Dynegy, Enron Settle Pipeline Suit

Dynegy Inc. has settled a lawsuit with Enron Corp. subsidiaries and plans to acquire the Northern Natural Gas pipeline that was part of a dispute between the two energy companies.

Dynegy said it has agreed to a deal to buy the pipeline by the end of this month for $23 million.

The deal, however, doesn’t mean Dynegy will back down from its $10-billion breach-of-contract suit it filed against Enron in November.

Dynegy had claimed that Enron signed away its right to the prized 16,500-mile pipeline system between Texas and the Midwest in exchange for $1.5 billion invested in Enron before a proposed merger of the two competitors collapsed in late November.

Enron claimed its smaller rival illegally terminated the $8.4-billion deal and therefore had no right to the pipeline.

Enron had argued that Dynegy’s claim should be part of Enron’s massive bankruptcy case filed in federal court in New York.

Under the agreement announced Thursday night, the companies have agreed to close the deal no later than the end of the month. Enron would have the option to repurchase the pipeline by June 30.

Enron said it will continue to pursue a separate lawsuit against Dynegy that seeks $10 billion in damages after Dynegy terminated its merger agreement with Enron.

Enron also said it will amend its original complaint to add an additional damage claim that calls Dynegy’s decision to exercise its option for the pipeline “wrongful.”

Meanwhile, Sen. Carl Levin (D-Mich.), chairman of the Governmental Affairs investigations subcommittee, said earlier Thursday that his committee will within weeks subpoena documents from Enron’s board of directors, senior managers and its auditing firm.

Enron filed for bankruptcy protection Dec. 2 as its stock fell from a high of $90 a year ago to less than $1.

Thousands of Enron workers were prevented from selling Enron stock in their 401(k) retirement plan during the collapse.

Levin said he is dismayed about “what appears to be a massive shell game with multiple layers of conflict of interest” that contributed to Enron’s collapse at a time when most investors believed the company to be thriving.

On the New York Stock Exchange Thursday, Enron shares rose one cent to close at 64 cents, while Dynegy fell 83 cents to close at $25.28, before the announcement.