HOUSTON – Enron and UBS Warburg, the investment banking group of UBS, AG, have agreed to a deal for Enron’s North American Gas and electric trading operation that entitles Enron to one-third of the profits generated by the new AA+ rated trading entity. 

"This is an extremely positive deal for Enron and its creditors that confirms the substantial value of Enron’s trading operation," said Enron CFO Jeff McMahon. "We believe this is a first step among many towards an overall plan of reorganization and planned emergence from bankruptcy."

The deal is for ten years but allows UBS Warburg a series of options to begin buying out Enron's royalty interest in the third-year of the agreement. UBS Warburg's calls may be exercised in three steps, each representing one-third of the royalty stream.

Following the exercise of the first call, the royalty payment rate will drop from 33% to 22%; following the exercise of the second call, the royalty payment rate will drop from 22% to 11%. Upon the exercise of the third call, the remaining 11% royalty would cease.

The complete transaction documents will be made available on www.enron.com and www.nysb.uscourts.gov.

Enron markets electricity and natural gas, delivers energy and other physical commodities, and provides financial and risk management services to customers around the world. Enron’s Internet address is www.enron.com. The stock is traded under the ticker symbol "ENE."

This press release contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and that actual results could differ materially as a result of known and unknown risks and uncertainties, including: various regulatory issues, the outcome of the company’s Chapter 11 process, the consummation of the transaction described above, general economic conditions, future trends, and other risks, uncertainties and factors disclosed in the Company’s most recent reports on Forms 10-K, 10-Q and 8-K files with the Security and Exchange Commission.