28 March, 2002 – A decision on Wednesday by the New York judge presiding over the Enron Bankruptcy case threatens to put in jeopardy the $130m acquisition of NewPower Holdings by UK multi-utility Centrica.
Judge Arthur Gonzalez refused to block claims against NewPower for any liabilities it may face because it was part of the collapsed energy trader’s consolidated tax and benefits group for a short time. Enron has a 44 per cent stake in NewPower.
Getting the order was necessary for Centrica to complete the tender offer for NewPower shares, the firms said. “We are looking carefully at the judgement and considering our options,” said Centrica.
The UK group announced the deal in February but said at the time it was subject to bankruptcy court approval.
In filings to the court, Enron had argued that if the sale fell through “NewPower’s financial condition will continue to deteriorate”, affecting the value of the stake and the amount Enron creditors will recover from bankruptcy.
“I understand that if the purchaser does not care to go forward, that may very well cost the [Enron] estate,” Mr Gonzalez said on Wednesday. “But I don’t believe I have the authority to give the estate this benefit.”
Enron was also tied to NewPower through deals with the energy trader’s off-balance-sheet partnerships, which are now the subject of a lawsuit filed by other NewPower shareholders.
NewPower supplies about 650 000 mainly residential customers in deregulated US markets. In December, Centrica paid £96.4m for Enron Direct, a UK electricity and gas supplier.