WSJ Article on Enron/Portland General Sale to Northwest Natural ,
 Northwest Natural In Talks With Enron Over Portland Utility=20
By Wall Street Journal staff reporters Robin Sidel, Rebecca Smith and Nikhi=
l Deogun 10/05/2001

 The Wall Street Journal B2 (Copyright (c) 2001, Dow Jones & Company, Inc.)=
=20
Enron Corp. is in advanced discussions to sell its Portland General Electri=
c utility unit to Northwest Natural Gas Co. for about $1.8 billion in cash =
and stock in a highly leveraged transaction that would eventually give Enro=
n a minority stake in Northwest, according to people familiar with the matt=
er.=20
The discussions are at a very delicate stage, and some important points nee=
d to be finalized, these people caution. The current environment could also=
 make financing such a transaction quite difficult, and board approval isn'=
t a certainty. However, should the two sides agree to terms, a deal could b=
e announced in the next few days. Northwest Natural is also expected to ass=
ume roughly $1 billion in debt.=20
Enron and Northwest Natural declined to comment.  If a transaction is consu=
mmated, it would come nearly six months after the collapse of Enron's agree=
ment to sell the utility to Sierra Pacific Resources. That transaction fell=
 apart in part because of the California energy crisis.  A purchase of Port=
land General would be a very big bite for Northwest Natural, which has a ma=
rket capitalization of just $650 million and supplies natural gas to more t=
han 500,000 residential and business customers in Oregon and Vancouver, Was=
h. Portland General is an electric utility serving more than 1.4 million cu=
stomers in Oregon.  The deal would bring together two Oregon utilities whos=
e executives and employees know each other well. Richard G. Reiten, Northwe=
st's chairman and chief executive, was president and chief operating office=
r of Portland General between 1989 and 1996, and also served on its board. =
 By buying a utility, Northwest would hope to have more bargaining power in=
 its gas purchases, enabling it to buy more product and store it when price=
s are cheap. A deal would be accretive to Northwest's earnings, people fami=
liar with the matter say. And the financial risk for Northwest Natural is s=
omewhat muted because Enron is helping to facilitate and finance the transa=
ction by agreeing to take common stock and convertible preferred stock in N=
orthwest Natural in addition to cash. Northwest Natural would finance the t=
ransaction with debt and equity offerings.  Shares of Northwest Natural wer=
e trading up $1.04 at $25.99 in 4 p.m. composite trading on the New York St=
ock Exchange, while Enron stock was down 39 cents a share at $33.10.  For E=
nron, a deal with Northwest Natural would be the latest twist in a five-yea=
r ordeal that was supposed to help the nation's biggest energy trader break=
 into California's deregulating electricity market. But the utility busines=
s proved less valuable than anticipated when Enron was prevented from selli=
ng off utility contracts that enabled it to buy electricity cheaply. And Ca=
lifornia's market developed serious problems last year that made it a less =
attractive place for Enron to do business.  Enron, which also owns a major =
gas-transmission pipeline system, has a history of buying assets and busine=
sses, learning what it can from them, and then selling off the bulk of phys=
ical assets so it can reinvest capital elsewhere.  It isn't clear where Enr=
on will put the capital to work that it garners from the sale. Its broadban=
d telecommunications business is in the doldrums and it recently said it wo=
uld invest $250 million in it this year, down from a formerly projected $75=
0 million. =09
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gina.taylor@enron.com, courtney.barker@enron.com, bret.fritch@enron.com, 