NGI Article on Auction

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Breaking News : posted Jan 9, 2:28 PM
Dynegy Not Opposed to Enron Auction; Senate Subcommittee to Issue 51 Subpoenas
Nearly 20 of bankrupt Enron Corp.'s creditors have apparently filed motions to delay the scheduled auction of the company's trading assets this week, but one-time merger partner and creditor Dynegy Corp. will not be one of them, a spokesman said Wednesday. However, whether the auction proceeds as planned, Enron is facing more obstacles on the legal front with 51 subpoenas requesting documents expected to be issued Friday by the Senate's Permanent Subcommittee on Investigations.
The U.S. Bankruptcy Court for the Southern District of New York has been asked by the creditors to delay approving any offer for Enron's trading business, once the most profitable unit of the company. The motion to delay was requested to allow the creditors time to look at the assets up for sale. Included in the auction are assets from its EnronOnline operation, which Enron would like to use in a joint venture with a cash-rich company.
Under Enron's proposal, a 51% joint venture partner would form a new company with Enron to be called New Energy Trading Co., or NETCO. Enron would contribute information technology and back office systems among other things, in exchange for a 49% stake. As of late Monday, UBS AG, Citigroup Inc. and BP had made bids for some of the assets.
Among those opposing the auction, now set for Thursday with a decision on the winning bids as early as Friday, is the Royal Bank of Scotland Group plc, which said, "Absent a disclosure of the intended uses for the proceeds of this sale, the creditors are unable to gauge that the benefits are adequate, appropriate and directed to the proper beneficiaries." Kansas City, MO-based Aquila also is opposed to the auction because of concerns about how the proceeds would be used. Aquila wants the auction's proceeds put in escrow until it is determined which units of Enron receive the money.
However, Dynegy does not plan to oppose the auction, said company spokesman Steve Stengel, who also expressed surprise that any company would want to delay it. "Dynegy has not taken any action to delay the sale of Enron's trading business," he told NGI. Stengel also confirmed that the scheduled sale of Northern Natural Gas Co. from Enron to Dynegy is still set to close by the end of January.
Still to come is word on who and what documents are being subpoenaed by the Senate's Permanent Subcommittee on Investigations. The subpoenas will be served on Enron, its accounting firm Andersen and 49 individual officers, employees and members of the board of directors. The subcommittee is one of five congressional panels investigating the fallen giant along with the U.S. Securities and Exchange Commission, the Department of Labor and the Department of Justice.
"The subcommittee is looking into the role of the officers and board members, the role of the auditors, and the role of special-purpose entities," a subcommittee spokesman told Reuters. These are some of the same types of things being investigated by the House of Representatives Financial Services Committee, the Senate Commerce Committee and the House and Senate Energy committees. The spokesman said the subpoenas would allow Enron and the others "several weeks" to respond.