GE Power Systems to Acquire Enron Wind

Bankrupt energy company Enron Corporation has agreed to sell the wind turbine manufacturing assets of subsidiary Enron Wind Corp. to GE Power Systems for about $400 million.

HOUSTON, Texas 2002-02-21 [] The sale includes the company’s global wind turbine manufacturing and marketing operations but does not include Enron owned or operated wind farms. Headquartered in Tehachapi, California, Enron Wind has manufacturing operations in the United States, Germany and Spain and has 1,600 employees worldwide. The company operates manufacturing facilities in these three countries and the Netherlands and maintains 11 sales offices worldwide. Enron Wind offers power plant design, engineering and site selection, operations and maintenance services. “The acquisition of Enron Wind represents GE Power Systems’ initial investment into renewable wind power, one of the fastest growing energy sectors,” said John Rice, president and CEO of GE Power Systems. “This acquisition will broaden the environmentally friendly, power generation options available to our customers.” “The proceeds of this sale will help to repay our creditors,” said Stanley Horton, chairman and CEO of Enron Global Services, which includes Enron Wind. “I am confident that the wind company will be a good business for GE.” Vestas Wind Systems of Denmark had expressed interest in purchasing all or part of Enron Wind last year after it sold a 40 percent share in its Spanish wind competitor, Gamesa Eolica. Vestas said at the time that Enron Wind, which has been up for sale for some time, has high production levels, a large development division, and owns its own wind farms. Vestas normally concentrates on the production and delivery of wind turbines, but said it would consider Enron Wind if the price was right. Nordex of Germany also said it would like to buy its rival, following the demise of Enron Wind’s parent company. Industry observers said the manufacturing group may be worth US$125 to $200 million, and had a global market share of 6 percent of installed capacity. Nordex, with a market share of 8 to 9 percent, is worth US$213 million. While the Enron Wind turbine production unit has been on the market unofficially for some time, prospective buyers, including rival turbine manufacturers, have been deterred by high price estimates. According to Chris Benham of Enron Wind Communications, more than one company was involved in bidding for the business but he could not provide details about those companies. As part of the transaction, Enron Wind will concurrently file a voluntary petition for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of New York. Subject to necessary bankruptcy court and regulatory approvals, the transaction is expected to close in the second quarter of 2002. John Ambler, an Enron Wind spokesman would not comment on other company’s interested in purchasing the company and did not characterize the sale as a formal bidding process. “We had investment bankers serving as consultants, Ambler said. “It was not a formal bidding process, but a number of interested parties had been consulted in the past few months.” In the end, Ambler said GE Power Systems was the best fit for the company. When the company enters bankruptcy court, Ambler said it is likely there will be an opportunity for other bidders to come forward with offers that would match or exceed GE’s bid.
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