Enron Corp.'s proposed sale of its core energy-trading business to UBS Warburg, raises the question: Without its crown jewel, what is Enron?
Until only a few months ago, the Houston-based company was the world's largest energy trader and was pushing its vision of deregulated markets into new states and new commodities.
But now, under bankruptcy court protection, Enron is frantically unloading assets, including its once-dominant trading operation, its Oregon utility, its best natural gas pipeline and a variety of international assets.
If all of these deals are completed, Enron could end up much as it began, a smallish operator of scattered pipelines.
The heady days when Enron tried to dominate the energy world and the halls of power are over, and its financial meltdown will haunt for years whatever company survives in the form of lawsuits and investigations.
"Without these assets, Enron is not much," said utilities analyst Andre Meade of Commerzbank Securities in New York.
"It's going to be a very small entity. My guess is Enron just gets liquidated and never emerges from bankruptcy ... or they might get acquired," Meade said.
Enron, recently 21,000 employees strong, has fired 6,200 workers and will jettison even more in the months ahead through asset sales and more expected layoffs. A company spokeswoman Monday could not say how big the resulting company would be and how many people it would employ.
Enron spokeswoman Karen Denne acknowledged the shrinking of Enron but said that "the pipelines are a self-sustaining business." Enron began in 1985 as a traditional natural gas pipeline operator, so "we'll be coming full circle," she said.
The latest unloading of assets is the auction of Enron's trading business to UBS Warburg, the New York-based investment banking arm of Swiss financial services firm UBS. UBS won a bidding war Friday for Enron's trading operation, which once handled an estimated 25% of all the wholesale energy trading in the nation.
Enron and UBS were working to complete details of the agreement Monday and delayed filing documents detailing the agreement with the U.S. Bankruptcy Court for the Southern District of New York.
Enron will sell the entire operation to UBS Warburg, rather than the 51% ownership stake it previously was said to be negotiating, according to published reports. UBS Warburg would pay no cash up front for the business but would give Enron 33% of any pretax profit generated by the trading business for at least two years.
