Enron Releases UBS Deal Details

Enron and UBS Warburg, have agreed to a deal for Enron's North American Gas and electric trading operation that entitles Enron to one-third of the profits generated by the new AA+ rated trading entity.

"This is an extremely positive deal for Enron and its creditors that confirms the substantial value of Enron's trading operation," said Enron CFO Jeff McMahon. "We believe this is a first step among many towards an overall plan of reorganization and planned emergence from bankruptcy."

The deal is for ten years but allows UBS Warburg a series of options to begin buying out Enron's royalty interest in the third-year of the agreement. UBS Warburg's calls may be exercised in three steps, each representing one-third of the royalty stream.

Following the exercise of the first call, the royalty payment rate will drop from 33% to 22%; following the exercise of the second call, the royalty payment rate will drop from 22% to 11%. Upon the exercise of the third call, the remaining 11% royalty would cease.


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