Accountant PriceWaterhouseCoopers Thursday said it has been appointed administrator of Enron Corp.’s London-based European operation, after it sought protection from creditors under UK laws.
The appointment follows the credit-downgrading of Enron Wednesday and the impact that has had on its ability to continue to trade, PWC said in a statement. US credit-rating agencies downgraded Enron bonds to below investment grade triggering a steep slide in its stock to below $1. In addition, Dynegy Inc.’s termination of a proposed $9 billion stock acquisition of the much larger Enron further rattled the market.
PWC said Enron’s UK $1.3 billion 1,875 Mw Teesside power station and the utilities and service businesses at the Wilton chemical complex were not included in the administration order.
Tony Lomas, one of four PWC administrators appointed to Enron, said “there is already very serious interest in Enron’s metal business and negotiations are expected to lead to a successful deal in the near term.”
But he noted Enron group built an “extraordinarily complex” network of integrated businesses that will take administrators some time to work through. He said PWC’s primary focus will be on the large physical assets and trading position of the group.
“Inevitably, job losses are expected,” he said. In the UK, the administrator is appointed by a court at the directors’ request. Companies are allowed to continue operating under control of the administrator during a reorganization.
With Enron’s credit rating downgraded to junk status, the New York Mercantile Exchange Thursday restricted all trades with the Houston company without written authorization. Enron stock was trading at 37�/share in midafternoon trading down 24�/share on volume of 165.8 million shares.
Separately, Enron Corp. said the company is evaluating whether previously declared dividends will be paid on the corporation�s common stock, the Cumulative Second Preferred Convertible Stock, the Enron Capital LLC 8% Cumulative Guaranteed Monthly Income Preferred Shares, and the Enron Capital Resources LP 9% Cumulative Preferred Securities, Series A.
It said the action is consistent with Wednesday’s notice it was suspending all payments except those “necessary to maintain core operations.”