said.

However, whether the company will make it on its own once its plan is confirmed remains a question. Enron provided no recovery estimate to the court, but would base its estimate on the assets’ values and the claims against them. The total recovery pool estimate most likely would be filed in an amended court document in August, according to Enron. Creditors are owed nearly $67 billion. Since Enron filed for bankruptcy nearly 19 months ago, it has spent $500 million in legal fees also.

Under the restructuring, most of the creditors would receive between 14.8 and 18.3 cents on the dollar, representing about 78% of the total amount Enron owes to various creditors. With confirmation, all of Enron’s unsecured creditors would receive 70% of their claims in cash and 30% in stock in the spun-off companies. If the figures are correct, Enron would hold the two-thirds majority of creditor support required to confirm the plan.

Gonzalez now will schedule a hearing on Enron’s disclosure statements to determine whether the creditors have been informed well enough to make a decision. A confirmation hearing then would be held sometime later this year, and with approval, Enron would emerge from bankruptcy.

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