By ALAN CLENDENNING, AP Business Writer
NEW YORK (AP) - A Swiss investment bank won't pay anything to acquire Enron Corp.'s energy trading business, won't assume any of the troubled company's debts and will share a third of its profits with Enron and its creditors.
UBS Warburg, a division of Swiss banking giant UBS AG, and Enron will file for approval of the deal with the Federal Trade Commission and the Justice Department (news - web sites) within five business days, according to documents filed Tuesday in U.S. Bankruptcy Court in Manhattan.
The terms of the deal to rescue Enron Corp.'s trading operations had been kept secret Monday despite repeated pledges to make the information public. Enron officials said the delays happened because officials had to iron out the final details of a complex deal negotiated in less than a week.
The plan to revive Enron's trading business calls for UBS Warburg to purchase the unit without paying any cash up front, said Mark Palmer, an Enron spokesman.
Enron and its creditors will get 33 percent of the new business' pretax profits for at least two years, Palmer said. UBS Warburg, a division of Switzerland's UBS AG, will have the option of buying one-third of Enron's stake after three years, and buying the rest of its stake in subsequent years.
Palmer said UBS Warburg is expected to lease Enron's Houston office and employ about 800 of the division's workers.
Enron's energy trading business generated about 90 percent of the company's $101 billion in revenue in 2000. The deal does not include existing contracts Enron has to supply power, valued at between $6 billion and $7 billion.
Enron collapsed late last year amid revelations of complex partnerships used to keep billions of dollars in debt off its books and mask financial problems so it could continue to get cash and credit to run the trading business.
UBS Warburg won the bidding for the trading operation, beating out Citigroup Inc., a large Enron creditor.
The investment bank was selected after intense negotiations during a court-sponsored auction that began Thursday morning and ended more than 24 hours later.
A creditors' committee approved the deal, but other Enron creditors have questioned it, saying they want more information about how the agreement was reached and how the proceeds will be allocated.
The deal must be approved by Judge Arthur J. Gonzalez. A hearing is set for Friday.
Some two dozen Enron creditors had already filed objections to the sale before the selection was announced. Dissatisfied creditors will have 10 days to appeal Gonzalez's ruling.
Before its collapse late last year, Enron was the world's largest energy merchant and the nation's seventh largest company by revenue. Enron differed from competitors in its penchant for complex bets on everything under the sun - advertising space, broadband, paper, the weather and more than 1,000 other products.
Trading of Enron shares, which sold for $83 a year ago but have changed hands at no higher than $1 since December, were halted Friday and Monday on the New York Stock Exchange (news - web sites) for the sale announcement. UBS' U.S.-traded shares fell 74 cents to close at $49.21 Monday on the NYSE.
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