Sounds like it's not a done deal yet.

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Subject:	(Less Than Zero) UBS Deal Shows What Enron Is Worth

UBS Deal Shows What Enron Is Worth
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By Christopher Edmonds 
Special to TheStreet.com
01/14/2002 02:45 PM EST
As it turns out, analysts had a hard time gauging what price UBS  would have
to pay for embattled Enron's  trading business, because there isn't one. 
Not only is UBS not paying Enron anything up front for the trading business,
Enron will also cede all ownership in the once-dominant trading business.
And to further show the deterioration in Enron's current business, The Wall
Street Journal reports that UBS will not assume any of Enron's current
trading positions. 
According to sources, when Enron releases the details of its sale today, it
will say it is giving its trading business to UBS and hoping for a return in
the future. In fact, UBS will get the trading platform and some employees --
taking a payroll liability from Enron -- and give Enron nothing in return. 
That UBS is providing little, if anything, upfront and is making no
guarantees regarding future profits speaks volumes about how quickly any
residual value in Enron's business has eroded and about what shareholders
can expect from the ultimate outcome. "This has to be very disappointing to
Enron's creditors and sends a strong message to Enron shareholders," says
Jeff Dietert, power analyst at Simmons & Co. and a member of the TSC Energy
Roundtable. 
Though details weren't out as of this writing, sources in a creditors
meeting held this morning in New York confirm that the deal calls for UBS to
provide Enron with a percentage -- said to be one-third -- of the profits
from the energy-trading business to Enron for the next 10 years. 
UBS will have the option to reduce or eliminate Enron's profit-sharing
position by paying a multiple of Enron's share of the profits during the
first five years of the agreement. If UBS elects to continue payments to
Enron over the entire 10-year term, profit-sharing will increase in each of
the last five years of the agreement.
Power Failure
While the Enron spin machine will put its best face on the transaction,
there is little positive in the deal for the bankrupt company. Enron once
hoped the trading unit -- which at one point accounted for more than 90% of
its revenue -- would fetch nearly $1 billion in an auction, with Enron
retaining an equity stake in the revival. 
Instead, the trading business is penniless, leaving Enron looking more and
more like a corporate pauper. 
As suggested Friday, the uncertainty of a resurrection not only caused a
dearth of bidders -- only UBS and Citigroup were serious in their pursuits
-- it also tarnished the potential value of Enron's gem. 
"It's like they are starting over," says Dietert. "We are talking about a
business that will be a small fraction of its former self and will take a
lot of time to rebuild." 
And with online competitors like the Intercontinental Exchange and Dynegy's
:NYSE -Dynegy Direct, it isn't clear how quickly, if at all, UBS can rebuild
the vitality of the Enron platform. 
However, it isn't costing UBS much to try. And with Enron holding no ongoing
ownership interest, UBS may have a chance to leave Enron's tarnished past
behind. "If Enron had any ownership, it would have been very difficult to
rebuild the business," says an official with a competing energy trader and
Enron creditor who wished to remain unnamed. "Sharing the profits is still a
stigma, but not nearly what it could have been. It will still be a tough
comeback." 
And creditors aren't likely to make it any easier. While still reviewing the
details, the power-trading official said creditors have concerns. "We need
to know how they define profit, how UBS plans to rebuild and market the
business and what happens to the profits once paid to Enron," he said.
"Creditors are owed billions, and there has to be some assurance profits
will go toward making creditors whole." 
The deal has to be approved by Judge Arthur J. Gonzales of the U.S.
Bankruptcy Court in Manhattan. He has scheduled a hearing on the deal for
Friday, and creditors are expected to raise a myriad of objections. 
Regardless of approval, analysts remain skeptical about the ability to
re-energize the once-dominant player in the energy-trading business. "There
is only about a 1%, 2%, maybe 3% probability that the old Enron business
re-emerges as a major player among energy traders," says Jay Dobson,
managing director of electric utility research at Deutsche Bank Alex. Brown.

This auction outcome has to leave Enron's creditors -- and especially
shareholders -- feeling powerless.