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Enron's Comeback Plan

Aired July 11, 2003 - 15:21   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


JUDY WOODRUFF, CNN ANCHOR: The once high-flying energy giant Enron has filed its plan to reemerge from bankruptcy. And if the proposal is approved, a lot of people will have little to show for their once-promising investments.
With me now from New York to explain the Enron comeback plan is Chris Huntington of CNN Financial News.

Chris, first of all, what about all these investors? Are they going to get their money back?

CHRIS HUNTINGTON, CNN CORRESPONDENT: Judy, the fact is that some investors will get nothing. In fact, the stockholders, the equity investors, will get absolutely nothing. Some of the debt-holders will get a fair good amount of their investment back. But the majority of debtors in the Enron case are going to get something between 14 to 18 cents on the dollar for their investment.

And that is less than half, really, than the average kind of return we've seen in bankruptcy cases over the last couple of decades. Ordinarily, in these cases, you can expect to see maybe 40 cents on the dollar. Here's basically the way it shakes out. About 80 percent of the creditors will get between those figures there, 14.4 and 18.3 cents on the dollar, to be precise. The payout, so says Enron, will be about 70 percent in cash, 30 percent in the stock of the companies that will emerge from the ashes, if you will.

Now, the final payout amount will be hopefully decided by mid- August, with maybe payouts beginning some time next fall. Here are the companies that will emerge from bankruptcy, at least as planned right now. A company called CrossCountry Energy will comprise the North American pipeline assets of Enron. This really takes the company back to its bare beginnings. Enron started as a simple gas pipeline company. It's really returning to that.

A company called Prisma is being created to house the South American assets, also pipelines and energy utilities down there. And, finally, Portland General Electric, which is an up-and-running company and has been part of the Enron family for a while, that is a going concern. There is some discussion, though, about selling that off and turning the proceeds, the cash proceeds, over to the creditors. So there is still a lot to be determined.

As far as whether or not this proposal, this plan -- and keep in mind that this has just been presented to the bankruptcy court as a plan. Whether this will be fully approved, that still needs to be decided, although the bulk of the money has been agreed to by the big, big creditors. There are two assets -- two facets of creditors that have to approve. Basically, it's the big-money holders. And those people have pretty much already signed off.

And then 50 percent of the number of creditors have to agree as well. So they think -- the folks at Enron think that they'll get everybody to approve of this, but it could take until the fall.

WOODRUFF: Chris, do they have any recourse, the people who are getting so much less than they deserve, in effect?

HUNTINGTON: Well, they've had recourse in this very lengthy bankruptcy process. Of course, in the bankruptcy procedures, the creditors, essentially, have a seat at the table. The major creditors in this case, as I indicated, have agreed to this. So they've pretty much said, well, this plan is about as good as we're going to get.

There are some creditors out there that could raise a hue and cry. And, of course, that would slow down the process. They could, of course, appeal to the bankruptcy judge and say: We don't like this. This isn't fair.

That certainly is what the bankruptcy proceeding is all about. So this has a way to work itself out. But, as I said, the majority of the big-money creditors have pretty much signed off on this and have resigned themselves to taking what is, in essence, a pretty low payout for an investment gone bad.

WOODRUFF: And, Chris, what about the -- I guess the people everybody's interested in? And that is the former corporate leadership of Enron, Ken Lay, Jeffrey Skilling, and others.

HUNTINGTON: Sure.

WOODRUFF: What is their legal situation right now?

HUNTINGTON: Well, as our colleague Lou Dobbs likes to point out, the Enron scoreboard is running right now at about 16 charged, with really only a couple of guilty pleas. Right now, though, we still do not have any formal charges against Kenneth Lay, the former chairman, and Jeff Skilling, the former CEO. That's Ken Lay right there, of course.

The biggest fish, if you will, caught so far, or at least charged by federal prosecutors, is Andrew Fastow. That's Jeff Skilling, the former CEO. Andrew Fastow, shown there, has now been charged with close to 100 counts of fraud and other misdeeds. He certainly is the first in line to go to trial. But his case is inordinately complicated, just because the structured finance deals that were at the heart of Enron's demise are so difficult to unravel.

The paperwork in these court proceedings is massive. So it's a slow-moving case. Of course, the federal prosecutors won't tip their hand as to whether or not they are going to indict or plan to indict Ken Lay and Jeff Skilling. But there is, shall we say, some optimism in the ranks of the prosecutors that we're able to talk to that that is still in the offing. WOODRUFF: All right, Chris Huntington, it's a story that we're all still fascinated by. Thanks very much.

HUNTINGTON: OK.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com






Aired July 11, 2003 - 15:21   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JUDY WOODRUFF, CNN ANCHOR: The once high-flying energy giant Enron has filed its plan to reemerge from bankruptcy. And if the proposal is approved, a lot of people will have little to show for their once-promising investments.
With me now from New York to explain the Enron comeback plan is Chris Huntington of CNN Financial News.

Chris, first of all, what about all these investors? Are they going to get their money back?

CHRIS HUNTINGTON, CNN CORRESPONDENT: Judy, the fact is that some investors will get nothing. In fact, the stockholders, the equity investors, will get absolutely nothing. Some of the debt-holders will get a fair good amount of their investment back. But the majority of debtors in the Enron case are going to get something between 14 to 18 cents on the dollar for their investment.

And that is less than half, really, than the average kind of return we've seen in bankruptcy cases over the last couple of decades. Ordinarily, in these cases, you can expect to see maybe 40 cents on the dollar. Here's basically the way it shakes out. About 80 percent of the creditors will get between those figures there, 14.4 and 18.3 cents on the dollar, to be precise. The payout, so says Enron, will be about 70 percent in cash, 30 percent in the stock of the companies that will emerge from the ashes, if you will.

Now, the final payout amount will be hopefully decided by mid- August, with maybe payouts beginning some time next fall. Here are the companies that will emerge from bankruptcy, at least as planned right now. A company called CrossCountry Energy will comprise the North American pipeline assets of Enron. This really takes the company back to its bare beginnings. Enron started as a simple gas pipeline company. It's really returning to that.

A company called Prisma is being created to house the South American assets, also pipelines and energy utilities down there. And, finally, Portland General Electric, which is an up-and-running company and has been part of the Enron family for a while, that is a going concern. There is some discussion, though, about selling that off and turning the proceeds, the cash proceeds, over to the creditors. So there is still a lot to be determined.

As far as whether or not this proposal, this plan -- and keep in mind that this has just been presented to the bankruptcy court as a plan. Whether this will be fully approved, that still needs to be decided, although the bulk of the money has been agreed to by the big, big creditors. There are two assets -- two facets of creditors that have to approve. Basically, it's the big-money holders. And those people have pretty much already signed off.

And then 50 percent of the number of creditors have to agree as well. So they think -- the folks at Enron think that they'll get everybody to approve of this, but it could take until the fall.

WOODRUFF: Chris, do they have any recourse, the people who are getting so much less than they deserve, in effect?

HUNTINGTON: Well, they've had recourse in this very lengthy bankruptcy process. Of course, in the bankruptcy procedures, the creditors, essentially, have a seat at the table. The major creditors in this case, as I indicated, have agreed to this. So they've pretty much said, well, this plan is about as good as we're going to get.

There are some creditors out there that could raise a hue and cry. And, of course, that would slow down the process. They could, of course, appeal to the bankruptcy judge and say: We don't like this. This isn't fair.

That certainly is what the bankruptcy proceeding is all about. So this has a way to work itself out. But, as I said, the majority of the big-money creditors have pretty much signed off on this and have resigned themselves to taking what is, in essence, a pretty low payout for an investment gone bad.

WOODRUFF: And, Chris, what about the -- I guess the people everybody's interested in? And that is the former corporate leadership of Enron, Ken Lay, Jeffrey Skilling, and others.

HUNTINGTON: Sure.

WOODRUFF: What is their legal situation right now?

HUNTINGTON: Well, as our colleague Lou Dobbs likes to point out, the Enron scoreboard is running right now at about 16 charged, with really only a couple of guilty pleas. Right now, though, we still do not have any formal charges against Kenneth Lay, the former chairman, and Jeff Skilling, the former CEO. That's Ken Lay right there, of course.

The biggest fish, if you will, caught so far, or at least charged by federal prosecutors, is Andrew Fastow. That's Jeff Skilling, the former CEO. Andrew Fastow, shown there, has now been charged with close to 100 counts of fraud and other misdeeds. He certainly is the first in line to go to trial. But his case is inordinately complicated, just because the structured finance deals that were at the heart of Enron's demise are so difficult to unravel.

The paperwork in these court proceedings is massive. So it's a slow-moving case. Of course, the federal prosecutors won't tip their hand as to whether or not they are going to indict or plan to indict Ken Lay and Jeff Skilling. But there is, shall we say, some optimism in the ranks of the prosecutors that we're able to talk to that that is still in the offing. WOODRUFF: All right, Chris Huntington, it's a story that we're all still fascinated by. Thanks very much.

HUNTINGTON: OK.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com