Friday February 15, 12:46 pm Eastern Time
Enron Europe creditors query $9.2 bln deficit
(UPDATE: Rewrites, adds quotes in fourth and eleventh paras)

By Tom Bergin

LONDON, Feb 15 (Reuters) - Irate European creditors of bankrupt energy trader Enron on Friday grilled the company's administrators over a 6.4 billion pound ($9.18 billion) hole in the firms' balance sheets.

Creditors of Enron's main European trading arms also quizzed administrators from accountants PricewaterhouseCoopers over why 24 million pounds was being paid to former Enron dealers to help unwind the firms' trading books.

Figures released by the administrators showed a deficit of 6.4 billion pounds between the book value of the firms' assets, as previously stated in the directors' statement of affairs, and the net realisable value of the firms' assets.

``The directors' statement of affairs is wrong and misleading,'' said Steven Gale of lawyers Herbert Smith. ``The discrepancy is at least consistent with discrepancies elsewhere in the Enron accounts,'' he added.

The administrators said it would be several months before they knew exactly how much Enron Capital and Trade Resources Ltd. (ECTRL) and Enron Gas and Petrochemicals Trading Ltd. (EGPTL) owed creditors.


BALLOONING DEBTS

So far, ``somewhere close to a billion dollars,'' had been claimed by external creditors, administrator Neville Kahn said. However, analysts expect the final figure for external debt to be much larger.

One attendee, representing Teeside Power Limited, said that ``as of today'' Teeside had a potential claim against ECTRL worth ``in excess of 500 million pounds'' ($717 million). Teeside had previously only claimed 22 million pounds agsinst Enron. The delegate gave no explanation for the discrepancy.

The administrators said there was similar confusion over the exact amount they would be able to recoup from debtors.

Administrator Steven Pearson told the meeting, held amid the chipped paintwork and exposed pipework of a downbeat central London conference room, that contracts to an estimated value of 565 million pounds were currently under dispute.

``Undoubtedly there will be quite an amount of litigation,'' Kahn said.

Such uncertainty meant the administrators were unable to specify a date when creditors might get paid. However Kahn told the meeting as soon as the cash was realised it would be disbursed ``bloody quickly''.

Last week Pearson told Reuters that creditors would be lucky to get 10 pence in the pound.


INTERNECINE DEALINGS

Much of Enron's trading was with other companies within the group. Both ECTRL and EGPTL traded with 40 of the 400 companies within the Enron Europe group. The administrators said ECTRL and EGPTL owe $2.2-$2.4 billion to Houston-based Enron Corp, while billions more is owed across the Enron network.

``It's a complex web,'' administrator Tony Lomas told creditors of another Enron unit, Enron Power Operations.

The administrators have retained 100 of Enron Europe's former 12,500 staff, mainly traders, to help close outstanding energy trades. They expect to recoup 96 million pounds from outstanding bilateral trades, after the traders are paid 20-24 million pounds in bonuses.

Had the company not collapsed the traders would have been paid about 30 million pounds in bonuses, Kahn said.

The figure of 96 million pounds excludes cash the administrator expects to get from more complex structured energy trades such as the 565 million pounds' worth of deals currently being reviewed by Pearson.

Pearson said the 565 million pounds related to ``a handful of very large disputes and a greater number of single-figure million disputes''.

The modest surroundings of the room were in stark contrast to the opulent corporate entertainment for which the world's largest energy trader was once known.

But many delegates kept their overcoats on as the heating seemed to have been cut off.