UBS to Pay Enron 33 Pct of Unit Profits

Tuesday January 15 8:33 AM ET
UBS to Pay Enron 33 Pct of Unit Profits
NEW YORK (Reuters) - Enron Corp (NYSE:ENE <http://finance.yahoo.com/q?s=ene&;d=t< - news <http://biz.yahoo.com/n/e/ene.html<;) and Swiss bank UBS AG (UBSZn.VX <http://UBSZn.VX<;) on Tuesday detailed their agreement to split profits from Enron's trading business, the one-time crown jewel of the collapsed company.
Under the terms of a deal worked out over the weekend, UBS Warburg, a unit of Switzerland's largest bank, UBS A.G., would take over the unit and pay Enron 33 percent of profits over a period of up to 10 years, according to a bankruptcy court filing. UBS will assume no liabilities from the trading business.
Enron announced late last week that UBS Warburg won a bidding contest over Citigroup Inc. (NYSE:<http://finance.yahoo.com/q?s=c&;d=t< - news <http://biz.yahoo.com/n/c/c.html<;) for an energy trading business that accounted for most of Enron's revenue last year. The company did not disclose the details of the sale at the time, however, and delayed the highly anticipated release on Tuesday.
The 10-year deal gives UBS Warburg the right to buy one-third of Enron's royalty interest in the third year of the deal for an amount based on the previous year's profit. UBS could buy another one-third in year four of the contract and the final one-third in year five, the company said.
The deal still requires approval of Judge Arthur Gonzales of federal bankruptcy court, where Enron filed for Chapter 11 protection in the biggest bankruptcy case in U.S. history. A hearing is scheduled for Friday.