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New Enron CEO sees rebirth of regulated businesses

The turnaround ace charged with raising Enron Corp from the ruins said on Wednesday he plans to avoid liquidation by rebuilding the failed energy giant in its old image as a regulated natural gas pipeline operator.

Steve Cooper, named interim chief executive officer of the failed energy giant on Tuesday, said he envisions an old-school Enron built on the steady revenues of its regulated power plants and pipelines. If his vision is successful, it would bring Enron in a full circle back to its roots as a gas company.

"We will be a substantially smaller enterprise from a revenue perspective," Cooper said. "We will still be substantial in the context of the movement of natural gas and liquids through our pipelines, both domestically and around the world."

Enron will be based on hard assets with predictable revenues and cash flows, he said. Enron in recent years, particularly under the leadership of former chief executive officer Jeff Skilling, had espoused an asset-light philosophy, which eschewed bricks and mortar in favor of contractual access. The firm on December 2 filed the largest Chapter 11 bankruptcy in US history.

Cooper, who is managing principal at New York- and Los Angeles-based restructuring firm Zolfo Cooper, was brought in after creditors asked former chairman and CEO Kenneth Lay to step down. Lay did so a week ago, saying he was unable to give the reorganisation his full attention because of the numerous civil, criminal and congressional investigations into Enron's spectacular collapse.

Cooper, 55, said he believes that a restructuring is always more valuable to creditors than even the best-managed liquidation, which leave a "patina of distress," he said.

"They try to put you over a barrel, and in fact they do put you over a barrel. And the size runs from the normal wine cask up to the giant-size casks that you have for brandy," Cooper said.

Cooper declined to put a total number on Enron's assets, but he said that roughly $40 billion of debt existed. About $10 billion of that is project financing that is owed by the projects and not Enron directly.

THREE BUCKETS OF ASSETS

Enron's assets are in three "buckets," Cooper said. The first are the regulated assets, which will be preserved for their revenues and cash flow, while the second has those assets, which are targeted for sale. The last bucket, he said, includes miscellaneous claims including litigation claims.

Spokesman Vance Meyer said that the litigation assets would include any proceeds realised from Enron's $10 billion breach of contract suit against Dynegy Inc. Enron accuses its one-time Houston rival of improperly pulling out of a $9 billion rescue merger, leading Enron into bankruptcy and triggering a clause that gave Dynegy the lucrative Northern Natural Gas pipeline.

Meyer declined to comment when asked if projected litigation assets might include future claims against others involved in Enron's collapse, including former Enron auditor Andersen. Enron has not sued Andersen yet, but fired the auditor after it admitted its employees had shredded Enron-related documents.

The first step over the next few weeks, Cooper said, would be to examine all of Enron's existing businesses and determine which ones should stay and which ones should be considered candidates for sale. He stressed that his concern was "to preserve as many jobs as possible."

Though Cooper declined to put a full timetable on his restructuring plan, he said he was going to move it at "light speed." He declined also to predict at this early stage how much debt may be recovered.

"It is highly probable that creditors of one entity or entities will be treated somewhat differently than creditors of other entities," he said.

Cooper said he had no interest in worrying about the facts surrounding Enron's collapse.

"I am not going to spend my time here looking in the rearview mirror, " he said. "I frankly don't care."

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