Citigroup, UBS Interested in Enron
NEW YORK (AP) _ Citigroup Inc. and UBS AG are reportedly preparing rival bids to purchase the sputtering trading operations of Enron Corp., the Houston-based energy giant that filed for bankruptcy protection earlier this month.
The two investment banks are expected to make separate proposals as early as this week to a New York bankruptcy court, the Wall Street Journal and the Financial Times reported on Monday, citing unidientified sources.
Enron’s trading business, which accounted for roughly 90 percent of earnings in the third quarter, has deteriorated in recent weeks because of uncertainty about Enron’s finances.
JP Morgan Chase and Co., which like Citigroup is a large Enron creditor, is expected to submit its own offer at a later stage, the newspapers said. The potential size of the bids was not reported.
Shares of Enron climbed 8 cents, or 11 percent, to 83 cents in Monday afternoon trading on the New York Stock Exchange.
Negotiators for Enron, Citigroup and UBS met over the weekend to finalize the details of the proposals, although sources warned that either proposal may still be withdrawn, the newspapers said.
According to the reports, Enron would retain a large minority stake under the terms of the proposals being prepared.
Representatives from Citigroup and UBS said their companies would not comment on the matter. Enron did not immediately return calls seeking comment.
Just months ago Enron was the country’s seventh largest company in terms of revenue. But investors and traders evaporated after the company in October revealed questionable partnerships that helped keep billions of dollars in debt off its books and Enron acknowledged it overstated profits for four years.
The swift collapse has launched investigations by the Securities and Exchange Commission, Labor Department, Justice Department and a congressional committee.