Enron Corp. has put 12 major energy assets, including Portland General Electric, Transwestern Pipeline, Northern Plains, Citrus Corp. and many other international assets, which make up nearly all of what is left of the company, formally on the auction block. The company has extended invitations to potential bidders to visit electronic data rooms containing information about its most valuable businesses and has executed confidentiality agreements.

Company officials expect to either complete transactions with buyers by December or close up shop because they didn’t get full value for the assets. Whatever assets remain in December could end up becoming part of one of more new companies that could be spun off as a separate entities.

Enron Interim CEO Stephen Cooper outlined a plan in May for “OpCo,” a company or companies that would own and operate any major unsold Enron assets (see Daily GPI, May 6). He envisioned a company possibly being spun off from Enron with assets worth a total of about $10.3 billion, including 15,000 miles of pipeline, 75,000 miles of distribution, 6,700 MW of generation and 12,000 employees. The company could be organized into three business segments: transportation services, power distribution, and generation and production in North, Central and South America. That plan, however, would only occur if these assets cannot currently be sold for full value in the marketplace.

“The reason we talked about the OpCo plan so much [in May] was that the wisdom at the time — and it still may be the case today — is that there were a lot of these types of assets out in the marketplace, which would tend to depress the values,” said Enron spokesman Mark Palmer. “The only predetermined outcome here is maximized value, and we’re really agnostic about how we get there.”

In the unlikely event that all the assets were sold despite the current abundance of energy assets on the market, Enron would be gutted and liquidated, said Palmer.

“These are the most valuable non-debtor entities that the company has,” he said. “What would be left would largely be non-core assets that we would continue to sell or close down to increase the amount of recovery for our creditors.” Palmer noted the company still has a portfolio of retail and wholesale energy agreements, broadband assets and interest in plenty of “special purpose entities.” But the assets currently on the block are those with the most value.

“This process continues our efforts to maximize value and enhance recovery for our creditors,” said Cooper. “Enron and its advisors, in consultation with the unsecured creditors’ committee and its advisors, will evaluate all offers received to determine the combination of bids that maximizes the value of all assets.”

Any proceeds would go into the pool of recovery in the bankruptcy and it would be up to the creditors committee, Enron and the court to determine how the money would be distributed. Palmer said even if Enron sold all of its assets, the proceeds would come nowhere near the total of all the claims against the company, which are estimated between $60 billion and $100 billion.

Nevertheless, the assets being sold are significant pieces of infrastructure in the North, South and Central American energy markets. The assets on the block include the following:

Enron said it may expand the group of assets available under the right circumstances. Final decisions and corresponding bankruptcy court filings on asset dispositions are expected in December.

It has retained The Blackstone Group LP as lead advisor on potential sales. Batchelder & Partners Inc. will be a co-advisor on the Mariner sale. Interested parties should contact Michael Hoffman, Raffiq Nathoo or Steve Zelin at Blackstone: (212) 583-5000, or, in the case of the Mariner asset, Joel Reed at Batchelder: (858) 704-3302. Initial indications of interest will be due in October, with final bids due in November.

In other Enron news Tuesday, Andersen Worldwide SC, the international accounting group affiliated with Arthur Andersen LLP, agreed to pay $60 million to settle lawsuits stemming from Enron Corp.’s collapse. About $40 million will go to Enron investors and workers and $20 million to creditors. The settlement resolves claims relating to Andersen Worldwide’s alleged role in the inaccurate audits of Enron. It does not settle claims against Arthur Andersen, the accounting firm’s U.S. arm, which was Enron’s auditor.

Earlier this year, Arthur Andersen discussed a deal to settle the claims against it for $750 million. That offer was slashed to $300 million before the deal was turned down by the plaintiffs. Arthur Andersen since has been convicted of a criminal charge of obstruction of justice related to its destruction of Enron audit documents. After its conviction in June, the firm agreed to stop auditing public clients by Aug. 31 and is expected to wind down its operations. Andersen Worldwide has largely been deconstructed and its various international affiliates have been sold off to rival accounting firms over the past several months.

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