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Dynegy Inc. has settled a lawsuit with Enron Corp. over control of a prized pipeline that was part of a dispute between the two energy companies after their merger agreement fell apart. Enron has agreed to turn over control of the Northern Natural Gas pipeline by the end of the month, Dynegy said late Thursday. “We acquired the pipeline under the terms originally agreed upon by the two companies, with the exception of the date extension,” said Chuck Watson, Dynegy’s chairman and chief executive. Enron would have the option to repurchase the pipeline by June 30. Dynegy had claimed Enron signed away its right to the 16,500-mile pipeline system between Texas and the Midwest in exchange for $1.5 billion invested in Enron before the proposed merger fell apart in November. Enron filed for bankruptcy shortly after the deal unraveled. Under the companies’ original agreement, Dynegy had the option to escape from the merger and pay $23 million for the pipeline. Enron claimed its smaller rival illegally terminated the $8.4 billion deal and therefore had no right to the pipeline. Enron said Dynegy’s claim should be part of Enron’s massive bankruptcy case filed in federal court in New York. Enron spokesman Mark Palmer said Friday that the settlement will allow Enron to focus on a relatively speedy resolution to the bankruptcy. He said Enron will pursue its $10 billion lawsuit claiming that Dynegy wrongly abandoned the merger. Dynegy also said the pipeline settlement won’t affect that battle. “We’ll fight what we view as a meritless lawsuit,” said David Burns, the Houston attorney representing Dynegy in its pipeline claim. Dynegy backed out of the deal to buy the company after Enron said it was in worse financial straits than it had originally disclosed. Enron quickly fell from a Wall Street darling to junk bond-rated failure because of questionable accounting practices that the Securities and Exchange Commission and others are investigating. Enron filed for bankruptcy in New York Dec. 2 as the energy trader disclosed mounting debts and its stock fell from a high of $90 a share a year ago to less than $1. Dynegy is among many creditors who will ask U.S. Bankruptcy Judge Arthur Gonzalez in New York today to transfer the bankruptcy case to Houston, where Enron and Dynegy are based. Copyright 2002 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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