AbitibiBowater, Inc. (fka ABWTQ)

[emailjanum]

KFC for you....

How does Blackstone do it? Well, you might suppose that no one on Wall Street is making money off Enron anymore, for instance. You'd be wrong. Blackstone is heading up Enron's restructuring, a monstrous project that aims to maximize the value of the company's assets so that creditors (can you say dumb money?) can get a few pennies back on the dollar. Blackstone's Bruce Haggerty, a 25-year-old analyst who only a few years earlier vamped with Billy Crystal at a Hasty Pudding event at Harvard (Crystal was in drag), labored for six months writing proprietary software to map out the bankrupt energy company. Haggerty created a complete picture of Enron on his desktop computer--all 2,000-plus entities accounted for in a dynamic model in which the values of the pieces change when assets are moved. Printed out, his Rosetta stone comes to 6,000 pages. Engaging Blackstone could well be the best money Enron ever spent on Wall Street, but the work won't come cheap. Bankruptcy filings show Blackstone could be paid as much as $17 million for its trouble.

...........................................


In Blackstone's busiest group, though--its restructuring business--the firm is fixing broken companies rather than investing in them. "We went into restructuring because it does well in bad times," says Peterson with a grin. "Like now." Here again Schwarzman hired well, picking up Art Newman, a teddy bear of a guy, from Chemical Bank. Newman's team has toiled on dozens of workouts including Chiquita Brands, Dow Corning, Global Crossing, W.R. Grace, Macy's, and Xerox. "Nothing comes close to Enron, though," says Newman. "In my 30 years in the business it is by far the most complicated bankruptcy ever."

It was the day before Thanksgiving 2001, and Newman's partner Steve Zelin was thinking more about turkey than turnarounds when Peter Atkins, a senior partner at law firm Skadden Arps, called to tell him the board of Enron wanted to engage Blackstone immediately. "We had our dinner and then flew to Houston early the next morning," says Zelin. He had only had the vaguest idea of what was awaiting him.

"We tried to get our bearings," says Zelin. "We met with Ken Lay and senior management." Zelin flew back to New York. "We met with the Dynegy people to do the merger, but it quickly became clear that wasn't going to work. We had all the parties assembled in the Westchester Convention Center," he says. "I remember there was a wedding in the next room with loud music playing." That Sunday, lawyers went hunting around Houston for a bankruptcy judge to take the company into Chapter 11. Enron filed for bankruptcy on Monday, Dec. 2. The creditors and Blackstone agreed that the company's trading business could not operate in Chapter 11. Selling that business became Blackstone's next task. Zelin and his team worked 15-to 20-hour days through December and into January. There was a daily 5 P.M. conference call for two straight weeks with Schwarzman and other senior members of Blackstone. "This was incredibly complicated and high profile," says Zelin. "The firm's reputation was on the line. We couldn't afford to fail."

http://money.cnn.com/magazines/fortune/fortune_archive/2003/06/09/343947/index.htm