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Enron sheds unit
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October 8, 2001: 2:21 p.m. ET
Energy provider is selling Portland Electric to Northwest Natural for $1.9 billion.
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NEW YORK (CNNmoney) - Shares of Enron Corp. rose more than 5 percent Monday afternoon on news the world's biggest power wholesaler is shedding its Portland General Electric subsidiary.
Enron agreed to sell Portland General Electric to Northwest Natural Gas Co. for $1.9 billion in cash and stock.
Enron (ENE: Research, Estimates) is selling the unit as part of its ongoing efforts to sell non-strategic assets to its core wholesale and retail energy business, the company said.
Northwest is Oregon's largest natural gas utility, serving more than 525,000 customers in northwest Oregon and southwest Washington.
Portland General serves more than 730,000 customers in 51 cities with an average demand of 2,400 megawatts. It owns 2,015 megawatts of generation split evenly among hydroelectric, coal, and natural gas.
Under terms of the deal, which is expected to close by the fourth quarter of 2002, Northwest (NWN: Research, Estimates) will pay $1.55 billion cash, $200 million in Northwest preferred stock and $50 million in Northwest common stock. Northwest will assume Enron's $75 million balance on its customer benefits obligation.
"Portland General is a solid performer and has been a great addition to the Enron portfolio since 1997," Enron CEO Kenneth Lay said. "However, over the past few years our need for ownership of a regional utility has been diminished by the rapid extension of our third-party supply network. As a regional utility, NW Natural is a perfect partner for Portland General going forward."
Enron's $50 million stake in Northwest Natural will entitle it to voting rights limited to 4.9 percent of NW Natural's total shares of common stock outstanding. Enron also has agreed to hold its Northwest stake for at least two-and-a-half years and gets a seat on Northwest Natural's board.
Credit Suisse First Boston was financial adviser, and Vinson & Elkins LLP was legal counsel to Enron.
At the end of market trading last week, Enron's shares closed down $1.37 at $31.73, while Northwest's shares were down $2.58 to $23.41. 
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