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101-year-old Pittsburgh firm may be sold to raise money for parent, Enron

Sunday, February 03, 2002

By Dan Fitzpatrick, Post-Gazette Staff Writer

Enron Corp., the Houston energy trader now engulfed in the largest bankruptcy case in U.S. history, has ties to a 101-year-old Pittsburgh mechanical contracting firm.

In fact, Enron is trying to sell the North Side firm, known as Limbach Facility Services, to raise much-needed cash.

Enron hopes to get $80 million to $120 million for the company, which it purchased in 1998, and as many as six potential buyers have expressed interest, according to Limbach Chairman Steve Wurzel. The company, which recently handled the plumbing, heating and air-conditioning work for PNC Park, employs 250 people locally and 2,600 people nationally.

It has revenue of $600 million, making it one of the largest specialty contractors based in the Pittsburgh area.

Despite his connection to a company accused of questionable accounting practices and exaggeration of profits, Limbach's chairman is not worried about Enron's woes.

"So far," Wurzel said, "our business has been unaffected."

Not only is Limbach profitable, he said, but it is also financially independent of Enron, which agreed after its December bankruptcy to establish separate bank accounts for Limbach's business units. Also, unlike the thousands of Enron employees who watched their retirement accounts vanish because they were invested heavily in Enron stock, Limbach employees maintain pension and 401(k) plans independent of Enron.

"None of the 2,600 employees were affected in any way, shape or form," Wurzel said. "Anything [Enron] is accused of doing is outside our knowledge and had nothing to do with our daily operations."

His priority now, he said, is to keep the business profitable and find a buyer willing to keep Limbach's headquarters in Pittsburgh.

The company got its start in 1901, when metal craftsman Frank Limbach founded a roofing and sheet metal outfit to do work for residential, industrial and institutional clients. The company survived the Great Depression, and grew into one of Pittsburgh's largest private companies, serving as mechanical contractor for Three Rivers Stadium, PPG Place and a variety of stadiums, manufacturing plants and office buildings around the country.

Scott and Walter Limbach, grandsons of the founder, finally sold the company in 1996 to Compagnie Generale des Eaux, a French utility.

Enron then purchased the Limbach group in 1998. It acquired Limbach's mechanical contracting unit and two other Limbach units -- Linc Corp. and Affiliated Building Services, which provides management services to airports. Affiliated Building Services gave Enron entry into such places as the Hartsfield Atlanta Airport, where Affiliated Building Services maintained the air-conditioning, heating, ventilation and mechanical systems.

Now, Linc and Affiliated Building Services are part of a separate Enron subsidiary, known as ServiceCo.

Like Limbach Facilities Services, ServiceCo was not part of Enron's December bankruptcy filing.

But like Limbach, it still could be sold to raise cash.

Enron and some outside investors in ServiceCo have had discussions recently about the subsidiary's future, but "I am not sure what Enron is going to do," said Jim Leech, a senior vice president at the Ontario Teachers Pension Plan, one of the outside investors in ServiceCo. When Enron purchased Limbach and the business units that became ServiceCo, it folded all of them into a much larger division known as Enron Energy Services.

That same division is at the center of Enron's current financial problems.

Last summer, an Enron employee asserted that Enron Energy Services overstated profits by hundreds of millions of dollars. At one time, the division was led by Lou Pai, who sold $353 million in Enron stock over the past three years. Another top Enron Energy Services officer, Thomas White, left the company last summer to become secretary of the Army.

But Wurzel said, "We don't have any knowledge of what our parent did."

"Lots of friends have called me from Pittsburgh to ask me if we are OK," he added. "We are OK, and you can quote me on that."