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Enron Europe creditors face $900 mn trading loss

European trading partners of stricken US energy group Enron face losses of about $900 million, an industry source close to the company told Reuters on Tuesday.

In the first firm indication of trading losses resulting from Enron's record-breaking bankruptcy, the industry source said London-based Enron Capital Trade Resources Ltd had outstanding liabilities of about a billion dollars.

Enron Europe's administrator, PricewaterhouseCoopers, was expected to recoup only about $100 million of that exposure from the settlement of ECTRL's outstanding contracts, the source said.

PWC declined to comment in detail but a company official, who requested anonymity, said creditors to ECTRL faced a "substantial shortfall" based on current estimates.

Houston-based Enron, once the world's largest energy trader, filed for bankruptcy nearly two months ago in the largest collapse in corporate history.

Enron Europe, based in London, was placed into PWC's administration in late November and 1,100 staff were laid off.

Two weeks before the company collapsed, a team from PWC held talks with Enron Europe's management on concerns about the US parent company's ability to support its credit in gas and power markets, the PWC official said.

ANALYSTS' FEARS BORNE OUT

The $900 million of losses match previous industry analysts estimates of the feared exposure for Enron's trading partners in Europe.

"It would be very difficult for all the European utilities to have got out and reduced their exposure to Enron," said Ben Tait, director of London-based energy consultancy Prospex.

"Enron was a gigantic business with 20-25 per cent of the market."

Enron traded power and gas in Europe with some 300 counterparties including many of the continent's utilities, oil majors, trading houses and banks that traded in energy.

At the time of its collapse, the company was sitting on around 250,000 open contracts in the forward markets, the official said.

One analyst said Enron had entered complex structured trades with banks and this may have inflated the losses.

Few companies so far have commented publicly on their exposure to Enron in Europe.

In November, Centrica Britain's largest gas supplier, said it could potentially lose £30 million on forward contracts with Enron.

German utility RWE said it could face losses of between €10 and €11 million. French energy giant TotalFinaElf said its exposure to Enron was about $25 million.

PWC said it had managed to settle with counterparties about 75 per cent of in-the-money, profitable, contracts held by ECTRL.

Part of ECTRL's position in the UK gas market was still being traded from the company's London headquarters, which has retained a skeleton staff of about 150, the PWC official said.

Separately, PWC partner Neville Kahn told Reuters that the auditor planned to hold a meeting of around 100 Enron Europe creditors in London on February 11 when losses are likely to be outlined. PWC would be writing to creditors imminently, another PWC official said.

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