In what would certainly be a blow in at least the short term for UBS Warburg Energy’s push to revive Enron Corp.’s trading arm, some of the former trading powerhouse’s top traders are soon expected to leave. UBS confirmed last week that at least six of Enron’s former key wholesale energy traders, including the leading natural gas trader and the chief of the options desk, have turned down offers to stay, although most who were offered jobs are staying with UBS.

The departures come at the precise time the 90-day period for retention bonuses paid by Enron as it neared bankruptcy ends, which would allow anyone obtaining one of the lucrative deals to now legally leave.

Traders set to leave include John Arnold, 27, chief natural gas trader, who helped build EnronOnline into a worldwide trading leader. Arnold apparently had as many as $1 billion in trades for Enron on certain days, and his trading account made more than $700 million in gross profit for Enron last year. Arnold did not comment on the defection, and there were no announcements of where he is planning to go.

UBS said the “overwhelming majority of people offered positions, accepted them,” but did not detail the number or the positions involved. Before filing for bankruptcy protection in December, Enron paid retention bonuses totaling $55.5 million to about 550 employees, and more than half of them worked in the energy trading division. Other retention bonuses were also paid to other Enron traders and employees before the bankruptcy.

UBS confirmed that John Lavorato, former president and CEO of Enron Americas, will stay, assuming Arnold’s job as lead natural gas trader. Lavorato apparently was paid a bonus of $5 million by Enron to remain late last year.

Also last week, the Securities and Exchange Commission — which cannot force private plaintiffs to accept settlement offers — apparently was urging plaintiffs suing former Enron accountant Arthur Andersen LLP to accept a settlement totaling $750 million. About $250 million of the proposed settlement would come from insurance and the remaining $500 million would come from Andersen’s future earnings over five years. payments would be made to three groups suing the accounting firm: Enron shareholders, unsecured creditors and current and former Enron employees. The proposed settlement so far has been rejected.

In other Enron-related news last week, the U.S. bankruptcy judge handling Enron’s bankruptcy proceedings froze the payments of Enron North America that had been funding operations for other business units. Since Dec. 2, 2001, when Enron filed for bankruptcy, Enron North America has given $632 million to the parent company for disbursement to various units. Although some of the money has been returned, creditors of Enron North America have suggested the subsidiary is being “plundered” and requested a halt to the payments.

In a 17-page ruling, Judge Arthur T. Gonzalez ordered Enron to stop the payments for 30 days until a court-appointed examiner studies the transfers. Following the 30-day period, Gonzalez said, Enron will have to guarantee that the loans will be repaid. Gonzalez’s order limits disbursements by Enron to Enron units that have not filed for bankruptcy to $70 million in intercompany loans. Now, creditors and Enron are negotiating over the role of the cash system examiner.

In December, Gonzalez allowed Enron to immediately borrow up to $250 million to continue its operations. Another hearing not yet scheduled will determine Enron’s request for a credit line up to $1.5 billion. The loan and the credit line, if approved, would be repaid before all other creditor claims. Enron attorney Martin Bienenstock said Enron had not pushed to obtain the credit line because it would have been used to pump up the commodity trading arm, which has since been sold to UBS Warburg. The commodity trading unit alone generated almost 90% of Enron’s $100 billion in revenues in 2000.

Gonzalez also ruled last week that the 15-member creditors committee should be given extensive latitude in probing document destruction by Andersen and to determine whether Andersen’s law firm held any responsibility for the auditor’s actions. The committee will be allowed to depose at least eight past and current auditing executives who were terminated or placed on leave after Andersen admitted shredding Enron-related documents.

The committee also will be allowed to request documents from Davis Polk Wardwell, which was retained by Andersen on Oct. 9, 2001 to advise it on document-retention issues, according to court filings. In its motion, the creditors committee indicated the discovery request is to determine whether litigation against third parties will be beneficial to Enron creditors.

Finally, Enron last week announced a settlement agreement to void the 30-year naming rights contract with the Houston Astros Baseball Club. The agreement will allow the Astros to remove the Enron logo from the city’s plush downtown stadium. The logo has been on the stadium since it was completed two years ago.

Under the terms of the settlement, the Astros have agreed to pay the estate the sum of $2.1 million and release Enron from all obligations under the contract. As a result, the Astros have the right to immediately negotiate a naming rights agreement with a new partner. While both parties have agreed to the terms of the settlement, the bankruptcy court must review and approve the terms of the settlement before it becomes final.

When Enron Field opened in 2000, Enron agreed to pay $100 million over 30 years for the naming rights. Enron had already paid $3.6 million for its name to remain on the field through Aug. 31, but the Astros wanted it removed before the season started, reimbursing Enron for the remainder of its contract.

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