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Enron Mail |
While it has been discouraging to see an endless stream of negative news coverage about Enron, we want you to know about some positive news that is starting to emerge. ABC News was at Enron today because they want to do a story about Enron's future, our business going forward and the tremendous work being performed by the remaining 20,000 employees worldwide. The segment is scheduled to appear on both Good Morning America and on ABC World News Tonight with Peter Jennings on Wednesday, Feb. 20. The Good Morning America piece will be kicked off with a live feed from the Enron Building tomorrow morning at 7 a.m. CST. Check local listings for the air time of World News Tonight. While there is no guarantee that these stories will be glowing pieces about Enron, the interest by ABC in running a positive story is encouraging. We wanted to let you know about these stories before they air.
Additionally, two articles featuring interviews with Interim CEO Steve Cooper ran yesterday in USA Today and the Los Angeles Times. We are forwarding them to you for your information. Thank you for your support as we work to turn the tide of media coverage and public perception of Enron and its employees. MONEY New Enron CEO turns company focus to future ; While workers cope with loss and uncertainty Noelle Knox 02/18/2002 USA Today FINAL B.03 (Copyright 2002) HOUSTON -- Inside Enron headquarters, employees walk by stacks of moving boxes as they scrounge for pens and Post-it Notes from the empty desks of their laid-off co-workers. On one desk, an employee finds a note that reads: "I'm not gone, don't take my stuff!" Forgotten behind the headlines of smoking guns, Aspen ski homes and shredded documents are almost 18,000 employees who work on Enron's power plants and pipelines. USA TODAY is the first to get a tour inside Enron since its collapse late last year and spend time with Stephen Cooper, the new chief executive, talking about his vision for the future. On the 50th floor of executive suites, decorated with rich carpets and velvet-covered chairs, there is a sweeping view of Houston -- a city Enron helped shape with its philanthropy, political donations and corporate muscle. Cooper, however, is only focused on saving part of the company. His plan faces monumental challenges. In his words, "Everybody's betting against us." While many American corporate icons have filed for Chapter 11 bankruptcy protection in the past year -- Kmart, Polaroid, Bethlehem Steel -- the size, speed and sordid details of Enron's collapse have sparked numerous investigations and lawsuits, angered creditors, demoralized employees and ruined its reputation. But Cooper -- whose firm Zolfo Cooper worked on the troubles of such companies as Polaroid, Sunbeam and Federated Department Stores - - is adamant Enron can emerge healthy from bankruptcy within a year. "I've probably been in more Chapter 11s than anybody in the United States, literally," he says. "This company, by way of business and asset base, by way of management team, by way of predictability of its future business, has more of all of that than most distressed businesses I've ever seen." Cooper's plans The company already has sold the energy-trading business that was once considered its crown jewel to UBS Warburg. Although a bankruptcy court and Enron's creditors must first approve any moves, Cooper's plans include: * Enron will likely have to give up this skyscraper for a "more modest habitat," Cooper says. * The company's new $100 million building across the street from headquarters also is for sale. * Even Enron's name blazoned across the top of the nearby Major League Baseball stadium is going to have to go. "Out of the ashes, there ought to be something everyone can be proud of a year, or two, or three from now," he says. Today, the company still has a pipeline network that stretches from Canada to California and from Texas to Florida. And Cooper is betting that business can power the light at the end of the tunnel. He wants to keep the North American and South American pipelines and power plants and sell or shut down the rest of the company's businesses, including its broadband network, water utilities and the like. That will mean cutting an additional 10% to 20% off Enron's payroll and returning the company to its natural gas pipeline roots of the 1980s. But to pull off his plan, Cooper must not only sway his critics, including giant Wall Street creditors, but also motivate thousands of devastated employees. "Cooper and (Enron President Jeff) McMahon have one of the toughest jobs in business to keep the people there and keep them motivated," says John Whitney, a turnaround expert and professor at Columbia University. To lock in 500 key executives, Enron offered $55 million in retention bonuses. Former Enron executives who went to UBS Warburg as part of the sale of the energy-trading business also pocketed multimillion-dollar payoffs. And Cooper's pay? The New York-based consulting firm Zolfo Cooper will receive $1.3 million a year, plus $1.2 million for each of the eight executives he brought with him to Houston. If Enron emerges from bankruptcy, Cooper's firm will get a $5 million fee. If Enron is liquidated, Cooper will get a fee agreed upon by the creditors and court, according to a filing in U.S. Bankruptcy Court in New York. Shattered morale Enron's fall from grace has shattered employee morale. "It's just so sad," says one current employee, who spoke on condition of anonymity. "On several floors, it looks like the rapture. It looks like people disappeared into space. They're just gone." This employee, just two years away from retirement, watched $160,000 in retirement savings shrink to zero with Enron's stock price. "Now I'm going to have to work as a greeter at Wal-Mart until I'm 90," the employee says. "It's gone. I just can't make it back." Jorge Garcia, a project controls manager laid off in December, says his friends still at Enron say, " 'You can tell if you'll be let go soon by your office accommodations. If you've been moved to a cubicle, you probably won't last long.' " That kind of stress takes its toll. Downstairs in the company gym, Kathy Kissner, a massage therapist, says that as the company fell apart, employees would call begging for any open appointment or even just five minutes between appointments. "I've lost 30 pounds in the last six months" from long hours and lack of sleep, says Mark Palmer, vice president of communications. Cooper knows his employees have been hurt financially and emotionally. It's the hardest part of his job. "When people are looking at the prospect of losing enormous amounts of money, they often times get heated. They get emotional and upset," he says. "It's never fun to be at the receiving end, but I've gotten used to it." Blast voice mail To motivate the employees, he is trying to focus them on future goals. "People have two choices: We can spend all of our time living in the past, which is a crazy way to spend your life. You can't change it. Or, we can begin to move beyond the disappointment and the upset and the loss, to focus on the future," he says. And he has opened up lines of communication. Once a week, he sends out a lengthy voice mail, telling employees what has happened during the past week, explaining management changes and timetables. When employees call or send him e-mail, he will go find them in the building to answer their questions. And next month, he will hold a meeting with all of the employees in Houston to explain the details of his strategy to bring the company out of bankruptcy. This kind of candid communication is essential, he says. "We are not trying to eliminate bad news. We are not trying to make it just good news. What we are trying to do is to eliminate uncertainty," he says. "People can live with either one of those, good or bad. What they can't live with is uncertainty." And while some still say Enron's future is uncertain, Cooper is certain of one thing: "The lives and reputations of 20,000 people shouldn't be trash- canned because a handful of geniuses decided to run wild," he says. "People ought to keep in perspective that we've got a lot of really tremendous people here, and for the sake of a couple bad apples, we shouldn't blowtorch the entire field." PHOTOS, B/W, Michael Stravato (4); Caption: In Houston: Turnaround CEO Stephen Cooper says the company probably will have to give up its main building and its new one, in the background. Core business: Kenneth Wagoner works in the gas pipeline control center in Houston. Fewer customers: Business has slowed at the coffee shop on the ground floor of one Enron building. No sweat: The fitness center at Enron no longer gets as much of a workout by employees. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. Financial Desk The Nation Acting CEO Plans Legal Assault Amid Effort to Salvage Enron Litigation: Those who helped fell the energy giant would be targeted, Stephen Cooper says. NANCY RIVERA BROOKS TIMES STAFF WRITER 02/18/2002 Los Angeles Times Home Edition A-1 Copyright 2002 / The Times Mirror Company HOUSTON -- Enron Corp. is planning a broad legal assault against those who helped bring the company down, according to acting Chief Executive Stephen Cooper, the corporate rescue artist who was selected three weeks ago to put the company back on the road to solvency. Cooper said in an interview that the litigation would be extensive and rapid, although he declined to identify specific targets. "Enron may have causes of action against institutions and individuals that could represent a meaningful asset for the estate," said Cooper, a principal with Zolfo Cooper, a New York consulting firm that specializes in corporate restructuring. "I think you will see something sooner as opposed to later." The players were many in what has become a lurid corporate morality play, and all are potential defendants. Enron filed the largest Chapter 11 bankruptcy in U.S. history Dec. 2, following a series of damaging disclosures of questionable transactions with partnerships controlled by company employees. The nation's seventh-largest company collapsed less than seven weeks after it disclosed losses tied to the off-the-books partnerships, wiping out billions of dollars in investor wealth and more than 6,000 jobs. An internal investigation by three Enron directors determined that abuses in accounting of partnership transactions masked at least $1 billion in recent losses, while a few company employees reaped millions of dollars in personal profits. Directors and executives, including former Chairman Kenneth L. Lay and former Chief Executive Jeffrey K. Skilling, failed to curb the missteps of subordinates, the report concluded. It also pointed to poor advice from Andersen, Enron's auditor, and Vinson & Elkins, one of its outside law firms. Still Sorting Out All the Issues Cooper, who occupies Skilling's old office on the 50th floor of Enron's mirrored office tower in downtown Houston, said the company has not asked any former employees to repay the millions of dollars they earned from partnership transactions. That would include former Chief Financial Officer Andrew S. Fastow, former Enron Global Finance executive Michael Kopper and former Treasurer Ben F. Glisan. "I think that the recovery vehicle in the main will be litigation," Cooper said. Cooper and his team are still "sorting out issues" related to Enron's financial statements and the value of its trading book, the contracts that were not included in the recent sale of its energy trading operation. Since Enron filed for Bankruptcy Court protection, the value of those contracts has eroded to about $1 billion from about $7 billion. "I certainly don't believe at this particular point in time that anybody is engaging in transactions that aren't completely above board," Cooper said. "We will be presenting to the creditors committee on a regular basis our financial statements, which I believe, in the main, will be accurate." Enron has not yet hired a new auditor to replace Andersen, which it fired. Enron already has filed a $10-billion lawsuit against Dynegy Inc. alleging that its cross-town rival withdrew from a proposed merger with Enron in late November as part of a plan to wreck the ailing company. Dynegy has said it pulled out of the merger because Enron misrepresented the depths of its financial problems and lost its investment-grade credit rating. The Enron that Cooper envisions will look much different from the market-dominating energy trader that Lay and Skilling built. The name will change, and the company will focus on its natural gas pipelines and power plants--the kind of hard assets Skilling said he disdained. Cooper's style, too, is unlike Lay's grandfatherly and professorial demeanor and Skilling's hard-driving image. Cooper insists on being called by his first name and dresses casually at the office, complete with baseball cap. He hasn't decorated Skilling's wood-paneled, deadbolted office. To keep up employee morale, Cooper said he visits workers in response to e-mail and sends out weekly, unscripted voicemail updates. An all-employee meeting will be held soon, he said. Enron's overhaul is well underway. Enron has agreed reluctantly to turn over to Dynegy its biggest pipeline, 16,500-mile Northern Natural Gas, which was a condition of the $1.5 billion that Dynegy invested in Enron as part of the aborted merger. Enron also recently gave away its vaunted energy-trading operation to New York investment banking firm UBS Warburg in a no-cash deal that would supply Enron with a cut of any future profit. What remains is an assortment of smaller natural gas pipelines, including one that runs from Texas to California, and electricity generating plants. Enron has announced plans to shut down its remaining telecommunications operations and to unload Portland General, its Oregon utility, as well as many of the international power plants and other assets whose poor performance helped sink the company. Cooper declined to detail which assets he is thinking of unloading because "we haven't settled on a final configuration yet. But it will be substantially smaller by way of reported revenue than the old Enron. "The company, if you remove the trading from the rest of the business, it's actually got a very good, very solid, very revenue- and cash-flow- and earnings-predictable business, which is really its power and pipes business," Cooper said. "So in my view, there is an eminently reorganizable entity here." 'Not Going to Wallow and Linger' Cooper expects to present "a fairly on-point direction" for reorganization to its creditors committee in the second quarter and to have settled on a new version of the company within a year. "We're going to move this process forward very quickly. We're not going to wallow and linger in Chapter 11 for a day longer than we have to." Although many have speculated that Enron will never emerge from bankruptcy and will instead be carved up and sold, Cooper said he is "not of that mind," adding that in his 30-year career of reorganizing companies he has seen only a few instances in which liquidation made more sense for creditors than reorganizing the ongoing business. Those cases all involved substantial amounts of valuable real estate, he said. Enron has a bit of that. Although it leases its Houston headquarters, Enron is building a tower nearly as tall next door. It has received $40 million in debtor financing to complete and sell that project. Cooper flatly states that he is not interested in doing a post-mortem on Enron, but he did acknowledge the "very labor-intensive" process of sorting through "hundreds upon hundreds" of so-called special purpose entities, which are financial vehicles commonly used by corporations to finance projects separate from the company's balance sheet and for other legitimate purposes, such as a sale and lease-back of a building. Lawyers and accountants are examining the entities to determine the extent of Enron's liabilities and the economic value to Enron of each vehicle, he said. A team of about 10 Zolfo Cooper employees, an unusually large number, is being assigned to Enron, Cooper said. "There's a difference between were the partnerships legitimate or not versus were they accounted for properly or not. Both of these are being looked at. We'll just have to wait to see what the attorneys say as that gets sorted out," Cooper said. Special purpose entities "are not good or bad, they're just instruments or vehicles which provide companies with financial flexibility to better manage their business, to better manage their balance sheet to fit the needs of their business," Cooper said. "The Enron phenomenon was the failure to transfer economic risk [from Enron to the partnerships] and the failure to disclose and the suspension of the corporate code of ethics and conduct that allowed people to get into a position where they had divided loyalties" by working for both Enron and the partnerships, he said. "What we saw here was a case where they weren't constructed properly, they weren't reported properly and by allowing someone to be on both sides of the transaction, you couldn't have really an arm's-length transaction. It's kind of like having you negotiate both sides of a prenuptial agreement." Despite its size, the Enron reorganization is much like every other he has handled, Cooper said. Those included Federated Department Stores Inc., Polaroid Corp. and Malden Mills. Unique to Enron, however, is the furor surrounding the rapid and stunning collapse of the business, Cooper said. "It's become an enormous lightning rod for not only the upset of people directly involved in the company, but it's become a lightning rod to coalesce all of these other national interests" involving such issues as accounting and corporate governance, Cooper said. "I hope people will be able to relax and calm down and look at this as an opportunity for a fresh start for our external economic constituencies, a fresh start by way of an investment and a fresh start for our employees," Cooper said. "It's sort of like when your car breaks down and you're in the middle of nowhere and you end up hating the car. You're kicking the tires. You're kicking the bumpers. After you get over it, you realize that it's still a good car. You get the tire or whatever fixed and you just keep going." PHOTO: Kenneth L. Lay, above, stepped down as Enron's chairman and chief executive last month. Interim chief and turnaround specialist Stephen Cooper says he envisions a company much different from the market-dominating energy trader that Lay helped build.; ; PHOTOGRAPHER: Associated Press; PHOTO: Stephen Cooper was named Enron's acting CEO in January.; ; PHOTOGRAPHER: Agence France-Presse Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.
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