With the bankruptcy court’s approval, Enron Corp. announced Wednesday it will move forward with a new holding company to protect its interests in Transwestern Pipeline Co., Citrus Corp. and Northern Plains Natural Gas Co. Enron first had proposed a separate company for its pipelines in March (see Daily GPI, March 20).

The newly named CrossCountry Energy Corp.’s shares would be distributed to creditors in connection with its Chapter 11 reorganization plan. Corbin A. McNeill Jr. and Raymond S. Troubh, existing board members, would anchor the new corporation’s board, and a search also is under way to identify three additional outside board members, Enron said.

Stephen F. Cooper, Enron’s interim CEO, said the willingness of McNeill and Troubh to join CrossCountry’s board was a “positive demonstration of our commitment to moving toward the independence of this business.” He said the pipelines’ “underlying businesses have been well run and are expected to continue to provide solid returns for the estate and ultimately our creditors.”

CrossCountry’s pipe holdings would include approximately 8.5 Bcf/d of capacity and 9,900 miles of pipeline. The 2,600-mile Transwestern extends from West Texas to the California border. Citrus, held jointly by Enron and Southern Natural, an El Paso affiliate, owns the 5,000-mile Florida Gas Transmission system running from South Texas to South Florida. The wholly owned Northern Plains is a general partner of Northern Border Partners LP, which holds ownership interests in Northern Border Pipeline Co., Midwestern Gas Transmission Co., Viking Gas Transmission Co. and Guardian Pipeline LLC.

In related news, a Houston federal judge Tuesday reset the criminal trial of Lea Fastow for January 27, 2004. Her trial had been scheduled to begin July 8. Lea Fastow, wife of former Enron CFO Andrew Fastow, would be the first individual tried in a case related to Enron. Enron’s former auditor, Arthur Andersen LLP, was convicted a year ago of obstructing the case against Enron and is appealing (see Daily GPI, June 18, 2002). However, several individuals involved in the case have pleaded guilty.

Lea Fastow had been an assistant treasurer at Enron. She was indicted in May on six counts for conspiracy to commit wire fraud, money laundering, conspiracy and filing false tax returns (see Daily GPI, May 2).

Lea Fastow’s attorneys had argued that she be tried after her husband. However, in a 12-page opinion, U.S. District Judge David Hittner denied that request, writing that the delay would be unreasonable. Andrew Fastow is not expected to go to trial before mid-2004. The former CFO has been indicted on 109 charges related to fraud, embezzlement and tax evasion. He has pleaded not guilty to the charges and remains free on bond with his wife.

Hittner wrote that Andrew Fastow’s promises to testify for his wife after his own trial, but before any appeal, cannot serve as a binding agreement, and there is no assurance his testimony will be forthcoming. Also, if Andrew Fastow waited until after an appeal to testify for his wife, it could be years before he was available to testify, which would violate the defendant’s and the public’s rights to a speedy trial.

According to Lea Fastow’s attorneys, Andrew Fastow has information about his wife’s innocence and he will only be available after his criminal trial concludes. Their request to Hittner basically centered on asking the judge to not sacrifice Lea Fastow’s right to a defense nor Andrew Fastow’s rights against self-incrimination.

In his order, Hittner cited a federal circuit case brought forth by prosecutors, which cites a unanimous 1982 U.S. 5th Circuit Court of Appeals case. The case states a defendant waives Fifth Amendment rights when he states in an affidavit that he will testify for a co-defendant if the co-defendant’s case is tried second. Fastow has filed two sealed affidavits in his wife’s case. The prosecutors argued that by filing the affidavits for his wife, Andrew Fastow effectively waived his Fifth Amendment rights in her case and thus could be subpoenaed by his wife even if she is tried first.

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