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Friday, 30 November, 2001, 18:15 GMT
Enron crisis claims 1,100 UK jobs
Enron power plant, Teesside
Enron power plant, Teesside: Jobs safe for now.
Near-bankrupt energy company Enron has said it is to cut 1,100 jobs at its London energy trading centre, leaving just 250 staff.

Accountants Price Waterhouse Coopers, appointed to salvage the viable parts of Enron's European division, said earlier on Friday that the London business has no cash left to settle its wage bill beyond this week.

"The over-riding priority is to preserve the valuable parts of the business and to reduce the cash needs of the business," said PwC partner Tony Lomas.

Enron's London-based European trading business was financed directly by the US parent company, which suspended all funding on Thursday.

However, many of the company's other European subsididaries are self financing, and have a better chance of survival.

Utility firms targeted for buy-out

Enron's utility companies - Wessex Water and its three Teesside power stations - have already attracted interest from buyers.

Electricity distributor Innogy on Friday said it would be "interested" in acquiring Enron's Teesside power interests, as well its electricity retail business Enron Direct.

Electricite de France, the state-owned French power company, and energy provider Powergen have also been named as possible buyers.

Banks under pressure

Some of the UK's major banks have been hit by the knock-on effects of Enron's collapse.

Abbey National's share price was 4% lower in mid-afternoon trade on Friday after the bank admitted that plans to write off 95m of a 115m loan it advanced to Enron.

Barclays and Royal Bank of Scotland also lent the failed energy trader substantial sums, although neither bank was willing to provide further details.

Analysts said that Barclays and RBOS have limited their exposure by sharing the loan with other banks.

RBOS's share price was 2.7% lower on Friday afternoon, while Barclay's slipped 0.8%.

Enron in administration

Enron's European division, based in the UK, split from its near-bankrupt US parent and went into administration on Thursday.

Under UK administration procedures, technically bankrupt companies can continue trading while expert accountants attempt to salvage profitable parts of the business.

PwC said that Enron's "extraordinarily complex" network of subsidiaries will make it difficult to assess the company's precise financial situation.

The job cuts announced today reduce the company's UK workforce to around 3,000, including 900 at its three Teesside power plants, and around 1,400 at Wessex Water.

The company has a further 5,000 staff spread across mainland Europe.

Record corporate failure

The US-based Enron Corporation said on Thursday that it is due to file for bankruptcy early next week.

The Enron crisis ranks as one of the biggest corporate failures in US history.

Revelations last month that Enron overstated its profits by $600m during the late 1990s led investors to downgrade the company's credit rating, leaving it unable to service its $13bn debt mountain.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Hugh Pym
reports from Enron's London headquarters
PwC Partner Tony Lomas
"It is difficult for us to sort through"
Wessex Water CEO Colin Skellett
"We were as amazed as everybody"
See also:

30 Nov 01 | Business
Europe escapes Enron knock
30 Nov 01 | Business
Enron 'to file for bankruptcy'
21 Nov 01 | Business
Crisis fears hit Enron shares
09 Nov 01 | Business
Traders wary of Enron's fate
09 Nov 01 | Business
Enron admits inflating profits
01 Nov 01 | Business
Troubles multiply at Enron
29 Nov 01 | England
UK set to survive Enron shake-up
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