UBS, Enron Plan Quick Moves on Deal
Swiss Bank, Enron To Seek Approval of Deal From FTC, Justice Department Within Five Business Days
By ALAN CLENDENNING
AP Business Writer
NEW YORK (AP) -- Enron Corp. (NYSE:ENE <http://finance.yahoo.com/q?s=ene&;d=t< - news <http://biz.yahoo.com/n/e/ene.html<;) will give up its crown jewel energy trading business to a Swiss investment bank in return for a third of the division's profits, and experts expect the bank will try to remake the division with a new name and management.

Documents filed in bankruptcy court Tuesday show that UBS Warburg, a division of Switzerland's largest bank, won't pay anything upfront to acquire the trading operation or assume any Enron debt.
Traders and other employees deemed crucial to the division's success will be kept on, but the documents didn't specify whether top Enron managers are among the group of workers that will be asked to stay.
Some of those employees will be awarded bonuses from an $11 million fund as an incentive to stay with the company, and Enron will supply $6 million of the cash, according to the documents filed in U.S. Bankruptcy Court in Manhattan.
A spokesman for Enron didn't immediately return a telephone message seeking comment about Enron's future or the future of the trading operation. UBS Warburg spokesman David Walker said his firm would not comment until after Judge Arthur J. Gonzalez decides whether to approve the deal. A hearing is scheduled for Friday.
Key among the changes UBS Warburg will probably make are a name change for the trading operation, a decision to show top managers the door, and the effort to retain the traders, said Mark Baxter, director of the Maguire Energy Institute at Southern Methodist University.
``I think those people will stay and they'll have a new boss,'' he said. ``As for top management, almost everybody is a liability now.''
Enron officials have said that about 800 of the division's workers will be asked to stay on at offices in Houston, and court documents indicated that UBS Warburg also wants to take over the division's offices in Portland, Ore., Toronto and Calgary, Alberta.
Enron itself will become a much smaller company because it received 90 percent of its revenue from the trading operation, and creditors are likely to demand the sale of other assets.
But the nature of the profit-sharing agreement between Enron and UBS Warburg gives Enron an opportunity to attempt to rebuild, said Charlie Sanchez, energy markets manager for Gelber & Associates in Houston.
Under terms of the deal, Enron and its creditors will initially get 33 percent of the new business' pretax profits and UBS Warburg the remainder, the documents said.
After three years, UBS Warburg can begin to buy out some of those profit-sharing rights and eventually buy the rights to all of the profits. And after five years, UBS can sell the business.
``It all seems very much like an attempt at least to keep a string of hope alive that UBS won't in fact won't be interested in purchasing them and they will accumulate enough proceeds to revive themselves, that they can become a rebranded phoenix,'' Sanchez said.
And in a statement, a top Enron official made it clear that the company hopes to eventually emerge from bankruptcy protection as a viable business concern.
``This is an extremely positive deal for Enron and its creditors that confirms the substantial value of Enron's trading operation,'' said Enron chief financial officer Jeff McMahon. ``We believe this is a first step among many towards an overall plan of reorganization and planned emergence from bankruptcy.''
UBS Warburg and Enron will file for approval of the deal with the Federal Trade Commission and the Justice Department within five business days.
Hours after the documents explaining terms of the deal were filed in court, the New York Stock Exchange delisted Enron stock, which sold for $83 a year ago but have changed hands at no higher than $1 since December. In a statement, the exchange said Enron's ``securities are no longer suitable for trading on the NYSE.''
The move was ``due to the expected protracted nature of the company's bankruptcy process and the uncertainty at this time as to the timing and outcome of this process as well as the ultimate effect on the company's common shareholders,'' the NYSE said.
Enron collapsed late last year amid revelations of complex partnerships used to keep billions of dollars in debt off its books and mask financial problems so it could continue to get cash and credit to run the trading business.
A creditors' committee supports the deal with UBS Warburg, but other Enron creditors have questioned it, saying they want more information about how the agreement was reached and how the proceeds will be allocated.
Some two dozen Enron creditors had already filed objections to the sale before the selection was announced. Dissatisfied creditors will have 10 days to appeal Gonzalez's ruling.
The deal does not include existing contracts Enron has to supply power, valued at between $6 billion and $7 billion.
Before its collapse late last year, Enron was the world's largest energy merchant and the nation's seventh largest company by revenue. Enron differed from competitors in its penchant for complex bets on everything under the sun -- advertising space, broadband, paper, the weather and more than 1,000 other products.
U.S.-traded shares of UBS AG fell 31 cents to close at $48.90 Tuesday on the NYSE.