Although no one can tell what sort of business it will be, Enron Corp. traders are expected to begin work soon under their UBS Warburg Energy banner “NetCo” once the Swiss-based investment banker officially takes over. The deal is scheduled to close as early as this week, but it still may be several weeks before actual trading can begin.

Nearly 650 former Enron employees in the trading unit are said to be ready to begin selling and buying energy contracts once UBS is given the green light, with most of the workforce based in Houston. Some employees will be based in former Enron offices in Toronto, Calgary and Seattle as well.

An energy executive recruiter based in Houston said he has talked with about 10 Enron traders in recent weeks who indicated UBS Warburg offered as much as $8 million in retention packages, but UBS declined to verify the amount. The traders offered contracts also would be prevented from leaving UBS for an undisclosed period of time. “We’re confident in the people we have hired,” said UBS Warburg’s Michael Hutchins, who helps run the global credit fixed income unit.

UBS Warburg spokesman David Walker also said that Enron traders have begun to contact former customers, but there are no indications on whether former customers are willing to return.

UBS will not pay anything up front for Enron’s wholesale unit or assume any of the trader’s debt; however, Enron will receive a third of NetCo’s pre-tax profits under a 10-year deal approved by the U.S. Bankruptcy Court in New York, which is overseeing Enron’s bankruptcy (see Daily GPI, Jan. 16). UBS also has a buyout option in the contract.

If Enron’s trading unit were simply liquidated instead of restarted, experts believe its current value is less than $50 million. In the past two years, experts estimate that despite dubious deals throughout the company, the trading unit actually made close to $3 billion in pre-tax profits.

Still unclear is whether the trading unit can successfully merge into the marketplace again. Jeff Dietert, an analyst with Simmons & Co., said it’s still “not clear how successful UBS is going to be…UBS knows that. That’s why it wasn’t willing to pay anything up front.”

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