Unknown suitor makes overture for Enron

By T. K. MALOY, UPI Deputy Business Editor  |  Dec. 4, 2001 at 2:47 PM
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WASHINGTON, Dec. 4 (UPI) -- In the continuing saga of bankrupt energy-trading firm Enron Corp, an unknown Illinois firm has been floating a tentative takeover bid worth an estimated $700 million for the crumbling Texas giant.

Based in Oak Brook, Ill., Standard Power & Light, described as a private power plant firm, has said that it was assembling a management team to review a possible takeover on Enron after rival Texan firm Dynegy Inc. withdrew from its earlier $8.4 billion merger agreement.

According to a filing with the U.S. Securities and Exchange Commission, Richard Ryan, president and chief executive of Standard Power & Light, said his company would buy "at least the majority shares of Enron, selling off all divisions of the business, except for the energy-related companies and putting this company back on its feet."

Ryan said Standard was in the process of assembling a management team over the next several weeks "at which time we hope to begin making filings to begin and complete the tender offer," according to the SEC filing.

At question, however, is who is Standard Power & Light, and does this company have the finances to purchase a diminished Enron. Among other things, it would seem that even Illinois officials -- such as state energy and commerce regulators -- haven't even heard of Standard Power, according to a state spokesman.

"No one has ever heard of Standard Power & Light," David Farrell, spokesman for the Illinois Commerce Commission, told the Chicago Sun-Times on Tuesday.

Attempts by United Press International to contact attorney Michael Moody of the firm of O'Rourke, McCLoskey and Moody, which represents Standard Power, were not returned.

Enron filed for Chapter 11 bankruptcy protection Sunday following a six-week downfall that ended shortly after Dynegy Inc. withdrew from its merger agreement, citing bad faith on the part of Enron.

Dynegy cited "Enron's breaches of representations, warranties, covenants and agreements in the merger agreement, including the material adverse change provision" all as factors in the company's decision to pull out of the deal.

Enron said Monday that, in connection with its Chapter 11 filings, it has arranged up to $1.5 billion of financing. Arranged by Citigroup and JP Morgan Chase, the financing will be syndicated and is secured by substantially all of the company's assets.

The failing Enron is suing its previous white knight Dynegy for "wrongfully" pulling out from the potential acquisition, which Dynegy chairman Chuck Watson described as "frivolous and disingenuous".

Meanwhile, Dynegy is also suing Enron in order to safeguard a separate deal to purchase Enron's still profitable 16,500-mile Northern Natural Gas Pipeline.

"The reality is that Enron invited Dynegy to participate in merger negotiations," Watson said. "Dynegy entered those negotiations in good faith and provided $1.5 billion in cash to Enron. Despite assurances that Enron's liquidity situation had stabilized, the cash was gone in less than three weeks, and Enron has had difficulty providing an accounting as to where it went."

Shares of Enron were higher Tuesday, trading at around 85 cents a share, but well off the company's onetime high of over $80 a share. The company faces possible delisting from the market for trading at below $1 a share.

The company is carrying $17 billion in debt.

Standard Power & Light said that it would purchase a controlling stake in Enron for less than $1 per share, according to its filing with the SEC.

(UPI reporters Marcella Krieter and Chris Sieroty contributed to this report.)

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