Enron Corp.’s Official Unsecured Creditors’ Committee has filed a motion requesting the bankruptcy court reject a $2.2 billion offer by NuCoastal LLC to acquire its CrossCountry Energy business unit. In the proposed “stalking horse” transaction, an unnamed company has submitted a counteroffer for $55 million more, according to the motion.

In May, NuCoastal offered $1.8 billion for CrossCountry, along with assuming $430 million in subsidiary Transwestern Pipeline Co.’s outstanding debt. The sale to NuCoastal was approved in May by Enron’s board of directors and supported by the Official Unsecured Creditors’ Committee (see Daily GPI, May 24). The approval included a $25 million break-up fee to be paid to NuCoastal under certain circumstances. However, the offer has to be approved by the U.S. Bankruptcy Court for the Southern District of New York, which has been overseeing an “overbid” process to offer other potential buyers an opportunity to submit higher bids.

The four-page motion, filed last Friday, said, “since the execution of the NuCoastal agreement by the sellers, the committee has received an offer from an investment grade company (accompanied by appropriate financing commitments) that offers approximately $55 million more cash, is not conditioned on the payment of a break-up fee, and is otherwise on higher and/or better terms than the NuCoastal agreement.”

The creditors’ committee said that even though it “truly appreciates the efforts made by NuCoastal…at this time the committee does not believe that the NuCoastal agreement reflects the highest and/or best offer for the sellers’ interests in CrossCountry…” The court is scheduled to hear a motion on the NuCoastal break-up fee on Thursday (June 24).

Enron formed CrossCountry in June 2003 as a holding company for the company’s interests in Transwestern, Citrus Corp. and Northern Plains Natural Gas Co. (see Daily GPI, June 26, 2003). The three businesses have approximately 8.5 Bcf/d of capacity and 9,900 miles of pipeline.

CrossCountry is headquartered in Houston and has approximately 1,100 employees. Transwestern is a wholly owned 2,600-mile pipeline system extending from West Texas to the California border. Citrus, which is held jointly by Enron and Southern Natural Gas, an El Paso affiliate, owns the 5,000-mile Florida Gas Transmission system that runs from South Texas to South Florida.

The wholly owned Northern Plains is one of the general partners of Northern Border Partners LP, which owns interests in Northern Border Pipeline Co. Midwestern Gas Transmission Co., Viking Gas Transmission Co. and Guardian Pipeline LLC.

NuCoastal, which had expected to close the CrossCountry transaction by the fourth quarter, was formed in 2000 by Oscar Wyatt Jr., former chairman and CEO of Coastal Corp. and an El Paso Corp. board member. Its other owners include affiliates of Kelso & Co. and ArcLight Capital Partners LLC Citigroup.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.