Enron Corp's once-envied trading operation officially got a new owner and a new name Friday.
UBS Warburg's deal to resurrect Enron's trading business under the Swiss investment bank's control was completed on Friday. The new business, UBS Warburg Energy, will begin trading this month.
PHOTO: AFP
"Combining the leading energy trading platform and more than 600 talented staff with UBS Warburg's risk management skills and AA+ credit rating will make UBS Warburg Energy a formidable competitor," said John P. Costas, chief executive officer of UBS Warburg.
PHOTO: BLOOMBERG
Lawrence "Greg" Whalley, who resigned as Enron's president and chief operating officer last week, will be managing director and head of the new operation.
About 650 traders and support staff are preparing to get back into the trading groove for their new employer, said UBS Warburg spokesman David Walker.
About 800 people staffed Enron's trading operation, but UBS Warburg determined fewer were needed for the new venture, Walker said.
"The critical thing is that we have all the key people and the senior management team that built this business into a market leadership position," Walker said.
A bankruptcy judge in New York presiding over Enron's case approved UBS Warburg's offer to take over the trading business three weeks ago. The bank paid nothing up front but agreed to give Enron and its creditors one third of the new venture's pretax profits.
John Olson, a securities analyst with Sanders Morris Harris in Houston, said UBS Warburg will need to retain some of the former energy giant's swagger to bloom.
"They have to be a market maker to really make a difference," Olson said. "They'll crawl before they walk, but that should probably be the outline of the recovery."
Art Gelber, a principal with energy trading firm Gelber & Associates and who used to trade with Enron, said the new venture's biggest problem will be shedding its Enron past while demonstrating its own trading strength.
"It's a bold attempt to resurrect what Enron once had," Gelber said. "They'll be carrying some very heavy Enron baggage. The traders will be coming from Enron, they'll still have the Enron attitude and all the Enron technology. The industry is really looking at Enron with a different coat on."
Enron, once the world's largest buyer and seller of natural gas, gained fame for creating markets in the late 1990s by trading such commodities as pulp, paper, bandwidth and weather futures.
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