Enron, PBGC Come to Terms on Pension Funding

During a hearing in New York on Friday, US Bankruptcy Judge Arthur Gonzalez signed off on the energy company’s agreement to sell whole or part interest in three natural gas pipelines for $2 billion to CCE Holdings LLC, a joint venture of Southern Union Co. and GE Commercial Finance Energy Financial Services, a unit of General Electric Co.   CCE Holdings also will assume $430 million in debt.

The Pension Benefit Guaranty Corporation (PBGC) noted that it withdrew its objection to the sale after Enron agreed to place $321 million in cash in an escrow account to fund a standard termination of the firm’s pension plans.   In a statement, PBGC Executive Director Bradley Belt noted, “Today’s agreement between the PBGC and Enron Corp. represents a significant step toward preserving the benefits of participants in Enron’s defined benefit pension plans.”  

The four plans at issue have roughly 17,000 participants and include:

• The Enron Corp. Cash Balance Plan,
• Garden State Paper Pension Plan,
• Enron Financial Services Pension Plan,
• San Juan Gas Co. Pension Plan.

Enron’s bid to sell the pipelines had been opposed by the PBGC, which was trying to preserve its right to pursue claims against the assets considered to be the fallen energy giant’s most valuable (see  PBGC-Enron Plan Seizure Battle Heats Up ).  

With the agreement in place, Belt said, “We look forward to prompt action by Enron to complete a standard termination that preserves all benefits earned by Enron employees.”