New CEO vows to revive Enron despite skepticism
Enron Corp named a restructuring specialist as interim chief executive on Tuesday who vowed to revive the fallen energy trading giant even though analysts say it is likely to be liquidated.
Stephen Cooper, 55, managing principal of New York-based restructuring firm Zolfo Cooper, was tapped to replace embattled Enron chairman and chief executive Kenneth Lay, who resigned last week under pressure from the creditors' committee of bankrupt Enron.
Cooper expressed confidence that Enron could be restructured successfully and emerge from bankruptcy.
"The physical assets look to me to be of an enormous advantage here," Cooper said in a voice mail to employees, according to a transcript obtained by Reuters. "The regulated assets -- the pipelines and generating plants -- provide reliable, steady cash flow and returns. And they provide a very sound, fundamental base to restructure around."
Analysts said since Enron sold its energy trading business to Swiss bank UBS Warburg, chances are slim the company can earn enough to dig out from at least $16.8 billion in debt.
Thousands of workers have lost their jobs since Enron filed the largest bankruptcy in U.S. history on December 2, and many former and current employees have seen the value of Enron shares held in retirement plans become virtually worthless.
The stock, which now trades over the counter after being delisted by the New York Stock Exchange earlier this month, fell to a record low earlier on Tuesday to 9 cents, compared with more than $90 in August 2000.
Attorneys for a group of former Enron employees said on Tuesday they were asking the US trustee responsible for administering the Enron bankruptcy to appoint an official committee of severed Enron employees.
"The severed employees are at the forefront of a battle likely to rage in the courts and in Congress for a long time," attorney Scott Baena said in a statement. "The severed employees are entitled to full and complete representation in every forum where their fate is being decided."
The group last week filed a class action lawsuit seeking damages from some former Enron top executives and others over their losses in the company's retirement plan.
ENERGY MARKETS UNSCATHED
Despite Enron's stunning fall from America's seventh-largest company to bankruptcy just weeks after saying it overstated earnings dating back to 1997 by almost $600 million, the chairmen of both the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission told a Senate hearing on Tuesday that no new enforcement powers were needed to police energy markets.
"It is not clear that giving the (FERC) commission additional authority within its current scope would prevent further Enron-like problems," FERC chairman Pat Wood told the committee.
Lawmakers said that US energy markets were unscathed by the collapse of Enron, which once epitomised the new breed of energy companies as it put together an online trading empire to capitalise on deregulated power markets.
"In the end it's my impression Enron's demise did not have a major impact on short-term energy markets," said Democrat Jeff Bingham of New Mexico, chairman of the Senate Energy Committee.
The top Republican on the Senate energy panel, Frank Murkowski of Alaska, came to a similar conclusion.
"Enron's collapse appears to be a story of lies, of deceit, shoddy accounting, corporate misconduct and cover-up," Murkowski said. "But we can not lose sight of the fact that this is a business failure, not an energy market failure."
Supporters of deregulation fear Enron's bankruptcy will set back legislation to restructure the nation's $220 billion wholesale electricity market. Such legislation would allow utilities and energy companies to tap a larger market for power, while offering US consumers greater choice and possibly lower electricity bills.
BUSH NOT TO MENTION ENRON
As President George W Bush prepared to give his State of the Union Address on Tuesday evening, the White House said Bush would not mention Enron by name in his address, but would tackle the broader issue of protecting workers and shareholders by requiring greater financial disclosure by companies.
Bush, whose political campaigns had received some $623,000 in contributions from Enron since 1993, will also not mention his refusal to hand over to congressional investigators records of involvement by Enron and other companies in developing the White House's energy policy, officials said.
US House of Representative Speaker Dennis Hastert backed Bush's decision to not hand over the records, saying they were "proprietary."
But House Democratic leader Richard Gephardt of Missouri, who met with Bush and Hastert at the White House, challenged the assertion that "private rights of advocates is more important than public interest."
Lawmakers on Tuesday also sought additional information from accounting firm Andersen, which had been Enron's longtime auditor before being fired this month. The US House Energy and Commerce Committee, one of at least eight congressional committees investigating Enron and Andersen, sought information from Andersen about consulting work it did for Enron, as well as details about who was involved in shredding documents related to Andersen's audit of the energy firm's books.
In Houston, meanwhile, another Enron top executive resigned, with Lawrence Whalley stepping down as president and chief operating office to accept a position at UBS Warburg.
Whalley in late October and early November had talked to Treasury Undersecretary for Domestic Finance Peter Fisher, who believed the company was asking for government intervention with a credit ratings agency.