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ISDA PRESS REPORT - OCTOBER 23, 2001 CREDIT DERIVATIVES * ISDA clears way for Railtrack convertible delivery - IFR TRADING PRACTICE * Investment banks offer derivatives services to clients - Financial Times WEATHER DERIVATIVES * Every cloud...?
- FOW ISDA clears way for Railtrack convertible delivery IFR - October 23, 2001 A UK lawyer retained by the International Swaps and Derivatives Association last Thursday advised that convertible bonds in their normal form meet the "not-contingent" clause of ISDA's standard credit derivatives definitions.
This cleared the way for banks to accept delivery of Railtrack's ?400m 2009 convertible under existing default swaps.
Around ?75m of convertibles had been delivered under default swap exercises by the close of trading on Friday.
Although banks and other protection sellers will now realise some losses on acceptance of the Railtrack convertible, compared with accepting Railtrack's straight debt, the advice from Robin Potts QC was welcomed by the heads of credit derivatives at the major dealers.
The legal opinion in effect removes one of the last main uncertainties about the enforceability of default swaps, and should allow increased sales of credit derivatives to convertible bond buyers.
"The market has demonstrated its maturity," said the head of credit derivatives trading at one bank.
"All the major houses are now accepting convertibles as deliverables."
A London-based lawyer was chosen to provide the advice because the UK is the regime with the main legal question marks about deliverability of convertible bonds under default swap contracts, as well as the home of Railtrack.
European convertibles typically feature a trustee with the responsibility to exercise conversion rights if a stock price moves a certain way beyond the strike price on a convertible bond.
Banks had worried that this "widows and orphans" feature of convertible bonds could be interpreted to mean that the holder of a bond did not have full rights over its disposal, and that the deal would not therefore be deliverable under standard default swap language.
The finding that convertibles are not contingent, whether they have a trustee or not, and therefore are deliverable under default swaps, unless specified otherwise, brought the price of the convertible bond closer to that of the cheapest to deliver of Railtrack's straight bonds, its S150m 2028 issue.
The convertible had been trading as low as 80 early last week, while the 2028 bond had been trading around 90.
By the close of trading on Friday, however, the convertible was priced at 84, bid only, while the 2028 bond was at 87.75/88.5.
Assuming that default swap exercises were around these levels, the total cost to protection sellers of the Potts opinion would have been roughly ?3m, when comparing the cost of accepting ?75m of the convertible with delivery of the straight bond.
This cost will rise slightly, as the gap between the prices of the convertible and the straight issue is likely to narrow further before more exercises are completed.
Bank derivatives heads generally view the short-term cost as negligible compared with the benefit of some assurance that convertibles are deliverable.
The advice from Potts does not carry the same weight as a court judgement, but as the price of the convertible has appreciated, there is little chance that an end investor in a synthetic securitisation or credit-linked note will mount a legal challenge to try to stop a bank from accepting delivery of the convertible.
The banks that arrange these structured trades normally have the responsibility for handling any default swap exercises on the credits included.
ISDA will soon unveil new detailed guidance on credit derivatives written on convertible debt, including the zerocoupon bonds that have been a major feature of issuance this year.
Investment banks offer derivatives services to clients Financial Times - October 23, 2001 By John Labate JP Morgan and Deutsche Bank are the latest firms to offer new derivatives services to their clients.
The two investment banks are expected to announce the first licensing agreements today with Longitude, a Manhattan-based online derivatives platform that will also launch today.
The agreements give both firms exclusive licenses to offer derivatives trading in a unique series of products.
Derivative services allow companies and other institutions to offset the risks that are inherent in a number of their investments or commercial activities.
Traditionally, the risks that have been hedged have been limited to things traded already, such as stocks, bonds or currencies.
Longitude was founded in 1999 and offers a service to run auction-based hedging services for "events of economic significance that cannot be hedged currently in the derivatives markets", according to chief executive Andrew Lawrence.
Mr Lawrence, a former hedge fund executive, says in its initial phase, the company will offer JP Morgan and Deutsche Bank clients derivatives and risk management services for economic statistics.
In the near term, other derivatives services will be launched through Longitude to hedge the weather, equity prices, mortgage payments data, central bank target rates, and to cover other areas.
JP Morgan and Deutsche Bank did not state the amounts of their spending for their licenses or the length of those contracts with Longitude.
"This differentiates us as a provider of cutting-edge derivatives products," said Chris Harvey, managing director at JP Morgan.
"There is no direct mechanism in the capital markets for clients to take views or hedge exposure to underlying economic variables."
Longitude's founders designed the system to simulate auction systems where prices were set without the need to match buyers and sellers in the market.
The system is similar to betting that occurs at horse tracks, where the prices are based on all "bets".
Once the hedged event occurs, the many separate claims are paid from the hedges placed in the system.
Every cloud...?
FOW - October 2001 It would have been tempting, in 1997, to believe that the art of financial risk management had reached a zenith.
That was the year innovative energy companies demonstrated that derivatives could be used to hedge the financial impact of one of the most powerful and unpredictable variables confronting business managers - Mother Nature.
According to the US Department of Commerce, at least $1 trillion of the US economy is sensitive to the vagaries of the weather, including vast portions of the energy, manufacturing, retailing, tourism and agriculture industries.
Yet it was only with the development of weather derivatives that companies gained the ability to protect their financial results from significant but non-catastrophic weather events such as excessive heat, precipitation or wind risks that few traditional insurance policies could efficiently cover.
Today, it is clear that the trading of the world's first weather derivative - a temperature collar executed between Koch Industries and Enron - marked the dawn of a new era in risk management, not the crowning of an old one.
It signaled the creation of a trading market fundamentally more efficient than insurance, which, after all, requires insurers to retain their clients' risk and to charge a risk premium for providing that service.
A trading market, by contrast, matches principals on either side of a risk, eliminating the need for a risk premium.
The result is a less costly, more efficient means of risk transfer.
Not surprisingly, companies whose financial results are sensitive to the weather have been flocking to this new market.
The cumulative notional value of all weather derivatives executed since 1997 exceeds $7.5 billion.
Meanwhile, leading-edge traders are continuing to develop a seemingly endless stream of new products that give companies the opportunity to hedge all sorts of risks once considered unmanageable, from advertising costs to river flows.
However, it is obvious that this new market still confronts numerous challenges.
Whole industries need to be educated in the use and value of derivatives.
Governments in the US and abroad must be shown that market-oriented solutions to risk management can be more effective, and more efficient for consumers, than regulatory solutions.
(Some US regulators still allow utilities to recoup the cost of bad weather from their ratepayers through inefficient weather normalisation clauses, for example.)
In some regions of the world and some market niches, data for indices that underlie these new products must become more rigorously standardised and more widely available.
Despite these challenges, the opportunities are nearly limitless.
The past half-decade has shown that nearly any high-volume product, service or business variable that can be measured can be commoditised, and that anything that can be commoditised can be traded.
Enron began proving this idea in 1989, when deregulation of the natural gas industry was forcing companies to change the way they contracted for gas in the wholesale market.
That year, Enron executed the world's first natural-gas swap to meet the needs of a customer that wanted to lock in a fixed price for its gas purchases.
To make the deal work, Enron agreed to absorb the cost, or benefit, of monthly spot gas purchases tied to a published index.
Five years after creating what would become the precursor to today's wholesale gas trading business, Enron began migrating its gas trading expertise into other markets, beginning with electrical power.
In 1997, it completed the world's first weather trade.
Two years later, the company's newly formed Enron Broadband Services unit debuted its Enron Intelligent Network, an Internet application delivery platform, that later led to Enron's first bandwidth trade.
That year also marked the launch of EnronOnline.
There, companies can buy and sell a vast array of physical commodities and related derivatives contracts in markets as diverse as natural gas; power; emission allowances; bandwidth; weather derivatives; NGLs, petrochemicals and plastics; coal; crude oil; pulp and paper; credit derivatives; shipping; steel and metals.
However, the idea of hedging risk with derivatives is not a new one.
As early as the 12th century, vendors at European trade fairs were signing contracts for future delivery of goods.
Futures contracts were part of tulip mania in Holland in the early 1600s.
In that same century, the Japanese created a futures market in rice at Dojima, near Osaka, to protect sellers from bad weather or warfare.
In 17868, the Chicago Board of Trade began trading wheat, pork belly and copper futures.
Today, the range of commodities and risks that can be traded are limited only by imagination and determination.
The weather market A closer look at the development of the weather market illustrates the opportunity.
According to a survey conducted by PricewaterhouseCoopers and the Weather Risk Management Association, the number of weather contracts executed in the 12 months ended April 14, 2001 rose by 1150/0, to 2,759, from the comparable year-earlier period.
While the total notional value of weather derivatives traded during that time declined 17%, to $2.5 billion, the downturn appears to have been a consequence of happenstance - in this case, mild temperatures during the winters of 1997, 1998 and 1999 in North America, where more than 95% of all contracts were executed.
Those temperate winters, the survey managers theorise, likely caused buyers of temperature-related weather derivatives to demand less protection against the possibility of an unusually cold winter in 2000.
While temperature-related weather contracts remain, for the moment, the most popular type of weather derivative, there are signs that the market is broadening.
While temperature-linked contracts accounted for 98.30/0 of all contracts traded during the first three and-a-half years of the market's development, for example, contracts linked to other measures accounted for 7.2% of all contracts written during the six months ended April 14, 2001.
We can expect this broadening of the market to continue as new products give companies the power to more precisely hedge their risks.
Prime examples introduced recently include power demand swaps and cross-commodity options.
Demand swaps are designed to overcome one of the biggest pitfalls of weather derivatives: they can protect companies against swings in demand -either for
| ISDA PRESS REPORT - OCTOBER 23, 2001 |
The following announcement was sent out from the ENW Office of the Chair on Sunday, October 21: As a follow-up to the Enron Net Works All Employee meeting on October 5, we are pleased to announce a number of organizational changes.
Beth Perlman, currently CIO for EA Systems, will work closely with Mark Pickering on a number of key projects for Enron Net Works.
Additionally, Beth plans to explore various commercial opportunities within Enron.
Replacing Beth in her current role will be Steve Hotte, currently CIO for EGS.
Anthony Dayao will continue as CIO for EES Systems.
In addition to his current responsibilities, Anthony will assume responsibility for creating a combined Wholesale/Retail Power Trading and Risk Management system.
Jeff Johnson will move into the new role of CIO for EGM/EIM Systems.
John Paskin will transfer to the Houston office from London to take up the new role of CIO for Corporate Systems.
His group will include the ISC, Enterprise Portal, Intranet Solutions, CRM strategy, Treasury Systems, Development Support and will matrix into HR IT Systems.
Continuing in their current positions are Inja Chun, CIO for EBS Systems; Paul Freeman, CIO for Enron Europe; Jay Webb, CIO for eCommerce, which now includes Commodity Logic Systems; and Jenny Rub, CIO for Infrastructure.
All of the above positions report into to Mark Pickering in the Office of the Chairman for Enron Net Works.
Transitions into their new positions will begin within the next two weeks and should be complete by the end of the year.
We are currently interviewing individuals to serve as CIO for EGS, as well as an individual to serve as head of our Enterprise Framework group.
We will keep you posted on the progress of these searches.
Please join us in congratulating all of these individuals on their new responsibilities.
| Organizational Announcement |
Beginning at noon today, Mark Taylor will be out of the office.
He will return to work on Monday, October 22.
Numbers to reach him are as follows:
| Mark Taylor - Out of Office |
MIchael: I will be over for the ISDA board meeting on January 25 and 26.
With the launch of the credit derivatives business, I think it would be a good time to do a brief Securities Law/Chinese Wall seminar relating to the credit business.
I would propose to review the rules we have instituted in NA and particular issues in the European market.
My preference on timing is in the morning on the 26th, and second, in the afternoon on the 25th.
Please give your thoughts on this.
Take care.
Mark
| Credit Trading |
I have listed a few pertinent facts about Jeff for your upcoming meeting.
Let me know if you need more information.
1.
Jeff joined ENA Legal on September 1, 1993.
His title is currently Assistant General Counsel.
2.
Jeff leads a group in the legal department that focuses on physical trading.
Jeff spends most of his time on structured deals like Brooklyn Union and physical gas trading.
He also has lead the legal team on acquisition deals such as Columbia Energy Services.
He has a strong work ethic and an excellent record in closing important transactions.
3.
He has good legal judgment and is described by his clients as a knowledgeable and practical trading lawyer.
4.
Jeff has consistently ranked "excellent" in the performance review process.
| Jeff Hodge's Election to Vice President |
I will be in Tokyo next week working on the start-up of energy trading in Japan for Enron.
I would like to book time on your respective schedules to meet on Wednesday afternoon.
I have some flexibility in my schedule if that does not work for you.
I will be in Tokyo on Thursday and Friday too.
Look foward to hearing from you.
Mark Haedicke
| Meetings in Tokyo on Wednesday, February 23, 2000 |
Please provide your comments to me as soon as you can.
The most important thing at this point is to make sure I have the business correctly described.
I am working on the letter of intent now.
We will have to decide how detailed you want the term sheet and loi.
I would think you would want it fairly general for your first few meetings until we get feedback.
Let me know.
Mark
| First Draft ofTerm Sheet on Project Bigtoe |
There is a proposal to have a meeting of the head traders of Enron, Reliant, Sempra, Coral, Duke, Southern, Dynergy and El Paso.
The idea would be to talk about e-commerce in the energy business.
Specifically, Enron might propose standardization of our masters, start-up of a clearing house for energy trading, electronic mechanism for confirmations, opening EOL to other companies to post bids and offers, and discuss electronic protocols for transactions with other energy companies to reduce costs.
We would probably discuss the state of regulatory restrictions under the CEA.
What are the anti-trust issues for such a meeting?
What are the appropriate parameters for such meeting?
Should legal counsel be in attendance?
Would it be best to make invitations through a formal letter?
| Proposed Meeting of Major Energy Trading Houses |
Jason: I have reviewed the CA and only have one comment.
I would like to add a paragragh 10 as follows: "This Agreement shall terminate on the date one year from the date of this Agreement."
Enron Net Works LLC will be the party to the agreement.
The address is 1400 Smith Street, Houston Texas 77002.
Please set up the agreement for signature by Louise Kitchen as Managing Director.
My number is 713-853-6544 if you have any questions.
Regards,
| CA |
Jeff, here is the list of managers and officers as it now stands.
Let me know what additional changes you want made and we will get all of them done.
Mark
| Enron Net Works LLC |
The OGC meeting scheduled for Wednesday, July 5, has been cancelled.
The OGC meeting will resume on the normal schedule beginning Monday, July 10, at 8:30 a.m.
Thank you.
| OGC Meeting - Wednesday, July 5 |
Bob: We are working on a "protocol" re electronic signatures.
Is this something isda would want to be involved in?
Maybe money could be made.
Let me know.
Mark
| E-Signature Protocol |
Bob: This is something we are working on at Enron.
Is this something ISDA has interest in taking a lead on?
I think ISDA could add value by developing a standard approach to e-signatures.
Mark
| E-Signature Protocol |
I think we should get either you or Sara involved in this.
Gary has requested a Houston lawyer help in establishing the business in London.
Mark
| Bond and Equity Trading in Europe |
Mark: A concern has been raised about IT service providers working on EOL or other Enron projects and then taking know-how to a competitor, such as Dynegy.
Since these service providers tend to work for a lot of different companies, it seems like this is a significant issue.
How do we address this risk in the contracts?
Do we need to add a non-competition clause?
Mark Haedicke
| Non-competition Clause in IT Service Contracts |
NIck: Do we have an erergy meeting scheduled in September.
Let's talk about this.
We could do it in either London or Frankfurt doing the week of the board meeting.
Let me know your thoughts on this.
Mark
| Energy Committee Meeting in September |
Please briefly fill-in the attached draft monthly report for Net Works by August 15.
Please e-mail your additions to Janette for her to compile.
Thanks,
| ENW Monthly Report |
Mary: I asked for a list of major energy trading parties.
It seems to me that we should try again to get those on the list that are not already members to join ISDA.
Let me know if I can help.
Regards,
| Information request |
Please carry your cell phone with you (with the power on) while you are at work during normal business hours.
It is important that I can reach you when it becomes necessary.
Thank you for your cooperation.
| Cellular Phones |
Peter: Please give me a two or three sentence summary of the trading issue and court decision thereon in Blue Range.
I want to report on it over the next two weeks in ISDA energy committee meetings.
Regards,
| Blue Range |
Please see below from ISDA.
Do we ever want to go to using the ISDA for physical and financial deals?
Should this be a long range plan?
Mark
| Single Master Agreement |
John: Let me know if you are ok with the following memo which would come from you and me to the traders and senior originators: Effective October 15, 2000, the retention period on tape recordings of trades done by telephone will be reduced from four months to one month.
The tapes regarding significant transactions may be retained for such longer period as approved in writing by both the Head Trader and the General Counsel.
Please propose those significant transactions on which you may wish to retain the tapes, prior to October 15, 2000, since the tapes on conversations older than one month will be destroyed on that date.
If you have any questions, please contact Mark Haedicke or Richard Sanders.
We are still looking at moving to recording only the deal terms -- but that
| Retention Policy on Trading Tapes |
Effective October 15, 2000, the retention period on tape recordings of trades done by telephone will be reduced from four months to one month.
The tapes regarding significant transactions may be retained for such longer period as approved in writing by both the Head Trader and the General Counsel.
Please propose those significant transactions on which you may wish to retain the tapes, prior to October 15, 2000, since the tapes on conversations older than one month (except with respect to litigation matters) will be destroyed on that date.
If you have any questions, please contact Mark Haedicke or Richard Sanders.
John Lavorato and Mark Haedicke
| Retention Policy on Trading Tapes |
The lunch for October will be at Dong Ting, 611 Stuart at Smith, from Noon to 1:00 PM.
The telephone number is 713-527-0005.
Please RSVP to my assistant, Janette Elbertson, at extension 37906 to let her know if you will be attending.
Thanks.
| General Counsel Luncheon |
If you have a copy of Who Moved My Cheese?
please read it at your earliest convenience and return it to the clerks' station so everyone attending the conference has an opportunity to read it.
Thank you.
| Who Moved My Cheese? |
Please delete the referenced meetings from your calendars.
It is no longer necessary to have this meeting on Thursdays, from 11:00 to 11:30 AM.
Thank you.
| Enron Net Works Meetings - Scheduled for Thursdays, 11:00 to 11:30 AM |
The attached legal report summarizes current significant legal activities of ENA Legal as of September 15, 2000.
This report does not attempt to list all transactions or include reference to on-going maintenance of completed transactions.
Please let me know if you have any questions.
| ENA Legal Department Monthly Report |
Terry: Greetings.
I have been reading about lliberalization of power markets in Japan starting next year.
I wondered if you expect IBJ or any of the other large financial institutions in Japan to make a market in power?
Would you or someone else you know want to talk about that?
Let me know.
Hope things are going well.
Take care.
Mark
| Energy Trading in Japan |
In order to provide better oversight and control of ENA legal expenditures on large transactions, please continue to follow the procedures set forth below for transactions where outside legal fees and expenses are expected to exceed $25,000.00.
The purpose of these procedures is to (i) improve communication with counsel (inside and outside) on issues, fees and services and (ii) send price signals on legal costs (with respect to specific transactions) on a timely basis to the business units.
Every effort should be made to continue to provide high quality legal work that has become standard at ENA.
1.
A written estimate of proposed fees and expenses and a written description of the services shall be provided by our outside counsel.
The responsible business unit and the General Counsel shall review and approve such written estimate before our outside counsel is directed to provide substantial professional services.
2.
Our outside counsel shall be instructed to promptly submit a revised written estimate if such outside counsel determines that legal fees and expenses for such transaction will exceed the previous written estimate by $25,000.00.
Such revised written estimate shall be reviewed and approved by the responsible business unit and the General Counsel or his/her designee before our outside counsel is directed to provide substantial additional professional services.
3.
In order to accurately track such expenses so that the expenses can be properly allocated to the various business units, a work order number should be obtained for each transaction.
Thank you for your cooperation.
If you have any questions or any other suggestions for controlling expenses, please call me at extension 36544.
| ENA Legal Expenditures |
Mark Haedicke is available for the conference call on Thursday, October 19, at 1:30 p.m. Eastern time.
Please confirm what time you were able to convene the call.
Thank you.
| Energy Bar Program - E-Commerce Panel |
In Julia's absence from the office, I need you to prepare an Enron Industrial Monthly Legal Report for October and submit it to me as soon as possible.
Attached is the ENW Monthly Legal Report to use as a guide.
The report should be concise, in bullet format, and submitted via e-mail to me by the 15th of each month.
| Enron Industrial Monthly Legal Report |
Please prepare a Monthly Legal Report for your group for October and submit it to me as soon as possible.
Attached is the ENW Monthly Legal Report to use as a guide.
The report should be concise, in bullet format, and submitted to me via e-mail by the 15th of each month.
| Legal Monthly Report |
Please prepare an LNG Monthly Legal Report for October and submit it to me as soon as possible.
Attached is the ENW Monthly Legal Report to use as a guide.
The report should be concise, in bullet format, and submitted to me via e-mail by the 15th of each month.
| LNG Monthly Legal Report |
I sent the e-mail below to our lawyers in ENA Legal.
In order to provide better oversight and control of ENA legal expenditures on large transactions, please continue to follow the procedures set forth below for transactions where outside legal fees and expenses are expected to exceed $25,000.00.
The purpose of these procedures is to (i) improve communication with counsel (inside and outside) on issues, fees and services and (ii) send price signals on legal costs (with respect to specific transactions) on a timely basis to the business units.
Every effort should be made to continue to provide high quality legal work that has become standard at ENA.
1.
A written estimate of proposed fees and expenses and a written description of the services shall be provided by our outside counsel.
The responsible business unit and the General Counsel shall review and approve such written estimate before our outside counsel is directed to provide substantial professional services.
2.
Our outside counsel shall be instructed to promptly submit a revised written estimate if such outside counsel determines that legal fees and expenses for such transaction will exceed the previous written estimate by $25,000.00.
Such revised written estimate shall be reviewed and approved by the responsible business unit and the General Counsel or his/her designee before our outside counsel is directed to provide substantial additional professional services.
3.
In order to accurately track such expenses so that the expenses can be properly allocated to the various business units, a work order number should be obtained for each transaction.
Thank you for your cooperation.
If you have any questions or any other suggestions for controlling expenses, please call me at extension 36544.
| ENA Legal Expenditures |
Dave: I have attached the "time allocations" (which are used for inside costs only) by attorney to the various business groups.
We can derive the percentage of total legal department inside costs from this chart, in order to calculate the capacity charge, for ENA and the other wholesale groups and ENW.
We had used this chart to bill back to the various business units within ENA, but we will stop doing that now per our conversation.
Are you in agreement?
Mark
| 2001 Allocations |
I would like to do fewer resolutions authorizing non-vps to sign contracts, and when we need such authorizations, let's make sure the resolutions are appropriately limited.
My thoughts are as follows: 1.
We have a lot of vps that can sign contracts.
2.
It is generally ok to have confirmations signed by certain carefully selected directors since we are confirming a trade that already took place and there is master agreement already signed.
3.
There are certain very routine agreements like pipeline right-of-way agreements that are ok for carefully selected directors to sign.
4.
Confidentiality agreements should be signed by a vp.
5.
Any authorization for a director to sign should expire within not more than one year and revoke all prior authorizations.
Please give me your comments.
Mark
| Appointments of Agents and Attorneys in Fact |
Dave and John: I am rethinking the legal reports.
I am preparing a monthly trading and transactional summary, a litigation report and the TOP TEN legal risk report.
To me the last two are the most important.
On a conceptual basis, is that what you need or want to see?
Mark
| Legal Reporting |
Mike and Jeff: I am rethinking the legal reports.
Alan and I am preparing a monthly trading and transactional summary, a litigation report and the TOP TEN legal risk report.
To me the last two are the most important.
On a conceptual basis, is that what you need or want to see?
Mark
| Legal Reporting |
Please start working on a top ten legal risks list.
I want to include that list for each of your companies (EGM, EIM and ENW) in the monthly report.
This list should be in bullet format.
If you have any questions, please give me a call.
Mark
| TOP TEN Risks |
Please see if you and/or AGC's in your respective groups can make time to participate.
I have always found it to be a very rewarding experience.
Let me know.
Mark
| Associate/Analyst Super Saturday Participation - ADDITIONAL REQUEST |
The volume and complexity of our legal work has increased dramatically over the past few years.
I think this environment requires additional time to be devoted to legal planning and review in order to provide the best possible service to our clients.
Within the next month, I have asked Janette to schedule a Quarterly Legal Review for each group listed on our new organizational chart .
I would envision that we would focus on the following: review of the current monthly legal report and significant legal issues review of the top ten legal risks form contracts and other documentation projects legal budget legal resources, inside and outside performance metrics In addition, I am proposing that any energy trading contract for a term longer than one year by initialled by an AGC or member of the OGC.
Let me know what you think about that.
Mark Haedicke
| Enron Wholesale Markets Quarterly Legal Review |
The Legal Committee meeting normally held every other Monday in conjunction with the OGC meeting will not be held for approximately two months.
The OGC meetings will continue every Monday morning as usual beginning 8:30 am Central time.
You will be notified when the Legal Committee meetings resume.
Thank you.
| Legal Committee Meetings |
I am on the Board of BEAR and sponsoring this effort.
Please let Janette= =20 Elbertson know by e-mail if you are interested in donating your time to hel= p=20 staff the table in the lobby on Monday, December 18, from 10 a.m. to 2:00 p= .m.
Thank you.
| CPS BEAR Program |
Please schedule a meeting for Dan Fournier and David Jackson with Jim Derrick and me in Houston over the next couple of months.
We will probably first meet in Jim's office and then go to lunch.
Mark
| Blakes |
Today, I talked to the GC of both Southern and Duke.
Each GC said they were not really up to speed on the issues.
I took the opportunity to walk them through the Nerc letter and the action taken at the Serc board meeting.
They each attempted to argue our fight was really with TVA.
Mark
| General Counsels of Southern and Duke |
Here is the memo I mentioned in our meeting today.
Let me know if there are other items we should put on the list.
Thanks.
Mark
| Enron Wholesale Markets Quarterly Legal Review |
The attached report summarizes current significant legal activities of EWS Legal as of November 15, 2000.
This report does not attempt to list all transactions or include reference to on-going maintenance of completed transactions.
Please let me know if you have any questions.
| Enron Wholesale Services Legal Department Monthly Report |
John: I have not seen the legal opinion yet from Brazilian counsel [Dr. Pinto] on our dollar indexing issue.
Please forward to me so I can review the opinion and get final approval for the deal.
Regards,
| Electrobolt Legal Opinion |
Please review the attached hypos and give me comments.
How do I make 2 and 3 better?
What other hypos should I add?
Maybe one geared more toward Alberta?
Mark
| Hypotheticals |
Thanks so much for your help on the BEARing gifts program!
It is a great cause and your help will make Christmas a lot happier for a lot of kids who really have very difficult lives.
Most have never received anything new.
Have a great holiday season!
Mark Haedicke
| CPS BEAR Volunteers |
I propose that we continue to alternate the Office of General Counsel ("OGC") and Legal Committee ("LC") meetings of Enron Wholesale Services on Monday mornings at 8:30 am, Houston time.
The OGC and the LC would have the following members: OGC LC Alan Aronowitz OGC Mark Evans Justin Boyd Barbara Gray Michelle Cash Jeff Hodge Steven Douglas Bruce Lundstrom Peter Keohane Travis McCullough John Novak Julia Murray [Marcus Von Bock und Polach?]
Elizabeth Sager Dan Rogers Richard Sanders Paul Simons Lance Schuler Mark Taylor Sheila Tweed Randy Young Please give me your comments.
It is anticipated that we will continue to adjust the membership of both groups as the businesses continue to change.
I plan to address the policy committee in February.
| Staff Meetings |
In reviewing the contracts, so far I have the following questions: 1.
Have Oman LNG and ADgas taken the risk of non-performance by DPC and indirectly MSEB without any credit support?
The only security is the equity in DPC?
Are such contracts typically secured or done with a buyer with deep pockets?
How much value was put into DPC by the shareholders?
2.
Are there local public policy issues that could be addressed by local courts with respect to the LNG contracts?
Fraud?
Bribery?
Are there any local law issues with respect to performance or interpretation of the contracts?
Isn't take-or-pay meaningless without credit support?
3.
What are the arguments for DPC to terminate the contracts?
Only where the PPA is terminated?
Payments?
4. Who negotiated the contracts?
Were there requests for credit support?
From Enron?
Did Enron ever promise to indirectly "backstop" the contracts by its investment in Dabhol?
5.
What was the discussion regarding the "reduction in operational capability" language in the contracts?
What was the language meant to cover?
Do we need our counterparty's approval to investigate other markets?
6.
Is there any argument that DPC has already breached the contracts?
Could our counterparties issue a press release claiming damages over the entire term of the contract?
Confidentiality and press releases?
7.
What is the law on piercing the corporate veil for an Indian company like DPC?
Could this issue be considered separate from the contract and be litigated in India or Oman and thus outside the arbitration?
8.
What is the list of all documents that could impact on whether or not Enron has any exposure under the LNG contracts?
9.
Are there instances where the Dabhol project could fail and the LNG contracts would not novate to MSEB?
Why does it matter if the LNG contract obligations novate to MSEB if DPC has no money?
10.
Other potential claims against Enron if the LNG contracts are terminated or not performed?
| LNG Contract Questions |
This is about a trip to Brazil.
She asked me to pay the $6000 in expenses.
Do you see any rationale to pay for this?
Mark
| follow up from our meeting 11/05/99 |
Dad: The name I have is Dr. Vinberg.
He is a therapist in Houston and is in his 80s.
I talked to him today and I thought he seemed good.
He recommended that we meet for two hours on one day and schedule some time the next day if it is productive.
His number is 713-622-1441.
He charges $150 per hour and I will pick that up as you would be incurring expenses to come to Houston.
Give him a call and see if he is acceptable to you.
If he is, I will propose dates and we can see if they work for everyone.
Love,
| Facilitator |
The attached report summarizes current significant legal activities of EWS Legal as of January 15, 2001.
This report does not attempt to list all transactions or include reference to on-going maintenance of completed transactions.
Please let me know if you have any questions.
| Enron Wholesale Services Legal Department Monthly Report |
Rob: How can we get some relief on this issue?
Should we set up a call with Peter and me?
There really is an earnings impact.
Let me know.
Regards,
| Enron Corp. Parental Guarantees |
We are pleased to announce organizational changes to the Enron South America legal department in response to the recent reorganization and realignment of the principal Enron Wholesale Services business units operating in the region, Enron Americas and Enron Global Assets.
Randy Young, currently General Counsel of ESA, will be assuming new responsibilities within Enron.
John Novak will become General Counsel of ESA, reporting to Mark Haedicke.
The ESA legal department will be responsible for supporting all Enron Americas and Enron Global Assets businesses in the region.
Additional legal resources, coordinated by Lance Schuler, will be provided from EWS Legal in Houston to support ESA's wholesale activities.
John will also work closely with Bruce Lundstrom, General Counsel of EGA, to coordinate legal support with respect to the EGA businesses in the region.
An organizational chart describing the new structure is attached.
This new structure will enable us to continue to provide quality legal support across business lines within South America while improving coordination and providing additional support from Houston for Enron's existing operating businesses, as well as the new business development initiatives under way in the region.
| Organizational Announcement |
Jim: Here is the background of the "dispute" with Blakes.
There is a lot of emotion on both sides.
I believe we need Blakes on a going forward basis in Canada.
Mark Haedicke
| Blakes |
The attached report summarizes current significant legal activities of EWS Legal as of February 15, 2001.
This report does not attempt to list all transactions or include reference to on-going maintenance of completed transactions.
Please let me know if you have questions.
| Enron Wholesale Services Legal Department Monthly Report |
I am willing to do this on the 20th, but only for one hour maximum.
See if Jim has any interest and then get back to Peter.
Mark
| Donahue Ernst & Young Law Firm |
The attached report summarizes current significant legal activities of EWS Legal as of March 15, 2001.
This report does not attempt to list all transactions or include reference to on-going maintenance of completed transactions.
Please let me know if you have questions.
| Enron Wholesale Services Legal Department Monthly Report |
It has become customary to prepare Unanimous Consents of Directors for many transactions even if such actions are not required by the relevant By-laws and/or Certificate of Incorporation.
Please consider carefully whether Unanimous Consents of Directors are necessary or appropriate in a particular transaction, i.e., the transaction is a significant transaction or evidence of authority is required for a legal opinion.
When in doubt, please review the By-laws and Certificate of Incorporation of the relevant entity and discuss the matter with a member of the Office of the General Counsel.
Thank you.
| Unanimous Consent of Directors |
Greg Piper raised the following questions: Is ENW a marketing affiliate?
Is EOL a marketing affiliate?
Sally Beck's organization?
Can Beck's organization process transactions for CMS pipelines?
Could Sally use ETS resources to do processing for CMS?
Greg is looking for some guidance by Tuesday.
Let's discuss.
Mark
| Net Works |
Starting on Thursday, April 19, at 2:00 p.m. there will be a weekly telephone conference for the California litigation team.
The objective will be to identify key issues and plan a coordinated strategy for all litigation in California.
The call will last not more than one hour.
Thus far, the responsibility has been allocated as follows: 1.
PG&E Bankruptcy Lisa Mellencamp and Carl Ecklund (LeBoeuf Lamb Greene & McRae) 2.
Class Actions Richard Sanders and Robin Gibbs (Gibbs & Bruns) 3.
CTC Matters Bob Williams, Mike Day and Gary Fergus (Brobeck) 4.
FERC Matters Regulatory and Richard Sanders and Dan Watkiss (Bracewell & Patterson) 5.
Government Investigations Regulatory and Richard Sanders Richard Sanders and Robin Gibbs will have overall responsibility for coordination of the litigation.
| California Litigation Team |
I am responding on behalf of Mark Haedicke.
We have checked with our department and our lawyers are not aware of any such contracts as you described in your e-mail.
Barbara Gray responded, "I am unaware of any subcontracts for this period.
I do know that we have used minority lawyers, but that does not appear to be responsive to the question."
Thank you.
| Small Business Admin. Evaluation of Enron's Subcontracting Program |
The attached report summarizes current significant legal activities of EWS Legal as of April 15, 2001.
This report does not attempt to list all transactions or include reference to on-going maintenance of completed transactions.
Please let me know if you have questions.
| Enron Wholesale Services Legal Monthly Report |
Mary: I would like to discuss seminars in Europe to further promote the isda form among energy companies on the continent.
Please give me a ring at your convenience.
Regards,
| ISDA SEMINARS |
The 9th Circuit of the U.S. Ct. of Appeals granted EES' request to stay an injunction granted by the District Court in the UCS litigation, which would have required EES to continue to directly serve UCS.
The stay allows EES to return the customer UCS to PG&E and SCE for utility service and thereby save the future accrual of an additional $144 million of negative CTC receivables.
In approximately two months, the 9th Circuit will conduct a further review of the stay, at which point the litigation will return to the District Court for discovery and eventually trial.
| University of California System Litigation |
Greetings: John, I would like to promote Hodge to VP this time around.
I know our system has changed to get that done, but I wanted to get your support on this.
I believe Jeff has done a good job and added significant value for a long time and has earned it.
Give me your thoughts.
Mark
| Jeff Hodge |
The attached report summarizes current significant legal activities of EWS Legal as of May 15, 2001.
This report does not attempt to list all transactions or include reference to on-going maintenance of completed transactions.
Please let me know if you have questions.
| Enron Wholesale Services Legal Department Monthly Report |
Mark: Please disregard the prior e-mail.
We couldn't view all of the forms; however, when we printed your form, they all printed out.
Mark Haedicke has everything needs for the meeting.
Many thanks.
Janette Elbertson
| DISREGARD PRIOR E-MAIL - RE SELF EVALUATION FORMS |
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Transwestern's average deliveries to California were 959 MMBtu/d (88%), with San Juan lateral throughput at 827 MMBtu/d.
Total East deliveries averaged 398 MMBtu/d.
El Paso's average deliveries to California were 2122 MMBtu/d (72%): - PG&ETop, capacity of 1140 MMBtu/d, deliveries of 653 MMBtu/d (57%) - SoCalEhr, capacity 1250 MMBtu/d, deliveries of 979 MMBtu/d (78%) - SoCalTop, capacity 540 MMBtu/d, deliveries of 490 MMBtu/d (90%) Thursday's posted Gas Daily prices: SoCal gas, large pkgs 2.885 (+.31) PG&E, large pkgs 2.84 (+.295) TW San Juan n/a TW Permian 2.74 (+.44) Enron basis: n/a
| California Capacity Report for Week of 12/26-12/28 |
I will be out of the office starting late this afternoon and will not be back in the office until Monday January 7th.
I will be out of town on starting the 1st of January and will be returning to town on January 5th.
My contact information is below in blue.
I will be checking voice mail regularly and will be carrying the Blackberry.
I may not have email access other than the Blackberry.
A list of people to contact for certain matters is below: Tracy Geaccone (X37372) EGS Cash, Planning, or Forecasting and Coordination of same with Corporate Morris Brassfield (X67006) ETS Operations Support Jim Saunders (X33532) ETS Accounting Pam Daily (X36135) EGS Space Planning, Move Coordination Have a very Happy, Safe and Prosperous New Year!
| Out of the Office |
FYI - In case you have not yet heard... Richardson Products has not paid their $1,661,000 TW line pack sales invoice.
They are claiming to have a Global Netting Agreement with Enron and are netting this payment with ENA and EGL issues.
We asked for a copy of this agreement even though we are certain that TW is not a party to it.
Paul Cherry, TK, Steve Kleb and I are all following up with our counterparts and are giving the collection of this money top priority.
We will keep you informed.
Rick
| Richardson Products Non-payment of Invoices |
The following item was presented in this week's corporate change control.... Dec. 28 Beginning at 5:00 p.m., the Corporate server team will remove domain controllers CORPHOU-DCARD02 and CORPHOU-DCARD03 from service to be rebuilt.
These are just two of the numerous active domain controllers within the Corp domain.
There should be no disruption of service as user requests should automatically be redirected to an active domain controller.
Once these servers are rebuilt, they will be returned to the Corp domain.
Dec. 31 From 8:00 a.m. - 12:00 p.m., the Corporate server team will move ECTHOU-HR1 to the Ardmore data center.
This move will result in a total disruption of service for those HR users whose S:\ drive is mapped to this server.
| ETS and Corporate Change Control |
This is a notice to inform you that the server where your Outlook mailbox resides is scheduled for an outage tonight.
Your mailbox will be temporarily unavailable starting anytime after 11pm and may continue to be unavailable until 1 a.m., when all server maintenance work have been completed.
Outlook Web Access (OWA) will also be unavailable during this time.
Blackberry users: Message delivery may be delayed for a few minutes.
If you have any questions, please call the Resolution Center at x31411.
| CORRECTION: Outlook Outage - Friday, December 28, 2001 |
Summary Risk Data as of 26Dec2001 Previous Active Financial Deals 71 71 Active Physical Positions 40 40 P&L Daily ($thousands) 88.3 47.0 VaR ($thousands) 1,626.3* 1,611.4* ETS Margin Account Deals 0 0 *The VaR continues to be over the ETS VaR limit of $1,000,000.
Company MTM by Counter Party Asset Liability Net 21Dec01 Previous Change NNG EL Paso Energy Marketing 17,727.8 (20,164.3) (2,436.5) (2,296.6) (139.9) NNG Reliant Energy Services 81.5 - 81.5 76.5 5.0 NNG TransCanada Energy 21,039.6 (20,429.4) 610.2 620.5 (10.3) NNG Grand Total 38,848.9 (40,593.7) (1,744.8) (1,599.6) (145.2) The terminated contracts with RMTC are now fixed receivables as of the early termination date of December 14, 2001 except for interest.
NNG is owed $4.8mm and TW is owed $33.9mm.
Amounts are past due.
Definitions: Physical deals modeled in the Caminus Zainet system are deals which have some form of price risk, (i.e.
Index to index deals, and anticipated fuel sales) This does not include standard transport and storage agreements or unhedged natural positions.
P&L Daily: Daily change in the mark-to-market (MTM) valuation of all deals being tracked in the Caminus Zainet system.
This includes the origination and changes in value for both the physical and financial sides of hedges, along with any speculative trades and floating unhedged physical positions.
VaR is "Value at Risk": Enron Corp policy defines this as the maximum expected one day loss on the portfolio given a 95% statistical confidence interval.
This number is currently calculated on the Caminus system using a variance covariance methodology, rather than a Monte Carlo simulation per the Enron Corp policy.
| Daily Summary of Risk Data 12/26 |
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| Close Relatives!!! 11051 |
Hope everyone had a great holiday.
A friendly reminder of the weekly update of key points (Cindy's email message of December 19th) for Stan.
Please forward your update to me and I will consolidate into report.
Thank you to those of you who have already forwarded weekly update.
If you have any questions, please call me at x33597.
| Reminder of weekly update for Horton |
On Friday, December 28, 2001, the Office of Ratepayer Advocates ("ORA") filed a motion requesting that the Commission suspend the procedural schedule in the SoCalGas/SDG&E 2003 BCAP.
ORA also requests that the time to respond to its motion be shortened to ten days (Jan. 7).
ORA's motion comes in the wake of the Commission's final decision in the Gas Industry Restructuring proceeding, Decision ("D.") 01-12-018, which was voted out on December 11, 2001.
As you know, that decision adopts the Comprehensive Settlement Agreement ("CSA"), to which Transwestern is a party, with modifications.
SoCalGas and SDG&E have notified the Commission that they will need to file revised BCAP applications (and supporting testimony) to reflect the impact of the CSA.
SoCalGas has not given a date certain for the submission of its revised application, but hopes to provide that information to the Commission by mid-January.
SDG&E plans on submitting its revised BCAP application 15 days after SoCalGas makes its filing.
In its motion, ORA requests that the Commission suspend the procedural schedule in the BCAP, under which ORA is scheduled to submit its "report" (direct testimony) on March 22, 2002, until after SoCalGas and SDG&E have submitted their revised applications.
After SoCalGas and SDG&E make their filings, the Commission would convene a second pre-hearing conference to adopt a new procedural schedule.
It is unlikely SoCalGas will submit its revised BCAP application before the end of January.
If SDG&E takes another 15 days to submit its revised application, that would leave a month, at most, under the current schedule for ORA to prepare its report.
That is not enough time for ORA to get its act together, especially given the two cost allocation methodologies which may be at issue in the BCAP.
Thus, it is very likely the Commission will grant ORA's motion.
At a minimum, the ALJ will establish a new schedule after SoCalGas informs the Commission of the date when it will submit its revised application.
ORA's motion does not raise any substantive issues.
The fact of the matter is that the procedural schedule in the BCAP is going to slip even more as a result of adoption of the CSA.
How much it will slip primarily depends on how quickly SoCalGas prepares its revised application.
Accordingly, we do not believe it is necessary for Transwestern to respond to ORA's motion.
Please do not hesitate to call or write if you have any questions.
| SoCalGas BCAP |
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I thought that you might be interested in our new monthly newsletter, ENERGY COMPETITION STRATEGY REPORT.
It contains detailed strategies on how to tackle the complex challenges of deregulation.
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| Deregulation |
Thank you for placing your ads on Excite Classifieds.
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Summary Risk Data as of 21Dec2001 Previous Active Financial Deals 71 71 Active Physical Positions 40 40 P&L Daily ($thousands) 47.0 0.5 VaR ($thousands) 1,611.4* 1,533.8* ETS Margin Account Deals 0 0 *The VaR continues to be over the ETS VaR limit of $1,000,000.
Company MTM by Counter Party Asset Liability Net 21Dec01 Previous Change NNG EL Paso Energy Marketing 17,814.4 (20,111.0) (2,296.6) (2,294.5) (2.1) NNG Reliant Energy Services 76.5 - 76.5 76.5 - NNG TransCanada Energy 22,482.7 (21,862.1) 620.6 620.3 0.3 NNG Grand Total 40,373.6 (41,973.1) (1,599.5) (1,597.7) (1.8) The terminated contracts with RMTC are now fixed receivables as of the early termination date of December 14, 2001 except for interest.
NNG is owed $4.8mm and TW is owed $33.9mm.
Amounts are past due.
Definitions: Physical deals modeled in the Caminus Zainet system are deals which have some form of price risk, (i.e.
Index to index deals, and anticipated fuel sales) This does not include standard transport and storage agreements or unhedged natural positions.
P&L Daily: Daily change in the mark-to-market (MTM) valuation of all deals being tracked in the Caminus Zainet system.
This includes the origination and changes in value for both the physical and financial sides of hedges, along with any speculative trades and floating unhedged physical positions.
VaR is "Value at Risk": Enron Corp policy defines this as the maximum expected one day loss on the portfolio given a 95% statistical confidence interval.
This number is currently calculated on the Caminus system using a variance covariance methodology, rather than a Monte Carlo simulation per the Enron Corp policy.
| Daily Summary of Risk Data 12/21 |
As part of the ongoing effort to enhance the iPayit AP process and software, a committee will be created whose purpose will be to manage future iPayit process/product changes.
The iPayit enhancement review committee will be made up of Enron representatives from multiple business units who will act as the primary voice of their respective organizations.
Please provide me with the names of 1-2 possible candidates from your organization who may be a good fit for the team.
Once the team has been identified, a kick-off meeting will be held.
Below are some specifics regarding duties of the committee and team member characteristics.
Listed below are the primary responsibilities of this committee.
Meet quarterly Identify potential iPayit process/software enhancements Help with prioritizing the list of suggestions Help functionally designing the enhancements Act as conduit between their organization and the overall iPayit process Facilitate better communications regarding Enron's AP process List of characteristics of a successful committee member: Knowledge of the iPayit AP process Knowledge of the iPayit software Knowledge of the accounts payable issues associated with that business unit Ability to make decisions representing their business area Willing to help make iPayit successful at Enron The goal of this committee is to drive continuous process and product improvements with iPayit.
The ultimate goal of the team is to create and manage the enhancement plan and give all Enron users a representative responsible for looking out for their interests in the process.
It also provides an avenue for sharing information and hints across business units and with SourceNet.
If you have any questions, please call me at (713) 646-6222.
Thank You
| iPayit Enhancement Review Committee |
Given recent events surrounding Enron, it has been decided that we will have a Bank Conference in order to answer questions concerning our institution.
You, along with our banks, have been invited to attend this event.
Please RSVP with Mary Border by filling out the attached registration form.
This is an invitation only event so please do not forward this email.
We look forward to your attendance.
When: Friday, November 9 Where: Hyatt Regency Downtown Ballroom Time: 8:00 AM-1:00 PM (lunch will be provided) Attire: Corporate Casual RSVP: Return to Mary Border via email or fax to 713 646 3422
| Bank Conference |
Mary Perkins of the Treasurer's office needs to know which account the money comes into if Notre Dame closes.
The way I read the new structure chart, looks to me like Rockne, Inc. buys preferred from Northern, so the $1.5 b should be paid to NNG.
Pls confirm and I'll let her know.
dF
| Funds Transfer |
I have the following three people I would like to nominate for a Personal Achievement Award.
Please approve and/or call with questions or comments.
Thanks
| Personal Achievement Award - Nominations |
Stan, In October we had a plan to purchase 0.5 Bcf of gas that was projected to bring our operational storage level to 12 Bcf by the end of the month and were concerned about over-filling our storage fields from potential long gas by shippers.
In reality, prices have risen and shippers have shorted the system by 1.7 Bcf month-to-date.
Our original plan, based on a combination of physical requirements and regulatory strategy was as follows: Ending October Balance 12 Bcf Ending November Balance 13 Bcf Ending December Balance 14 Bcf To acheive this plan we are projecting a purchase in November of at least 2.5 Bcf (depending upon shipper short gas over the remainder of the month).
We also expect to receive 0.3 Bcf of SBA imbalance payback in November that should raise the operational storage levels to approximately 13 Bcf.
We are still at risk for over-filling our storage fields in November and do not wish to buy any volumes that might push us over the 13 Bcf operational storage level.
Therefore, we are targeting the purchase of 2.5 Bcf of gas (which may be adjusted based on the customer's imbalances over the next week) for November.
Kent
| November Operational Storage Purchases |
UH Team: Resume Review: The Analyst/Associate group is currently collecting resumes from the University of Houston.
We will be holding a resume review session sometime this week to select the students who will be invited to interview with us next week.
Since there are several resumes to review, we will be needing your help in the selection process.
An email will be sent to you stating the time and place of the review session.
# of Interviewers/Greeters Needed: On campus interviews will take place on Mon-Nov 12th and Tues-Nov 13th.
Until we determine the number of students that will be interviewing, we do not know the exact number of interviewers needed.
Therefore, we are estimating 8 Interviewers are needed for Day 1 and 4 for Day 2.
Since it is not uncommon for an interviewer to be unable to volunteer due to business reasons, we need to have an alternate list as well.
We would like to have 4 alternates for each day.
We only need 3 Greeters each day.
Below are those already listed to interview: Below are those already listed to greet: Mon, Nov 12th Tues, Nov 13th Mon, Nov 12th Tues, Nov 13th 1.
Rod Hayslett 1.
David Draper 1.
Theresa Vos 1.
2.
David Shields 2.
Rachel Cady 2.
Finney Attasseril 2.
3.
3.
3.
3.
4.
4.
5.
6.
7.
8.
1.
Interviewers (Mgr and up) - Your schedule permitting, verify if you would like to volunteer or be an alternate (select a day) 2.
Greeters (Below Mgr) - Your schedule permitting, verify if you would like to volunteer or be an alternate (select a day) I will be out of the office Thursday and Friday this week (but checking email) so please respond to me with CC: to Jeff D. Davis.
Thanks for your assistance.
Regards,
| PLEASE READ - UH Recruiting |
Dear Rod: Sorry we could not touch base today.
I know you are swamped with the current situation.
Several of us have helped companies work through crises like this over the past twenty years.
We understand Enron's need for exceptionally fast action.
We have the crisis management expertise and I offer you our full and complete support in this time of need.
Mark, Paul and myself have been contributors to successful crisis interventions involving such companies as IBM, Texaco, Humana Hospitals, Texas Instruments, Hospital Corporation of America, Lucent Technologies, Atlanta Scientific, Honeywell, 3M, Phillips Petroleum Company?.
Rod, we are at your service immediately.
We know that in Enron's current crisis, you cannot: ?
Grow fast enough to make a positive difference ?
Sell assets fast enough to make a positive difference ?
Move fast enough into a major cost cutting program and reorganization of assets to generate the cash and credibility to needed to appease Wall Street ?
Aggressively communicate and perform those needed actions fast enough to regain support from Wall Street.
Due to the significance of this situation, we know that Enron would benefit greatly by reducing cost this week by 5-7 percent, with an additional 5-7 percent reduction next week, followed by an additional 5-7 percent over the next month - all while you and the leadership team continue to manage the external crisis.
This will get you the positive story and operating earnings needed to begin reestablishing your market position.
These are hard times and these unbearably hard decisions and their public announcement need to take place quickly.
We offer to help you and the leadership team: ?
Speed the achievement of large scale cost reductions ?
Quickly shore-up your most pressured areas of exposure ?
Create the "operations" success story for Wall Street, investors, partnerships and employees ?
Provide options for impending scenarios not yet encountered Call me today at #33034 or I will give you a call in the morning to follow-up.
We want to help you make a positive difference.
Sincerely,
| Immediate support |
Rod, I suppose with everything going on you are probably pretty busy, but I was wondering if Biliana Pehlivanova and I can join you for lunch at your convenience.
Please let me know if this could potentially work.
Thank you and hope to meet with you soon.
Sincerely,
| Lunch |
Rod and Joe, Here is a proposed write up of the procedures we use to protect the data that we send to RAC.
Please take a look and give me your comments.
Thanks!
| RAC Procedures |
Something for us to talk about during our next staff meeting.
There are three projects which have significant cash flow problems and thus= difficulties in meeting debt obligations: these are: SECLP, Panama and Gaz= a.
In the past, as I suppose we have done in Dabhol, we have taken the pos= ition that we would not inject cash into these companies and would be prepa= red to face a default and possible acceleration of the loans.
SECLP has be= en the biggest issue/problem.
Panama is much less (a few million of floati= ng of our receivables from the company) would be sufficient to meet the cas= h crunch in April of this year.
Note that, in Panama, the debt is fully gu= aranteed by the government and is non-recoursed to the operating company, B= LM.
In the past, we have discussed letting the debt default, which would c= ause the bank to potentially seek complete payment and acceleration from th= e GoPanama.
The reason: the vast majority of BLM's problems stem from acti= ons taken by the regulator that have effectively amended our PPA's with pri= vate parties; those actions resulted in significant loss of revenues, which= although today have stopped or have been limited, have left a "mark" on th= e company's liquidity position.
=20 Now the question is: come April of 2002, should any of our actions in Panam= a or decisions related thereto (which we would have otherwise taken or made= ) be affected in any way by either the proposed merger or an effort by Enro= n to preserve efforts to re-establish investor/creditor confidence?
The sa= me could go for SECLP and Gaza.
This is simply an overall "guidance" question.
Let's take it up during our= staff meeting next week, if that's ok with you.
Many thanks, Mariella
| Confidential - Decision tree on projects |
In light of the recent events, can we still attend the event at the Kayenta Boys & Girls Club?
This is the event that Senator McCain my be at and that we will be invited to make some remarks.
Lou also mentioned that it might be something for Stan to go to.
What do you think?
Cheers,
| Kayenta Event in December. |
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