Enron Sets Plan to Decrease Debt

Enron Corp. on Wednesday laid out its plan to emerge from Chapter 11 bankruptcy within a year at a meeting with its largest unsecured creditors.

Chairman Kenneth L. Lay and other company executives met with its creditors as Congress opened hearings in its probe into the collapse of the once mighty energy company. Lay had declined an invitation to appear before a House panel along with the chief executive of Enron’s longtime auditor Arthur Andersen.

Chief Financial Officer Jeff McMahon told creditors about Enron’s months-old plan to raise between $4 billion to $6 billion by selling global assets including its failed Azurix Corp. water unit and its wind energy businesses.

As far back as August, Lay said the company would sell its underperforming global assets to raise money to pump back into its core businesses.

McMahon also said Enron is in advanced talks with three prospective financial bidders to sell a controlling stake in its core energy trading unit. It is considering holding an auction to bring in other bidders to boost the price the unit may command, McMahon said.

Financial backers include J.P. Morgan Chase & Co., Citicorp Inc., two of Enron’s biggest creditors, and UBS Warburg, sources said. All decisions are subject to approval by U.S. Bankruptcy Court Judge Arthur Gonzalez.

The committee, which will be led by Williams Cos. and Wells Fargo, includes a cross-section of Enron’s debtors, such as bank debt providers, bondholders and energy firms.

Enron said it now has about $15 billion in bank debt, of which only about $2 billion is secured. The company said it has bond debt of $15 billion; $13 billion in trade debt, of which $8 billion is for derivatives and $5 billion is to banks and for bonds and surety debt related to contract delivery of $2.5 billion.

Enron shares, despite bouncing off an intraday low of 52 cents, closed down 6 cents at 66 cents on the New York Stock Exchange. The shares have traded in a 52-week range of $84.88 and 25 cents.