At least a $35 million piece of Enron Corp.'s corporate loan changed hands in the 20-21 context early last week. The paper was a touch stronger later in the week, but was quoted wide in the 20-24 range. The uptick came with reports that Enron is pursuing litigation against its banks, claiming they provided improper advice. The bank debt had been weak following a bank meeting on May 21. One source who attended the meeting believed the slump was caused by technicals. This was the first bank meeting since last August and some lenders came out of the meeting and decided to sell, he explained. About $30 million of what is known to the market as the Hawaiian trust facility also traded in the 18-19 context.
Through the litigation against Enron's banks, Stephen Cooper, Enron's interim ceo and chief restructuring officer, is trying to increase the value of the estate, noted one buysider. Cooper either hopes to bring in money through a settlement or negotiate with the banks to give up their unsecured claims against the company in exchange, he explained. Large quantities of the company's bonds have also been actively trading in the 171/2 context. The bank debt continues to be priced at a premium to the bonds with expectations that bank debt holders will pursue litigation against the agent banks. Repeated calls to an Enron spokesman were not returned by press time.