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GE calls for adjustment in purchase price of Enron

The issue of how much General Electric (GE) will pay for Enron Wind assets still appears unsettled. After bidding up the purchase price by over $100 million to win the bid over Caterpillar Inc at $325 million in a court supervised live auction April 11 (Windpower Monthly, May 2002), GE is asking for a "significant adjustment of the purchase price," according to court documents submitted September 16 by Enron Corp to a New York bankruptcy court. Caught in the middle are Enron Wind creditors, still waiting for a payoff, including the owners of more than 500 Z-750 turbines in the US Midwest, California and Texas, made by Enron Wind predecessor Zond.

In April, Mission Iowa Wind Corp objected to GE's purchase because the agreement failed to resolve the $14 million allegedly owed to Mission by Enron Wind and because GE said it would not honour warranties on the troubled US-made 750 kW wind turbines. Mission Iowa owns the 193 MW Storm Lake project in Iowa, which consists of 750 kW turbines, described in a wind market analysis by Sweden's Handelsbanken Securities as a "product with questionable quality and a poor track record."

Since the sale of Enron Wind, Mission and Storm Lake have been trying to get information from Enron about how it plans to allocate funds from the purchase to creditors. In August Mission went to court to compel Enron to provide the information. In its response, Enron said it has not determined the allocation. It also said GE is seeking a change in the purchase price, an issue that must be settled before an allocation can be made.

Steve Zwolinski, GE Wind's CEO, said in June the topic of warranties was holding up negotiations, so the parties put off the solution to later (Windpower Monthly, July 2002). "We could not understand the problem well enough to put a price tag on it. So we decided to cog it off," he said. Whether the adjustment in purchase price sought by GE is related to the warranty issue is not clear.

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