US power giant set to collapse

THE WORLD'S biggest corporate failure seemed a near certainty after the debt-crippled US energy group Enron called in PricewaterhouseCoopers as administrators to its European arm. The collapse of the business will threaten up to 2,000 Enron jobs in London and brought trading in metals and oil markets, in which the company is a major player, to a near standstill.

The collapse of a group with interests across the world employing 21,000 people may also hamper the chances of an early recovery for the struggling global economy.

Enron, worth $80bn (£56bn) a year ago, has seen its value collapse after it admitted it overstated past profits and engaged in a series of complex financing deals which were not shown in public accounts. An $8.4bn rescue deal with rival Dynergy was called off on Wednesday night, and with a debt downgrade triggering an immediate payment of $3.9bn in debt, the group's European arm called in the administrators.

'Tony Lomas, Steven Pearson, Dipankar Ghosh and Neville Kahn of PricewaterhouseCoopers were appointed joint administrators to the European Holding company of the Enron group and a number of its operating companies,' PWC said.

'Inevitably job losses are expected. Teesside power station and the utilities and service businesses at the Wilton chemical complex are not included in the administration order. There is already very serious interest in Enron's metal business and negotiations are expected to lead to a successful deal in the near term. The Enron Group built an extraordinarily complex network of integrated businesses and this will take some time for the administrators to work through.'

Earlier, news of Enron's predicament paralysed many of its subsidiaries around the world. In Australia operations by the Enron unit trading in the wholesale electricity market was suspended. In India negotiations on selling Enron's controlling stake in a $2.9bn power plant were frozen.

In New York Enron warned in a stock exchange announcement that it might backtrack on paying out previously declared dividends as it struggled to conserve precious cash. US banks JP Morgan Chase and Citigroup look set to bear the most pain if Enron collapses.