RBS to Make Cash Payment to Enron and Forfeit Rights to Claims in the Enron Bankruptcy

July 17, 2005

HOUSTON -- Enron Corp. announced today that it has reached an agreement with The Royal Bank of Scotland PLC (RBS) to settle RBS’ portion of the MegaClaims litigation. RBS is the first of ten financial institutions named as defendants in the suit to settle with the Enron estate.

According to the terms of the agreement, RBS will pay Enron $41.8 million in cash. In addition, RBS will subordinate or assign to Enron approximately $329 million of claims filed by RBS in the Enron bankruptcy in return for a $20 million cash payment from the estate. This agreement resolves all open issues between Enron and RBS.

“The terms of this settlement are commensurate with the modest role we believe RBS played relative to others involved in this case,” said Stephen Cooper, Enron’s interim CEO and chief restructuring officer. “We are pleased that the agreement was reached in a timely manner and achieved our objective of a cash recovery in addition to the subordination of claims against the estate.”

Other financial institutions involved in the MegaClaims litigation include Barclays PLC; Canadian Imperial Bank of Commerce; Citigroup Inc.; Credit Suisse First Boston, Inc.; Deutsche Bank AG; J.P. Morgan Chase & Co.; Merrill Lynch & Co., Inc.; Royal Bank of Canada; and The Toronto–Dominion Bank. The complaint includes 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 remains subject to the approval of the United States Bankruptcy Court for the Southern District of New York, which has jurisdiction over the MegaClaims litigation. Enron is represented in this matter by Susman Godfrey LLP; Togut,Segal & Segal; and Venable LLP.

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