Daily Archives: September 2, 2004

Latest chapter in Baylor-Methodist divorce

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This Chronicle article reports on the the latest dustup between longtime partners Baylor College of Medicine and the Methodist Hospital — Baylor has started moving residents to St. Luke’s Episcopal Hospital, which is generating even more acrimoney in the already chippy split with between Baylor and Methodist. Here are earlier posts on the Baylor-Methodist divorce.
Executives at Methodist claim to be “dumbfounded” at th e move and claim that the transfer reneges on a previous agreement between the two institutions regarding involving the allotment of residents.
This latest dispute is only the latest in a series of disputes that have arise after Baylor and Methodist’s decision to part ways in April ended an historic 50-year Texas Medical Center relationship during which the hospital was Baylor’s primary teaching hospital for its medical students and residents. St. Luke’s is Baylor’s new teaching hospital and Methodist’s new primary partner is Cornell University’s medical school, which is located in New York.
In other Medical Center news, this Chronicle article reports that Memorial Hermann Hospital System and The University of Texas Health Science Center at Houston renewed their agreement in which Memorial Hermann serves as the school’s primary teaching hospital. UT-Houston and Hermann — which have been partners since 1968 — agreed to continue their partnership for 15 more years.
Under the renewal, UT-Houston purchased the Hermann Professional Building and adjacent garage for $31 million and renamed the building the University of Texas Health Science Center Professional Building. It will be UT-Houston’s first outpatient clinic, and its location (across the street from UT-Houston) will be convenient for UT-Houston faculty and students.

Continental announces jobs cut

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Continental Airlines — one of Houston’s largest employers — announced plans to cut 425 jobs today in a move that the company says will save it $125 million before taxes in 2005 and $200 million a year before taxes by 2007.
In its news release, Continental said that the move, along with other recent efforts to boost revenue and cut costs, should generate a total of about $1.1 billion in pretax benefits. Continental posted a second-quarter loss of $17 million on revenue of $2.51 billion, which the company said was primarily the result of high fuel prices, weak domestic fares, and costs attributable to the early retirement of leased aircraft. The company also warned that existing employees would be asked to take wage and benefit reductions “unless the revenue environment improves dramatically.”
Most of 425 job cuts would be in management and clerical staff, although the exact number of layoffs was not disclosed. Some of the positions that Continental plans to eliminate are already empty and some of the other job cuts will come from normal attrition. The latest round of cuts, most of which are effective immediately, are in addition to the previously announced reduction of 253 reservation positions. After the latest reductions, Continental will have cut its management and clerical work force by almost 25% from levels before the attacks of Sept. 11, 2001 on New York and Washington, D.C.

Another trial in an Enron criminal case gets pushed back

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Remarkably, almost three years after Enron‘s descent into bankruptcy amid wide-ranging allegations of corporate fraud, the Enron Task Force still has not taken a criminal indictment against a former Enron executive to trial.
And one of the first Enron-related criminal cases scheduled to go to trial this fall — the indictment against five former officers of Enron’s telecommunications unit, Enron Broadband — has been pushed back to March of next year. Yesterday, U.S. District Judge Vanessa D. Gilmore in Houston postponed the trial of the Enron Broadband criminal case to March 1, 2005.
Former Enron Broadband CEO Ken Rice pleaded guilty to one charge in July, while former Chief Operating Officer Kevin Hannon pleaded guilty to one charge earlier this week.
The first trial involving former Enron executives is scheduled to begin on September 20 in U.S. District Judge Ewing Werlein‘s court in Houston in the case that is known as the Nigerian Barge case. Now that the Enron Broadband case has been pushed back to March of next year, there is a decent chance that Ken Lay‘s request for a speedy trial may result in his case being the second trial to occur of a former Enron executive.
Under normal circumstances, the Government’s cases in both the Nigerian Barge case and the Lay case appear to be weak. However, anything related to Enron is atypical. Given the public bias against Enron, the Government has a decent shot at convictions in even their weak Enron-related cases.

Enron finalizes pipeline deal

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Enron Corp. agreed to sell its CrossCountry Energy business to a venture of Southern UnionCo. and a General Electric Co. unit in a deal the companies valued at $2.45 billion. CrossCountry Energy holds Enron’s interests in three domestic natural-gas pipelines that were one of the company?s most valuable assets when it filed its Chapter 11 bankruptcy case in early December 2001. Earlier posts on the spirited competition for these assets can be reviewed here and here.
The sale ? which is at a price that is $100 million more than the auction winner’s initial offer ? remains subject to approval by the Enron Bankruptcy Court in New York on Sept. 9. The deal is expected to close by mid-December.
NuCoastal LLC, a company run by Texas billionaire and Coastal Corp. founder Oscar Wyatt Jr. offered $2.2 billion in May. In June, Southern Union and joint-venture partner GE Commercial Finance Energy Financial Services put forward a rival offer of $2.35 billion. Both offers included the assumption of about $430 million in debt.
The CrossCountry sale is a key part of Enron’s ?going concern liquidation? reorganization plan, which also proposes to sell Enron?s interest in Portland General Electric, its Pacific Northwest utility, to an investment group backed by Texas Pacific Group. That deal is for $1.25 billion in cash and $1.1 billion in assumed debt.