Court approves UBS bid for Enron’s trading business

By the OGJ Online Staff

HOUSTON, Jan. 21, 2002 — The federal bankruptcy judge presiding over the reorganization of Enron Corp. approved the sale of Enron’s wholesale trading business to UBS Warburg in a proposal filed with the court.

In an auction, UBS Warburg won the right to restart the business for no money upfront with the provision that it pay Enron creditors a royalty as a percentage of the profits each year for 3 years. UBS Warburg also has the right to buy out a share of Enron’s royalty each year for 3 years.

The judge approved the transaction late Friday. The transaction is also subject to approval under federal antitrust laws and by the Federal Regulatory Energy Commission.

“This is a unique opportunity for UBS Warburg as this technology-based trading business leverages the firm’s worldwide strengths of trading, market making and risk management,” UBS Warburg CEO John P. Costas said in a statement.

Costas emphasized the revived trading organization would receive will assume none of Enron’s past current or future liabilities or trading positions. Wire services reported that UBS Warburg, an investment banking unit of Swiss bank UBS AG, would drop the name
Enron when it names the trading business.

Enron unexpectedly collapsed after investors lost confidence in the former Houston energy trading giant because of incorrect earnings statements and billions of debt not revealed on the balance sheet. It filed for protection against creditors in a New York federal court Dec. 2, 2001.

The company has since become the subject of a growing number of federal and state investigations and numerous shareholder and employee lawsuits.

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