August 16, 2005

Enron Corp. today announced an agreement with JPMorgan Chase and its affiliates (“JPMC”) to settle JPMC’s portion of the Enron MegaClaims litigation.  According to the terms of the agreement, JPMC will pay Enron at least $350 million in cash. JPMC also agreed to subordinate or pay for the allowance of claims with a value of $660 million. The settlement is valued at approximately $1 billion.

“Today’s settlement is a tremendous financial outcome for the Enron estate,” said Stephen Cooper, Enron’s interim CEO and chief restructuring officer. “We are encouraged by the momentum of the recent MegaClaims settlements and look forward to working with the remaining financial institutions to get these issues behind us.”

The MegaClaims litigation generates value for the Enron estate through both cash recovery and claims reduction. Settlements announced to date provide for $665 million of cash payments and the subordination or cash in lieu of subordination of approximately $3 billion in claims.

“This latest settlement reached with JPMorgan Chase is our fourth agreement to date and our first with a U.S.-based financial institution,” added John J. Ray III, Enron’s Board Chairman. “This settlement achieves a significant milestone towards settling the MegaClaims litigation and delivers on the goal to deliver value to creditors as rapidly as possible.”

Financial institutions still to settle include Barclays PLC; Citigroup Inc.; Credit Suisse First Boston, Inc.; The Toronto–Dominion Bank; Deutsche Bank AG; and Merrill Lynch & Co.  The Enron MegaClaims complaint involves claims that the banks aided and abetted breaches of fiduciary duties; aided and abetted fraud; and engaged in civil conspiracy.  The suit also includes bankruptcy-based claims relating to equitable subordination; preferential and/or fraudulent transfers; and the re-characterization of certain transactions.

The agreement, which also resolves other litigation and claims between Enron and JPMC, remains subject to the approval of the United States Bankruptcy Court for the Southern District of New York.

Enron is represented in this matter by Susman Godfrey LLP; Togut, Segal & Segal; and Venable LLP. 

Enron’s Internet address is www.enron.com.