City loses bid for PGE

Randy Leonard: ‘These people don’t give a hoot about Portland, Oregon’ Fred Miller: ‘The city is conjuring up an enemy’

By Kristina Brenneman

The Portland Tribune, Jul 11, 2003, Updated Oct 30, 2009

The city of Portland’s bid to acquire Portland General Electric has been rejected by Enron Corp., the utility’s bankrupt parent.

The city’s offer which reportedly totaled $2.2 billion and at least one other bid were deemed inadequate, according to Martin Bienenstock, Enron’s bankruptcy counsel.

Enron is thus forging ahead with its plan to disperse the 42.75 million shares of PGE’s common stock acquired when it bought the Portland utility in 1997 to Enron creditors.

Enron was expected to present the option today when it files its hefty reorganization plan in federal bankruptcy court in New York.

If the court approves the plan, a process that could take from several weeks to many months, it would make PGE a separate company owned by about 2,000 companies, banks and institutions.

“Obviously, no one has come up with an acceptable offer,” said Fred Miller, vice president of operations at PGE. “If the city or anyone made an acceptable bid, it seems to me they’d have accepted it.”

But city officials, who have devoted almost a year to acquiring the utility, said money was not the primary issue in the breakdown of negotiations with Enron. Instead, they pointed to lawsuits, government fines and other liability costs looming over customers.

Commissioner Randy Leonard said city officials tried to exclude liabilities from their deal with Enron and were rebuffed.

“I’ve become convinced as a result of those negotiations that they want PGE customers to be liable for some of their debt,” he said. “These people don’t give a hoot about Portland, Oregon. If Enron attempts to do something to hold Portland ratepayers liable, we do have the power of condemnation in our toolbox.”

There are no plans to submit a new bid for PGE, Leonard said.

On hearing the commissioner’s comments, Enron spokesman John Ambler shot back: “I certainly hope they are not violating the confidentiality agreement.”

Commissioner Erik Sten, who spearheaded the city’s pursuit of a takeover of the utility, insisted that a PGE acquisition is not dead. He said the city will carefully evaluate Enron’s reorganization plan before it decides on its next move.

Besides condemnation, the city’s options include appealing to the New York bankruptcy court or blocking the PGE stock spinoff plan through the Oregon Public Utility Commission, Sten said.

So far, the city has spent $850,000 on legal bills and other costs to pursue PGE.

“We’re not walking away from this at this point,” Sten said. “Now a bunch of banks own PGE instead of a bankrupt company. It’s possible they’ll sell it in the short term. We want to make sure they do the right thing.”

Enron could resolve the city’s liability concerns by guaranteeing in writing that ratepayers would be protected from costs, Sten said.

Another suitor

At least one other private company was seeking to buy the utility. It was rumored to be a leveraged buyout company with ties to Sierra Pacific Power Co., a Nevada utility that sought to buy PGE in 1999.

The PGE stock spinoff plan does not rule out a future sale, said Bienenstock, Enron’s bankruptcy counsel, who is a managing partner at the New York law firm of Weil, Gotshal and Manges LLP.

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