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We will send an e-mail immediately after the hearing this afternoon to let each of you know what occurred.
After you receive the e-mail, please feel free to call us if you have any questions.
We believe this will be the most efficient way to get the information to you as quickly as possible.
| Today's hearing |
Due to recent organizational changes, desktop support for managing directors has been streamlined.
The attached document describe the revised services offered.
We appreciate your cooperation in advance.
LaMetrice Dopson Global Infrastructure - Senior Director Enron NetWorks
| Desktop Support for Managing Directors |
We just got notice of new cash control procedures.
Each Thursday, RAC will have to submit to Corp. Accounting a list of payees and amounts that need to be paid for the following two weeks.
All cash expenditures (excluding payroll & benefits) such as fax machine rental, expense accts, cell phones, office supplies, etc will need to be submitted regardless of amount.
Sharon Sullo and I will coordinate for RAC.
We are going to build a spreadsheet with all of the recurring items and establish a reporting system for non-recurring items going forward.
All of the requests for RAC will be aggregated and submitted to Rick Buy for approval before sending to Corp. Our first report is due by 5:00 PM today.
Your assistance is appreciated.
Rick C.
| Cash Control Procedures |
As you are aware, we are in the process of rescheduling the Enron Corp. Board of Directors meeting.
Due to the proximity of the Holidays we will hold committee meetings and Board meeting on the same day.
Therefore, please let us know today the minimum amount of time you would need for your respective committee meetings.
Please be aware that some of our Directors will be joining the meeting via teleconference and we will therefore need to do all mail outs at least one week in advance.
As soon as we have a firm date for the Board meeting, we will advise you.
Thank you.
| Board Meeting Update |
Dear Rick, Thanks for speaking with me today.
Here is the position description for the KWI President of the Americas Opportunity.
I feel that this is a tremendous opportunity to be an integral player with a very exciting relatively early stage Applications Software company, in the very exciting and hot Energy Commodities Sector; They are already profitable, pre-IPO.
This position has a great compensation package.
Please get back to me if you have an interest or if you know someone who might be intrigued by this opportunity.
Thanks,
| KWI President of the Americas Opportunity |
Paula and Rex - I have mentioned this several times in the past several weeks, but have not received an answer.
Isn't it time to significantly adjust our 16b list?
There is clearly a new management team making the key decisions, and with all of the frequent Board meetings, it should be easy to do.
Thanks.
MEK
| 16b |
I would see the primary responsibilities: 1.
Develop with Fallon a written process for the valuation of terminated contracts.
We will most likely only have Bjorn for a short period of time given his reluctance to go to NETCO.
While no one appears to care about the fact that we have no way to render a correct value for financial statement purposes, this would be a priority if I was managing the estate.
There is no metric for the approval of comprises internally.
Our curves say one value, the counterparties quotes say another.
Differences in value may be a better metric that notional settlement amounts.
2.
With IT, assure that the terminated contracts are frozen in value.
The book is currently floating, rendering an open position which is unmeasured as to VaR.
Examine ways, if any, to manage this uncovered market risk.
3.
Valuation of assets held for sale and DASH process.
It would appear that we should work backwards from the summary of sale that the Unsecured Creditors Committee wants.
There have already been complaints about multiple forms (DASH, transaction review committee for).
This would require revamping the DASH process and TAP.
4.
Revaluation of International assets.
5.
To the extent EES performs post petition, value this book and the associated ongoing costs associated with it.
6.
My understanding is that the billing on performing accounts is behind.
Manage and develop a process to collect these past due amounts.
Collectibility does not improve with time.
7.
Ongoing review of business unit's cash requests.
8.
Develop a systematized IT solution to payments and transfers made 90 days prior to bankruptcy (in process).
9.
Manage the bankrupt counterparty portfolio.
10.
Collect amounts owed by PG&E and So Cal Edison ($545 million notional).
11.
Maintain a pipeline report.
| Oldco RAC |
Dear Rick, I quickly wanted to send you my new contact information as well as ask you about my Cash Balance Plan.
My fifth anniversary with Enron is coming up this Sunday, December 9.
The Cash Balance Plan vests after five years and I want to make sure that HR's comments to me regarding the plan are right.
HR (Sheila Walton) told me last week that I need not to worry about vesting in the plan since we will officially still be Enron employees as long as we are getting paid severance.
With the latest information we got this seems to be questionable now.
HR and Benefits do not seem to know what is going on now; all my questions remained unanswered when I called them this morning.
Benefits stated that as long as my termination date was after the 9th of December I would vest.
HR doesn't seem to know when my official termination date is.
If needed, I have more than 10 days of unused vacation; I could be deemed on vacation and terminated after the 9th.
I would like to ask you to help me with this matter and try to set my termination date after December 9, i.e.
at the earliest next Monday.
I feel that the company has left us with absolutely nothing but an extreme lack of information and loads of unanswered questions.
I do not see myself in a position where I want to give my Cash Balance Plan up.
| Carol North |
We are in the process of rescheduling the Enron Corp. Board of Directors meeting (originally scheduled for December 10-11, 2001).
We will confirm new dates as soon as possible.
Please call me if you have any questions at 3-6485.
Thank you.
| Enron Board of Directors Meeting to be rescheduled |
I work for Jeff Donahue in corporate development.
I spoke to Bill Glass, Chief Credit officer of UBSW and hed like to meet tentatively at 8 am tomorrow morning in 49c2/c3 at 8 am.
Hopefully, you are available to address their questions.
I understand that you have been speaking directly to Bill heretofore.
Regards
| tentative 8 am meeting with Bill Glass, Chief Credit Officer |
With all of the events of yesterday, information for the DPR for the above dates is not yet complete.
At the present time, we are planning to issue a final DPR for the 30th of November as well as a preliminary and then final for the 3rd of December.
However, we do not yet have an estimated time for these to be issued.
I will keep you up to date when I have additional information.
If you have any questions, please call me at 713 853 9123.
Best regards
| 11/30 and 12/3 DPR - update |
Please see attached letter from Scott Josey.
Thank you.
Donna M. Cagle Executive Administrator to President & CEO Mariner Energy, Inc. 580 WestLake Park Blvd., Suite 1300 Houston, TX 77079 281/584-5511 (phone) 281/584-5515 (fax) dcagle@mariner-energy.com <<Board Letter 12-4-01.doc>>
| Letter to Mariner Board Members |
Rick, As follow-up to our discussion of today, we would like to explain our concerns.
EEL entities are under control of an administrator - Price Waterhouse - who represents the interest of the creditors of those entities.
All decisions regarding those entities are being made by the administrator.
Michael Brown, Fernley Dyson, John Sherriff are not in the building and to the best of my knowledge have resigned all directorships.
Most of the remaining employees (300) are working for the administrator.
There are, however, interests of Enron Corp which are housed in Enron House may not be getting the attention they deserve or , potentially more concerning, are being used or eyed by the locals for their benefit.
Examples are : 1) the contractual assets in ECTRIC which include financial trades, weather derivatives, nordic energy, some crude and products trading.
2) large in the money pumped storage trade which is in a US-based LLC - in the money by a net $50MM 3) Enron Direct is being offered for sale (JV with EES) 4) The TXU VPS contracts (currently under termination dispute) is being negotiated solely by administrators and their employees Transactions are being terminated by counterparties, deals are being cut between the administrators and commercial for the dispostion of assets, and value is being eroded because no support staff will work without a reasonable expectation of being paid.
Finally, the administrators have been here for several weeks and seem woefully prepared to take on the task at hand.
We suggest that the Houston-based 'investor' (whether that is current managment or a trustee) ought to reconstitute some form of governance over its activities in Europe so that it can be assured of receiving maximum value for its assets here.
Currently, we have little capability to cause the local staff to provide us with the information and access to make informed decisions.
Please give us a call so we can discuss a course of action, if any, you would like us to take.
Ted
| US Interests in Europe |
Mr. Buy, Please find attached the list of UBS Warburg Credit Risk Control contacts as described by Bill Glass during today's phone conversation.
We are looking forward to working with you and your staff.
Kind regards,
| Contact List |
Per Rick Buy's request, we are developing procedures so that the head of each RAC department will have a current list of emergency contact numbers for all RAC employees.
I have outlined the plan below: The Assistant in each group will be responsible for updating home telephone numbers, cellular phone numbers and home addresses for each member of their group.
Rita Hennessy will consolidate the list for all of RAC on a monthly basis.
The monthly update will be emailed to the personal email address of each department head or their designee.
This update should be stored on a personal computer until the next monthly update is received.
Two hard-copies of the monthly update will be maintained in a file at the home of Rick Carson and at the home of Sharon Sullo.
If this plan is acceptable to you, please let me know the personal email address to use.
Please call me with comments or questions.
Thanks,
| Emergency Contact Procedures |
Rick - this is the event that Cal Payne spoke to you about several weeks ago.
He indicated to me that you would be interested in attending.
I am David Johnson - a partner with Andersen and we are sponsoring the Risk Officers Roundtable.
This is not a training seminar or an event with an audience.
This group has been meeting for a couple of years and recently asked Andersen to take the lead in facilitating the group.
The objective of this group is to focus on issues that each of you are facing as risk officers or leading energy trading organizations.
The ideas and issues dicussed will remain confidential.
This is a forum for people facing similar issues to bounce ideas off of each other and to discuss topics of mutual interest.
From an anti-trust perspective, competitive approaches as an industry or similar initiatives will not be discussed.
The group will meet about 4 times a year Our plans for the next meeting are as follows: Location - Las Vegas (Bellagio currently has rooms for $129/night) Date - Monday November 12 and Tuesday November 13 Agenda - We will get with each attendee and formulate an agenda.
This will be circulated prior to the meeting.
Attendees - Confirmed - Eddie Meche, Reliant, Philip Chesson - Williams, Glen Labhart - Dynegy, Cal Payne - UtiliCorp Invitations extended to Rick Buy - Enron, Rich Osborne - Duke, Mark Randle - Sempra and Bob Andersen - ElPaso.
| Risk Officers Roundtable |
Many of you have not signed up for an afternoon activity for the RAC Credit Offsite @ Del Lago Resort on Friday, November 9.
The sign-up sheets are on the countertop at my desk.
Please choose your activity by this Friday so that arrangements can be made at the resort.
Activities available are: golf scramble, massage, pontoon fishing, boat ride, volleyball, tennis, racquetball, horseshoes, shopping at the outlet mall, pool tables or lounge by the pool/bar.
Karen
| RAC Credit Offsite - Del Lago Resort - November 9 |
I want to thank everyone for their hard work during these trying times.
Lots of our efforts in the past building systems, procedures and infrastructure pay off in times like these.
Feedback from both Citibank and JPM/Chase and Enron's Board members has been very positive relative to RAC.
Congratulations to all.
On another note I want to caution everyone in the group from making negative statements in the presence of ours and other groups, especially more junior members of these groups.
Because they come from RAC they are not considered idle commentary and can be, and have been, damaging to morale to these people.
We all speculate about the state of affairs and it is a good stress relief but we can not be a part of morale reducing behavior.
Things are not back to normal but they are improving.
Upon receipt of commitment from banks, hopefully later today or early tomorrow, our short term issues should be resolved.
Lots of activities are underway to address medium term and long term solutions.
In the mean time, keep smiling.
Rick
| Memo to RAC |
Louise has asked me if you are available to meet with Duke Energy on Friday November 2nd at 3pm.
Please let me know your availability.
Thanks Sue TIM: can you make sure that Jeff gets this message.
Thanks.
| Meeting with Duke Energy |
Rick, Dave asked me to send you the attached file to use as a starting point for the "RAC's Roles" project that you mentioned in the meeting.
This presentation was prepared a few weeks ago.
Thanks,
| RAC's Roles |
Pls.
plan to join the Enron Corp. Board of Directors meeting scheduled for Friday, November 2, at 3:30 p.m., CST.
For planning purposes, your placement on the agenda is as follows: Jeff McMahon #1 Rick Buy #2 Mark Haedicke+Others #7 It makes sense for Jeff and Rick to be there at 3:30.
We will call Mark at his office a few minutes before his session and the rest of his team will join via teleconference at that time.
Please call me or Kelly Johnson (36485) if you have any questions.
Thanks.
| Enron Board Meeting |
Attached is the updated status of the steel trades/transactions that have potential LOC/cashflow impact in the next few months.
According to Kent, who had a direct conversation with Bowen late yesterday, all new steel trades/structured transactions not yet agreed to will require Bowen approval prior to being reviewed by RAC.
In summary, the commitment status for the Kibar and EDZK trades is yet to be determined, upon reviewing the taped conversation between the traders and the counterparties.
Duferco payments for the final 100,000 ton slab purchase and the $40,000 option are up for restructuring next week with the company.
Please let me know if you have any questions/concerns.
Thanks.
| EIM steel transactions pipeline update |
The Board meeting is confirmed for tomorrow, Sunday, Nov. 4, at 3 p.m. CST in the Board Room.
Most of our Board will be here in Houston.
If you are not available and would like to call in, please contact me (either at the office or via cell phone at 713 962 2109).
Ken may chose to hold an executive session at the beginning and the end of the meeting, but at this time I expect the business discussion to be an open session if you chose to attend.
'Will keep you advised if that changes.
Thanks, Paula
| Board Mtg. |
Rick/Bill/David, Generally, we have managed to keep our main counterparts transacting, but things are tight.
We are signing netting agreements and agreeing to collateral threshholds, but we are negotiating hard where we think that we will be so close to collateral lines in the next few months that we would actually have to post.
As we go into this week, we need to hold on to those we have, incrementally open up a few more, and start to get people to business as usual.
Amongst the things that continues to be missing are the OFFICIAL STORY (we have access to the newspaper here, too), good communication regarding global relationships, and calendar and status of new developments regarding credit facilities, equity issuance/raising..... Not that some of it is getting through, it just comes through random channels and we know very little more than our counterparts that have a subscription to the Wall Street Journal.
To that end, it has been suggested here that Houston (PR?)
with RAC/Finance develop a daily script of talking points for the masses.
We have traders and credit people talking all day to counterparts - they really could use a strong story to tell without have to think about it.
I am very confident that I can tell a reasonable story myself, but I am concerned that I do not have all the facts at my disposal and my guess is that the average trader/credit specialist is probably at a greater disadvantage.
Thoughts?
Ted
| Credit Story |
Conferring with Gorte, we need a new DASH for the India sale due to 1) the time since signing (5 months) 2) downward change in purchase price 3) general change in circumstances of Enron In addition to updating the numbers (as we discussed this morning), we should include an ownership structure diagram and a legal risk memo concerning what bankruptcy related approvals are required (if any).
Whether or not Board approval is required is possibly an open issue.
We will research.
| EOGIL DASH |
During this critical time, it is imperative that our management team remain focused on our business and continue to address the challenges currently facing our company.
For that reason, I have decided to postpone the Enron Management Conference.
The Conference will now be held Friday, February 22 - Saturday, February 23, 2002 at the Westin La Cantera Resort in San Antonio.
While the Saturday meeting allows some Enron executives who cannot be away from the office during business hours to attend the Management Conference for the first time, I also recognize that it requires many of you to forfeit additional personal time on behalf of Enron.
I truly appreciate your sacrifice and I sincerely encourage your attendance.
The new agenda, while still being finalized, will be abbreviated but every bit as informative and worthwhile as previously planned.
We'll be in touch soon with more details.
Regards,
| 2001 Management Conference |
After discussions with the management team, the HR group and our advisors on Wednesday, January 23, 2002, we agreed that Janet Dietrich and I would co-lead, with HR and our advisors, the completion of the proposed Key Employee Retention and Severance Program for Enron.
A lot of ground work has been completed, however, we need to bring it together into a complete, concise and workable plan that can be negotiated and agreed to over the next two weeks.
Timing is critical.
In order to work towards retaining the intellectual capital required to maximize the value of the assets of the estate, the internal plan needs to be substantially complete by the close of business, Monday, January 28, 2002.
From there, we will endeavor to complete final discussions with the Creditors Committee and their advisors during the weeks of January 28 and February 4, 2002.
We need your assistance between now and this Monday to complete the preparation work.
Specifically, Janet or I will schedule some time with you today, tomorrow, over the weekend or on Monday to review to following information for Debtor companies: validation of the information that you have already provided to HR obtain any additional information necessary to make sure that the HR file is complete and accurate your business plan, by quarter, for the next several quarters a clear illustration of the value that exists (as it is currently best understood), along with a plan to realize that value a clear mapping of your personnel to the plan projected role, by individual - discussion to include your view on near term activities (ex: data mining) versus longer term roles (ex: asset sales, etc) projected completion time, by individual, by task - to realize the value discussion, by individual, regarding the most appropriate type(s) of retention / severance to utilize for their intended role services provided, by individual, to debtor and non-debtor companies - including IT system connections and ties, partial and complete headcount, etc.
For non-debtor companies, we need to discuss: services provided, by groups and individuals in debtor companies, including level of reliance, ability to separate tasks, individual / group services, etc.
any other issues that you believe need to be discussed and considered in these discussions Preliminarily, we have broken out the groups as follows: Janet Dietrich (with Kalen Pieper and Shanna Funkhouser) will meet with the following: Wholesale Jim Fallon EBS Rich DiMichele EGM Gary Hickerson EIM Rodney Malcolm EA Don Miller Ongoing Concern Janet Dietrich Operations Bob Hall IT Piper / Dayao Dan Leff (with Robert Jones and Marla Barnard) will meet with the following: Finance Jeff McMahon Treasury Ray Bowen A/P, Purchasing, Cash Management, Insurance, IR HR, EPSC, etc, Cindy Olson Properties, EHS EES Dan Leff Accounting Rick Causey Tax Bob Hermann Government Affairs Rick Shapiro RAC Rick Buy Legal Jim Derrick PR Mark Palmer ETS Stan Horton International Assets Jim Hughes E&P Scott Josey EEOS Brian Stanley By the close of business today, Robert Jones from HR will send to each of you a spreadsheet illustrating: employee name, title, salary, supervisor, projected role, projected completion date for the role, application of type of retention to the role, comments, etc.
Please review and verify this information prior to our meeting.
If we have missed a group on these lists, please advise Janet or I immediately.
Thank you for your input and help.
Kay Chapman or Esmeralda Hinojosa will work with you to set up time to meet in the next couple of days.
Thanks - Janet & Dan
| PROPOSED RETENTION PLAN: IMMEDIATE ACTION REQUIRED: NOTE FROM JANET DIETRICH & DAN LEFF |
As a reminder, the mandatory Annual Compliance Meeting was rescheduled to Thursday, November 8, 2001 from 8:30 - 10:00 am at the Doubletree Hotel, LaSalle Room B.
The agenda is as follows: Robert George Board Seats Richard Lauer ECT Securities LP Cassandra Schultz Risk Management Policy Bob Bruce Chinese Wall Policy Chip Schneider Transaction Approval Process Rick Carson RAC Reporting Tools Please confirm your attendance at this year's meeting either by responding to this email message or contacting Donna Wackerle at ext.
39755.
If you have already RSVP'd, thank you and we will see you Thursday.
If you have any questions, please contact me directly at ext.
31939.
I look forward to seeing you this year.
PLEASE FORWARD THIS MESSAGE TO YOUR ADMINISTRATIVE ASSISTANT TO ENSURE IT IS SCHEDULED ON YOUR CALENDAR.
| Annual Compliance Meeting |
Attached, please find the emergency contact information for the RAC group.
In the event of an emergecy, please use the list to contact the members of your group.
It will be updated on a monthly basis and distributed by the 10th day of each month.
Please keep this list at your home until the next update is received.
Thank you
| RAC Directory |
We are in the process of determining the Committee meeting schedule for December 10, 2001.
Please let us know approximately how much time you may require for your agenda in order to ensure the appropriate allotment of time.
Thanks.
| Committee Meeting Poll |
The following reports have been waiting for your approval for more than 4 days.
Please review.
Owner: Karen K Heathman Report Name: Brad Larson Days In Mgr.
Queue: 6
| Expense Reports Awaiting Your Approval |
Dan, Rod Hayslett has agreed to support the sale of the Haina note.
Please proceed.
1) I want a DASH on the transaction.
RAC signoff on any asset sales is policy.
I view the sale of a note as policy.
2) I want to make sure that Enron is not making any substantive reps or warranties that could bite us.
3) I want to know who the buyer is.
Ray
| Haina Note |
Steve, Make sure that we circulate a DASH on the disposition of the QWEST note which we discussed on Friday.
I want to reinforce the concept of RAC signoff of asset sales, including the sale of financial assets such as notes and receivables.
When can we close the sale?
Thanks.
| Qwest Note |
Bill and Friends: FYI, things are still quite tight here.
signed a number of netting agreements and some collateral as well towards the end of last week.
Fri nite signed 'ring-type' trade with Innogy which is one reason they came out in press saying that they were trading with us.
Also, signed netting and all but one point on collateral agreement with JAron.
Downgrade to Baa3/BBB- increases margin requirments by about ?19mm - primarily credit trading (solution to this being worked on but not imminent) Priorities are producers of gas and power in UK.
In particular global counterparties.
cna you please provide brief update of following from your side for our 7:30 am meeting tomorrow (any quick insight/status appreciated) Hess Duke AEP EKT Also, any news of status of secured bank facility, L/C capacity, when do we expect wire from Dynegy, S&P had ugly headlines(comments?)
We are starting to get some noise from regulators (FSA, OFGEN) and exchanges (UK px, lpx and apx) -not big numbers but hasssle and bad optics
| Quick Update |
ISDA International Swaps and Derivatives Association, Inc. 600 Fifth Avenue Rockefeller Center - 27th floor New York, NY 10020 U.S.A.
URGENT!!
URGENT!!
URGENT!!
URGENT!!
URGENT!!
URGENT!!
URGENT!!
Please note that the Trading Practice Committee Meeting scheduled for this evening at 6:00 at the offices of Bank of America has been postponed until further notice.
Kindly acknowledge by replying to this message.
**IF YOU HAVE CONFIRMED TO ATTEND ON BEHALF OF YOURSELF AND/OR YOUR COLLEAGUES, KINDLY FORWARD THIS MESSAGE TO THEM IMMEDIATELY**
| URGENT NOTICE FOR TODAY'S TRADING PRACTICE COMMITTEE MEETING. |
Tuesday, November 13, 2001 Enron will be hosting our previously scheduled bank meeting on Monday, November 19th at 2:00 p.m. EST.
The meeting will take place at the Waldorf Astoria Hotel in midtown Manhattan.
As previously stated, this meeting will be for Enron's bank relationship and credit officers only.
As such, identification will be checked at the door.
If you have not already returned your institution's Confidentiality Agreement, please fax it back to Mary Border's attention at 713.646.3422 by noon, Friday, November 16th.
Please note that there will not be a call-in number or video-conference for this meeting.
Please reconfirm your attendance with Mary either by email (mary.border@enron.com) or by phone (713.853.0941) as soon as possible.
We will be covering information on the pending merger, our current financial situation, and more details on our structured financings.
I realize that all of you have requested more information than we have been able to provide over the last few weeks.
Thanks for your patience and I look forward to seeing you Monday.
Regards,
| Rescheduled: Enron Bank Meeting |
Attached please find the rates for Tuesday, November 13, 2001.
Money Markets did not trade or price on Monday due to the Veteran's Day holiday.
The prices for the auction rate preferred (ARP) stock are as of Friday.
The ARPs traded on Friday in lieu of Monday's close.
If I can be of any assistance, please feel free to call me at 713-853-2386.
Thanks, Julie
| Weekly Money Market Rates |
Rick: You can call Travis Mueller who owns a barber shop around the corner (next to Luther's BBQ) if you want.
He's quick, cheap and good.
His number is 713-650-1960.
Steven
| phone number |
I have received questions about interpreting the ratio.
Let me use yesterday's closing price.
The merger probability is derived from a two scenario test, merger closure or merger non closure (there is also a competing offer scenario in reality).
Let's use a closing DYN price of $46.20 yesterday (note I had a typo), at the exchange ratio, (not taking into account timing and dividends), this yields a merged ENE price of $12.40 ($46.20 * .2685).
ENE closed at $10.00 yesterday.
Thus if the market thought there was complete certainty of merger, the prices would converge at $12.40.
Now comes the artful part, the non merger ENE price.
I included another tab (Merger) to sensitize this.
Say we pick an ENE price with no merger of $4.00.
Looking at a deterministic probability, one can look at the distance (difference) in dollars to calculate the probability.
For instance: ENE merged 12.40 ENE close 14-Nov 10.00 ENE no merger 4.00 Probability of merger = (1-((12.40-10.00) / (12.40 - 4.00))) or 71.4%.
Said another way, there is a 71.4% chance of being worth $12.40 and a 28.6% chance of being worth $4.00, which yields a weighted price of $10.00 ($12.40 * 71.4%)+($4.00 * 28.6%).
I also included a $1 distressed ENE price and a $7 previously observed low end ENE price as scenarios.
Regards,
| Exchange ratio prices and probability |
As you may have become aware, the company received notice yesterday that you have been named as defendants (along with Enron Corp., Ken Lay, Jeff Skilling, Andy Fastow, and Arthur Andersen) in one of the federal securities class actions.
I will forward to you a copy of the Complaint.
We are in the process of determining who would be the most effective counsel for you.
If you wish to have separate representation, please let me know.
I cannot guarantee that the D&O carrier will reimburse you for the cost of separate counsel.
I am setting up a meeting with counsel for Enron Corp., Susman & Godfrey, to discuss this litigation with you as soon as possible.
Please do not hesitate to call me with any questions.
Thank you.
| Securities Litigation |
With the Dynegy announcement on November 9th, the U.S Trustee's office removed Enron from the PG&E Official Unsecured Creditor's Committee.
Dynegy is already on the Committee.
Important hearings in the PG&E bankruptcy are scheduled for December.
These hearings should begin to vet the issue of preemption, or the ability of the federal bankruptcy court to preempt state law under the bankruptcy code, thus freezing out the CPUC from ruling on the transfer of PG&E's generating assets to FERC jurisdiction.
We continue settlement discussions PG & E. Including offsets in our trading contracts, our net nominal exposure to PG&E is $511 million.
The claim is disputed primarily due to the pending FERC refund case.
In initial discussions, Enron offered a $85 million discount.
PG&E has countered with a $237 million discount, a $152 million gap.
We are meeting with the company in an attempt to narrow the difference.
Southern California Edison (SCE) has broken off settlement negotiations.
The are forwarding a position that the Direct Access customers should pay a share of the IOU's undercollection, even though many Direct Access customers were sourcing their power via ESP's at that time.
Enron Government Affairs believes that the CPUC is behind SCE's position.
This regulatory scheme would have Enron owing SCE money on a net basis.
The Power Exchange (PX) Bankruptcy continues.
Enron has taken a visible role on the PC Official Unsecured Creditors Committee.
A liquidating plan in the bankruptcy should be filed shortly.
| California slide for BOD package |
Rick, Slide 4 is the proposed new slide.
I also added slide 3 just for your review so that you can see what is normally in the bank presentations.
They asked us to keep each part of RAC to 2-3 bullet points, at most.
Please call me at x31946.
Thanks,
| For your review 359pm |
This will confirm the meeting for tomorrow morning (November 20, 2001) at 11:30 a.m. CST in Conference Room 50M03.
Lunch will be served at the meeting.
For those needing to call in to the meeting, the information is set out below.
| Securities Litigation |
Rick One question we are often asked is how do security and risk relate?
Risk is the potential reduction in asset values from threats and vulnerabilities.
Security is an ability you possess to protect specific assets in specific way(s).
So the answer is: Security is able to reduce risk in specific areas but without the full breadth of risk defined it is impossible to determine how significant security solutions are.
Stay Safe
| Security vs Risk |
... how about an LBO?
Certain high net worth executives sponsor the deal in conjunction with a major financial investor such as JPM/Chase or Citibank.
Force the share trust participants to go along and cut in all management and employees.
It gets the company out of the spotlight and might have some real attraction for deal starved investors... esp at this price level.
It could remotivate everyone and provide a way to recover some of the lost value that had accrued to the employees over the years.
Obviously, some stakeholders would do better that others but that's the way it goes sometimes.
Just a thought.
Hang in there.
Jim
| I know this sounds crazy but... |
We are moving ahead with finalizing a Master Netting Agreement that will cover all physical and financial agreements between BNP Paribas and Enron, except for the exchange agreements pertaining to NYMEX and LME trading.
The agreements to be included under this arrangement are listed below.
The intent is to complete the agreement by close of business on Tuesday, November 27.
We have communicated this to Bart Schouest at BNP Paribas and to BNP Paribas' counsel in New York.
1.
ISDA Master Agreement dated effective as of June 28, 1995 between Enron North America Corp., formerly Enron Capital & Trade Resources Corp., and BNP Paribas, formerly Banque Paribas (as the same may have been or may be amended, restated, supplemented of otherwise modified from time to time, and including all Transactions, schedules, annexes, and confirmations thereunder, collectively).
2.
Interest Rate and Currency Exchange Agreement dated effective as of January 16, 1992 between Enron Corp. and BNP Paribas, formerly Banque Paribas.
3.
ISDA Master Agreement dated effective as of February 22, 2000 between Enron Capital & Trade Resources International Corp. and BNP Paribas.
4.
ISDA Master Agreement effective as of April 4, 2000 between Enron Credit Limited and BNP Paribas.
5.
General Terms & Conditions governing transactions executed between Enron Capital & Trade Resources Limited and BNP Paribas.
6.
General Terms & Conditions governing online transactions executed between Enron Capital & Trade Resources Limited and BNP Paribas for the Sale and Purchase for Flat UK Beach Trades.
Please address any questions or concerns to me ASAP.
Regards,
| BNP Paribas Master Netting Agreement |
The people from Weil Gotshal would like to talk to you about the Dynegy case on 1/25/02.
Are you available that date?
Let me know and I will arrange a time, so that we can sit in.
| Weil Gotshal Meeting |
My Fellow Comrades: Our time together has been fun so let's not let it end here.
I would be delighted to hear from each of you and regret not having enough time to contact everyone individually.
One last technical tip...
Export your contact file in a pst format..... and you can import it to your home Outlook effortlessly... call for details!
| All the best |
Mr. Buy, I want to say, "Thank you" for everything you did for RAC.
I have enjoyed working for a great group.
I have learned a lot from everyone in RAC.
Please let me know if anyone needs help.
Thanks again,
| Thank you!!! |
Based on recent discussions with several energy firms, there appears to be interest in conducting a survey which * summarizes the current state of risk management best practices within the industry, and * provides benchmark data addressing current levels of risk based performance for various energy related lines of business To respond to this interest, we would like to conduct a survey which addresses these goals.
We have prepared a proposal which outlines our approach for conducting a survey, and provides samples of expected output.
I will be in touch sometime next week to discuss the proposal with you, and determine your interest in participating.
I look forward to speaking with you, and potentially working with you as a participant in this project.
<<Benchmark_Sales_Presentation_v2.ppt>> Thank You
| Risk Management benchmarking survey |
The Extreme VaR functionality is now operational on the RaC website.
The testing phase is completed, but ongoing calibration and fine-tuning will continue.
Extreme VaR represents a complement to Regular VaR, but concentrates on the Extreme Tail regions.
The default shown on the screen is at 99.7%.
It can easily be set up for any portfolio of interest and at a user-specified confidence level.
The following document summarizes the procedure to invoke it from your websites.
Let me know if you have any questions.
Naveen Andrews (58668).
| Extreme VaR |
Rick, as a followup to our conversation about a month ago I just want to summarize where we are on the sale of EOGIL and the steps we are taking for corporate approvals as we move toward closing.
We are currently anticipating project close on July 27th, but as with all things associated with India the date will probably slide some.
Here'e what we are planning to do for Corp approval.
1) Steve Harper is working with Brad Larson to get a RAC document completed along the lines of the package we prepared for the China sale last month.
This should be completed early next week and either your group or Steve will get it circulated for sign-offs.
2) We (Detmering/Sherrick) will review the project with Skilling/Lay prior to Rac sign-off.
Based on our last discussion, we will not need board approval for this sale since it is less than $500 million.
If this is not correct, let me know ASAP.
Otherwise, we will do the above and plan to close on July 27th.
Thanks
| Sale of India E&P --EOGIL |
Hi Vince & Rick, attached is a resume of a friend of mine from when I worked in NYC.
This guys has MIT Aerospace background but has extensive trading and risk management experience--one of those with commercial and technical experience.
He is an excellent team player with great personality as far as working in stressed and dynamic environment goes.
He will do well at Enron.
I think he is ready to try Houston like I did as he is ready to raise a family.
| Possible Candidate |
REMINDER FOR DINNER MEETING ASME OCEAN,OFFSHORE,ARTIC ENGINEERING DIVISION RASISING OF THE RUSSIAN SUBMARINE KURSK Tuesday, January 29th at 6:30 PM Ramada Plaza Hotel 7611 Katy Freeway @ 610W SPEAKER Frans van Seumeren President and CEO of Mammoet Frans van Seumeren initiated, negotiated and concluded the Kursk contract with the Russian Government for the operation to salvage the Kursk.
He will describe the technical and operational aspects of the recovery.
If you are interested in making a reservation contact:
| [ASME-OMAE-Houston] ASME Dinner Meeting - Raising Russian Submarine Kursk |
Attached is the legal risk memo for the proposed sale by certain Enron entities of their interest in UtiliQuest LLC.
This transaction has been given a legal risk ranking of 2.0 (on a scale of 1.0 to 5.0, with 1.0 indicating minimal legal risk), primarily due to potential post-closing indemnification obligations.
The legal risks discussed in this memo were also set forth in the DASH; however, please note the following correction to the DASH: while the Enron entities' pro rata share of the maximum potential liability under the seller indemnity is $20.7 million, Enron and the other sellers have joint and several liability for indemnification obligations which are capped at $30 million, and Enron will be liable for the entire $30 million if the non-Enron sellers cannot satisfy their pro rata share of the liability under the seller indemnity (note that Enron is not guaranteeing or backstopping the other sellers' share of this liability in any way; however, the purchaser may choose to hold Enron liable for the entire liability, and leave Enron to pursue the other sellers for their share).
Please contact me if you have any questions.
| Legal Risk Memo -- sale of Enron interest in UtiliQuest |
Molly, Attached is the spreadsheet that outlines TNPC's billing and receipt history.
There were a few invoices out over 30 days but the majority pay within 10 days after due date, some even before the due date.
Out of the $435k that is outstanding, there is an invoice for $234k that went to the gas desk (James Barker) today for proof of delivery and volume issues.
This amount was not marked on the dispute log.
Another invoice for 91k is currently on the dispute log for an undertake penalty and has come to partial resolution.
The remaining $134k is a collection issue as collection calls to Chris Miceli have not indicated a dispute, but rather a confirmation to pay.
Due to the nature of this customer, CSC handles the collection of this customer internally.
Please let me know if you need any additional information.
Joni Fisher
| TNPC |
On Monday August 6, about 75 new full-time Associates will be starting their careers at Enron.
Attached is a schedule of Orientation Topics, as well as an invitation to welcome these Associates at a Happy Hour Monday evening.
It would be great if you could stop by, even for just a few minutes, to welcome them to the company.
For your convenience, the Happy Hour is at Farrago, which is less than 6 blocks from the Enron Building.
Members of the Program regularly tell us that senior level interaction is an area that we can improve on, so your participation in events like this very important.
An RSVP is not required, but if you plan to attend, please let us know so we can prepare a name tag for you.
Feel free to extend this invitation to other senior members of your team.
As always, we appreciate your continued support of The Program.
Regards,
| Full-Time Associate Orientation - Happy Hour |
Ben/David/Bill - Please see the what we have for the following policy excerpts at the end of= this message, and address the following: 1.=09Advisory Limit Setting - is it by the BOD or by the CEO?
Our presenta= tion says CEO, but also specifies the trigger as 3.0 for P50 and 1.5 for P9= 9.
If it's CEO level, we don't need to specify in the policy what the trig= ger limit is, as CEO can change.
If it's in the Policy itself, it's consid= ered a Board approved limit.=20 a.=09Let's decide - if CEO level, let's change to say "a certain multiple o= f..." instead of 3.0 and 1.5 b.=09If at Board level, don't we need to specify a time horizon?
If not, w= hy bother to specify the trigger - if one's going to be at CEO discretion a= nd consequently not specified in the policy itself, why not all of it?
2.=09Definitions in 3.4 excerpt below - Rick Buy wants these definitions ha= rd coded and clearly defined in the policy ?=09Future Available Cash -=20 ?=09Is this straight off a daily report from Accounting?
What does this # = represent and what do we want in the policy?
?=09which individual is going to provide this daily, and when?
=20 ?=09Borrowing Capacity -=20 ?=09I defined this by pulling terms straight from the slide in the Joint Au= dit/Finance Committee presentation - do you agree?
?=09who is going to calculate this daily and provide to RAC, and by when?
?=09Potential Future Cash Requirements - ?=09is this clear enough?
any specific collateral assumptions given contra= ctual cash posting optionality?
worst case assumption?
3.=09Does RAC really need to calculate this if GRMO is going to report it o= n the Executive Report Viewer, and the calculations are hard-coded above?
= Seems like we could implement a process by which the 3 pieces of informatio= n get fed to GRMO to calculate and report, like all the other market risk m= etrics.
Please call me in the morning so I can run through any required changes.
Regards,
| Liquidity Ratio Calculation and Definitions in Policy |
As per our discussion last week, Sally will get with you and review the closing of the books that occurs each night.
This is in reference to the issue of which of the approximately 1200 books get closed easily and which ones require some miracles.
The goal is to better understand the issues at the commodity and/or business unit level.
Thanks.
| Books |
Rick, We have you scheduled to speak to IPG about Risk Management in EB4499 from 10:300 to 12:00 on Wednesday August 8th.
Attendee and Company information to follow.
Thank you,
| IPG Meeting Wednesday August 8th |
The attached memo contains an Enron Industrial Markets Lumber Trading 5 Day Cumulative loss notification for July 24, 2001.
The Office of the Chair for Enron Industrial Markets is responsible for signing the memo and returning it to Chris Abel, at 3155a, who will forward it to RAC to obtain their signature.
Thanks,
| Final 8/1/01 Lumber Notification |
Rick, Attached is the significantly scaled down version of the RAC presentation we anticipate using for the taped Bloomberg mid-year credit review.
Please let me know if you have any comments or other changes once you have had a chance to review.
As we discussed earlier, we do not yet know when the taping will be.
If it is after August 15th, we will plan on working with Bill Bradford and Dave Gorte on this.
Thanks.
Shirley
| RAC Presentation for Bloomberg |
Rick, There are very few single issues that require urgent consultation with you, however there are lots of little things that you may want to be aware of: We had an FSA 'Traded Risk' 2-day audit the past two days.
The operations/risk group bore the brunt of the work but Michael Pitt and I spent some time with them as well and we did do some level of preparation.
Jonathon Marsh, our compliance guy, seeemed very pleased with the result.
You never get away clean, but I think that they were impressed with the effort as well as the Enron risk culture.
by the way, my opinion of both Jonathan Marsh and Paul Freeman, the new technology guy is quite high - they are both good guys who want to make positive changes and not afraid to say whats on their mind.
2 risk policy issues came up - one regarding credit trading and the other regarding the freight book wanting to lay off credit risk with the credit book.
these we are slated to discuss with you tomorrow.
There are 2 new bad credits in Metals - 1 related to McCook where two of the 3 companies in the group declared ch 11 - we are owed est.
$7.5MM the other co. is the one that has granted us a free gigantic option on tolling ally for power - the commercial team is attempting to work out a situation where we transfer the unsecured claims to the ch 11 entities to a first security package on the smelter in co 3.
The other bad deal is a lead company out ogf the NY office where they owe us $450K on financials and we owe them $1MM on physicals - we are working on netting the positions There are a number of deals being worked on surrounding TPL ppa's in which the power positions would be taken on by Enron and we would get cash to either extinguish or re-mark the price (the purchases are way out of the money).
There are 3 in the negotiation process - each big - not at the decision or DASH stage.
we had a DASH signed off while I was away on ETOL for a gas turbine in which we get tolling in exchange for a capacity payment.
I assume you are up to speed on the tragedy at TPL yesterday.
Norway is looking at 2 large power prepays with municipal generators - low probability we will be circulating a DASH on $2MM more into Thrace - turkish e&p and pipeline play - total exp =$7.25MM team worked extensively with Jim ledlow and Brad on the analysis.
deal looks fine on the surface - 46% iirr vs 35% capital price.
only real issue is 'do we want to sink more $ into Turkey in order to improve the chances of a good sale or do we just put progress on hold' good news is that $1.5mm is coming from cash flow from the project.
We have in the works one of the few EES NA-type deals with Guiness at a single facility.
$9mm in capital.
in the markets, we do not seem to be doing particularly well of late - Norway is down, uk gas has gotten caught in a short squeeze, uk power has lost a little, metals is metals .... things are moving on the personell front as well: Rudi starts monday Mike Mumford (internal transfer from Enron Credit) start 9/3 Tracy comes in mid September Blair van Zant -Director credit starts on 9/30
| London Update |
The following reports have been waiting for your approval for more than 4 days.
Please review.
Owner: Karen K Heathman Report Name: Brad Larson Days In Mgr.
Queue: 5
| Expense Reports Awaiting Your Approval |
Dan, in response to the following memo, can you discuss with Rick his ideas.
I would also like to go through a detailed description of each EES office, its people and functions to determine which should be eliminated and which should be modified.
Given the latest redeployments and terminations the field offices are a shadow of their previous stature either way.
This is consistent with our overall strategies but perhaps we want to accelerate.
If you could help set up the framework to discuss I would much appreciate.
Good job on handling the "5's".
Regards
| Remote Offices- Suggestions |
The doorstep audit is not yet complete as I'm having about 25 or so deals "tested" out of the Long Beach office.
We should know all final results within the next week or so.
Rick-your suggestions are generally on target as we have already begun the process for pulling each specific office's information together-ie: how many offices do we have, who are the specific people in them, what do they transact on (DSM, gas/power commodity, services mgmt., etc), and can we consolidate/minimize the number of offices we have.
For example, of the 87-ish offices that we currently have EES folks in, only 14 of those offices have individuals that transact gas or power deals in the EnronDirect sales group (ie: customers below $10 million in energy spend) and there are @ 45 sales folks in these 14 offices.
The losses now expected out of the Long Beach office are MUCH lower than initial estimates.
If anyone would like to review, please call me directly.
We are already well underway in establishing new transaction process' for both gas and power deals.
Although we have already put in place and communicated these new procedures to each of the sales offices, we are putting together a "sales package" that will encompass each of the new procedures in detail, each of the new gas and power contracts and rules for use, and a new sales policy which will review in detail the responsibilities for each sales individual.
This policy will require signatures from the sales folks in order for them to continue working for EES in a sales transaction role.
We are also exploring an independent verification process whereby we would have someone from either Deal Capture or Deal Management actually contact the customer to confirm the transaction.
The "McDonald's Hamburger" analogy is quite appropriate here!
Just wanted to let everyone know what was already underway.
| Remote Offices- Suggestions |
Rick, thanks for taking so much of your time to explain RAC to the IPG group.
You said all the right things and left them with exactly the impression we were shooting for.
We are now trying to finalize a term sheet so we will be working with your folks to get this transaction down the road.
If I can return the favor let me know.
Thanks again.
| IPG visit |
Attached are the Enron Global Markets EOL Crude 24/7 Trading violation memos for Net Open Position, Maturity Gap Risk and VAR for August 10, 2001.
The Office of the Chairman for Enron Global Markets is responsible for printing out hard copies of these memos, signing and returning the hard copies to Chris Abel at 3560f, who will forward them to RAC to obtain their signature.
Thank You
| Final 8/10/01 EOL Crude Violations |
As you may recall this Committee issued 30 subpoenas to Enron officers on January 11.
Mike Levy of Swidler Berlin has been retained by the Company to assist you in gathering and producing documents that are responsive to the subpoena.
Mike or someone from his firm will be contacting you this week.
Mike will be in touch with J.C. Nickens, who represents many of you in civil litigation and as SEC co-counsel, so they do not duplicate efforts.
In addition, the Company has formed a Task Force to respond to all requests for documents.
Dave Grant is the head of the Task Force.
Dave or someone from the Task Force may also contact you concerning the subpoenas.
Thank you for cooperating with these people.
Please do not hesitate to call me (5-2402) or Dave (3-1681) with any questions.
Thanks.
| Subpoena From Senate Committee on Governmental Affairs You Received |
Rick, Lynn recently demo'd portrac for all of us in Corp Development.
It is a fantastic tool.
It's been needed for forever - I've been pulling together an asset list for Andy and Jeff Donahue - and I know first hand how difficult it is to get the detail that your group has input into portrac.
Donahue also thinks it's a great tool.
Lynn is going to demo it for Andy sometime soon.
I'm working with Lynn and Dave Gorte's folks (Cindy Hudler) to create a livelink library of models, presentations, tax structures, etc.
(all the files a corp dev person needs when we actively work an asset for sale).
We hope to have a link on the portrac web page similar to the DASH and COMET links.
It's very encouraging to see how far your group has come in organizing our investment data - Cindy's got a 30GB file of all models.
It sure makes my supposed 6 - 9 month job easier!
| portrac |
Sovereign Bond Spreads: =20 Significant New Issuance - Commentary: ?=09The emerging markets started the week on an extremely quiet note as inv= estors awaited more news from Argentina, in particular, on possible IMF sup= port for the country.
The situation started to improve on Tuesday night aft= er Domingo Cavallo's speech intended to support domestic confidence, in whi= ch he reiterated that the Argentine government would not default on its deb= t payments.
He also announced some special measures designed to reduce the = government's debt burden, such as an acceptance of bonds as payment for pas= t-due taxes and bond coupons for future tax liabilities.
This announcement,= together with positive clues from the IMF about the possibility of a US$6.= 9bn disbursement to Argentina, helped the market to rally around 2.5 points= .
However, the continued fall of international reserves and private sector = deposits, evidenced by the latest data release, did not contribute to reviv= e investor confidence and pulled the market down by around 1 point.
In Turk= ey, the week was fairly busy with prices rising on the back of the successf= ul T-Bill auction and as a result of a technical short squeeze.
Real money = accounts and local banks were active buyers of Turkish bonds helping the Tu= rkey 2030 benchmark to break through an important resistance level of 80.
R= ussian market activity picked up on the positive news from Argentina, but t= he rally was not sustained and Russian bonds closed almost unchanged on the= week.
Central and Eastern European assets had a positive week gaining arou= nd 0.25-0.50 points in price.
Overall, the general sentiment in the emergin= g debt markets has improved but is still very much subject to stabilisation= in Argentina.
The EMBI+ Index tightened around 20 bps on the week to at +8= 96 bps level on Friday.
?=09The United Mexican States (Baa3/BB+) placed a US$1.5 bn 8.30% issue due= 08/2031 on Monday.
The bond was priced at a spread of +335 bps over Treasu= ries.
The fact that a Latin American issuer was able to successfully place = such a large transaction is a good sign that the impact of the Argentine cr= isis is limited and has not shut down the primary market for borrowers.
?=09The Republic of Latvia's (Baa2/BBB) credit rating outlook was raised by= Standard & Poors from "Stable" to "Positive" reflecting an improved spendi= ng control and better perspective for GDP growth.
| Sovereign Bond Spreads, 10 August 2001 |
Attached please find the daily log for 08/09/01, 08/10/01 and weekly summary for week of 08/06.
If you have any comments please advise at ext 54751 or send email.
Regards,
| Daily Log and Weekly summary log |
Attached is the Enron Americas GasTrading violation memo for Maturity Gap Risk for August 13, 2001.
The Office of the Chairman for Enron Americas is responsible for printing out a hard copy of this memo, signing and returning the hard copy to Chris Abel at 3560f, who will forward it to RAC to obtain their signature.
Thank You
| Final 8/13/01 Gas Violation |
Attached are the Enron Global Markets EOL Crude 24/7 Trading violation memos for Net Open Position, Maturity Gap Risk and VAR for August 13, 2001.
The Office of the Chairman for Enron Global Markets is responsible for printing out hard copies of these memos, signing and returning the hard copies to Chris Abel at 3560f, who will forward them to RAC to obtain their signature.
Thank You
| Final 8/13/01 EOL Crude Violations |
Please note the following addition to the domestic credit reserve for Aug 2001: CP: Valley Electric Association, Inc. Deal No: 714097 (leg 1 on-peak; legs 2 and 3 off-peak) Deal Date: 8/1/2001 Deal Specifics: EPMI fixed price power sale Term: 6/1/2002 thru 12/31/2006 Volume: variable hourly MWs; up to 35MW/h for on-peak 6X16; up to 40MW/h for off-peak Price: Fixed $46.75 Delivery Point: Mead basis (Palo Verde/WSCC-S) Trader/Mid-Marketer: Matt Motley/Paul Choi Credit Reserve Amount: $48,500 (forty-eight thousand five hundred USD) RAC: transaction confirmed under 2/13/01 Master Contract with margin rights.
Please call w/any questions.
Regards,
| Valley Electric Association, Inc. - credit reserve |
Please note the following addition to the domestic credit reserve for Aug 2001: CP: PG&E Energy Trading - Power L.P. Deal No: 731164.1 (leg 2 of Calendar Spread Deal - Buying Cal 04) Deal Date: 8/14/2001 Deal Specifics: EPMI to purchase Financial Swap on 50MW of Power for Calendar Year 2004.
Term: 1/1/2004 thru 12/31/2004 Volume: 50 MWs on-peak Price: $40.00 Delivery Point: NY West (Zone G)) Trader/Mid-Marketer: Gautam Gupta/Kevin Presto Credit Reserve Amount: $10,280 (ten thousand two hundred and eighty USD) RAC: transaction confirmed under 6/19/01 ISDA.
Please call w/any questions.
Regards,
| Credit Reserve for PG&E Energy Trading- Power L.P. |
Please see attached a United Way Contribution Summary by Business Unit as of Wednesday morning, August 10.
This summary includes the total contribution amount to date, percent participation, campaign goal, and percent of goal for each business unit, as well as the functional groups within your business units.
Currently we are at 77%, or $2.25M, of our financial goal with only 42% participation.
These numbers are still significantly lower than where we were this time last year and we continue to need your help!
If you will do the following throughout the remainder of the campaign, I know it would help exceed our goal of $2.9M.
?
Continue to send out reminder emails including the United Way link ?
Continue to have personal dialogue with your direct reports and those in your group Please let me know if you have any questions regarding this report or the campaign in general.
Thank you for your participation and support of this year's campaign.
| UPDATED UNITED WAY REPORT |
We know you have questions about recent events impacting Enron and our plans for the future.
Ongoing investigations and pending litigation have made it difficult, if not impossible, to share information in a timely manner.
While we can't address certain issues, we can tell you about our initial plans to move Enron forward and emerge from bankruptcy, and we are eager to do that.
We had planned to hold an all-employee meeting tomorrow, January 23, at the Hyatt Regency.
However, we don't want to subject you to the media frenzy that would certainly surround such a meeting, so we've decided to postpone it.
We are currently making arrangements to hold a series of employee meetings within the building to protect your privacy.
We will provide the date and times to you as soon as the logistics for those meetings are finalized.
Prior to the employee meetings, we will provide an overview of Enron's new organizational structure.
You can expect that memo shortly.
| Employee Meeting Postponed |
Attached is the Enron Americas GasTrading violation memo for Maturity Gap Risk for August 14, 2001.
The Office of the Chairman for Enron Americas is responsible for printing out a hard copy of this memo, signing and returning the hard copy to Chris Abel at 3560f, who will forward it to RAC to obtain their signature.
Thank You
| Final 8/14/01 Gas Violation |
To: All Enron Houston Users Subject: New Dialing Instructions Ref: Tie Line Access Code Changes - Enron Building Phone System Effective Saturday, August 18, the access code for remote locations will be modified within the Enron Building phone system to reflect a standard utilized by all Enron phone systems.
The modification will change the first digit dialed when accessing the tie lines by using the Alternative Routing feature from 7 to 8.
As all other Enron phone systems currently access the tie lines with the digit 8, the change from 7 to 8 will only affect users who reside in the Enron Building.
All other Enron phone system users should note that several digits of the tie lines to London, Calgary, and Portland have changed.
What This Change Means To You Effective Saturday, August 18, you must replace the first digit 7 with an 8 when accessing the tie lines.
Additionally, several of the digits to the London, Calgary, and Portland tie lines have changed.
All other digits of existing access codes will remain the same.
For your reference, a list of the new dial strings for remote locations is identified at the bottom of this message.
Please Note: This change also means that any Auto-Dial buttons you use to call associates at remote locations will now have to be re-programmed.
Such buttons may be programmed on conference room phones and FAX machines in your area.
To re-program an Auto-Dial button: ?
Press the Menu button on your soft keys ?
Press the Program button on your soft keys ?
Press the Auto-Dial button you wish to program ?
Dial the new Dial String (as identified below) ?
Press the # key REVISED DIAL STRINGS FOR ENRON TIE LINE NETWORK Users must dial 8 digits to call via Tie Lines
| New Dialing Instructions |
Rick 1 Limits.
Here's how I interpreted the BOD approvals: The BOD approved an aggregate of $150MM, with $50MM of discretionary VaR, plus the new policy which doesn't recognise the concept of discretionary VaR.
So here's what I did: Effectively I allocated all the $50MM of discretionary such that Pug's "Big Buckets" are now as follows: US Gas $100MM US Elec $100MM Europe Gas & Elec $35MM Global Products $20MM Financials $15MM Emerging Businesses $20MM If you have a calculator handy you'll see that this aggregates to $149.164MM (assuming zero correlation).
At Business Unit level the individual commodity limits are unchanged, and I have put limits over the Business Units themselves as follows: Enron Americas $82MM EWS OOC (aka George Martingale) $3MM EEL $34MM EGM $23MM EIM $8MM EBS $4MM PGE $4MM ETS $1MM Again I used root-sum-of-squares, and remember the original commodity limits (by VaR, net open and mat gap) are still in place (e.g.
gas = $61MM as before).
So that keeps it screwed down pretty tight and preserves the discretion between the "Big Buckets" and the Business Units.
I spoke to Rebecca C who could only remember the decision outlined above, but offered to call Pug and let him know.
I said I would come back on that.
I think we should do that ourselves, possibly with Lay in the loop (?).
Cleared it with Whalley today (he laughed), mentioned the dwindling membership of the Risk Management Committee and said "In my current role I think I should be asking for limits, not approving them" ...and then... 2 The gas desk lost $98MM yesterday A combination of a very bullish AGA number (3 Bcf injection - not a typo - three Bcf !)
plus some hurricane activity in the gulf sent prices up by between 25 and 30c all across the strip.
The long and the short of it was we are long Nov - Jan but short (big-time) out beyond that - the rest is arithmetic.
So we have two flavors of P&L notification, one at the business unit level (Americas) $89MM loss against VaR limit of $82MM; the other as a commodity, losing $126MM (the desk aren't the only ones with a gas position, as usual) against the Big Bucket number of $100MM.
Total trading was a loss of $106MM against a VaR limit of $150MM so no calls to Pug required (thank goodness).
That's it for now, hope you're having fun and remember: pan-fry the big ones and throw back the little ones.
DP
| Policy and other items |
Rick, Our group has completed our new investment strategy and are preparing to move into the execution phase.
I would appreciate the opportunity to present the strategy to you, Dave Gorte and Randy Petersen.
It would take about 1 hour, and I would value your feedback.
Let me know if you are up for it, and I will have my assistant schedule it.
Thanks,
| Enron Principal Investments Strategy |
Attached are the Enron Global Markets EOL Crude 24/7 Trading violation memos for Net Open Position, Maturity Gap Risk and VAR for August 15, 2001.
The Office of the Chairman for Enron Global Markets is responsible for printing out hard copies of these memos, signing and returning the hard copies to Chris Abel at 3560f, who will forward them to RAC to obtain their signature.
Thank You
| 8/15 BU EOL Crude Violations |
Attached are the Enron Global Markets EOL Crude 24/7 Trading violation memos for Net Open Position, Maturity Gap Risk and VAR for August 16, 2001.
The Office of the Chairman for Enron Global Markets is responsible for printing out hard copies of these memos, signing and returning the hard copies to Chris Abel at 3560f, who will forward them to RAC to obtain their signature.
Thank You
| 8/16 Business Unit EOL Crude Violations |
IT'S THE LAST DAY!
WE'RE GETTING CLOSER, BUT STILL HAVE A WAY TO GO!!
We are currently at 85% of our goal with 61% participation.
It's time to really rally the troops.
Per the report below, you will be able to see how your group is doing, Please call or email if you have any questions or need anything else.
Thanks for all that each of you are doing to help us exceed our $2.9M goal.
| Updated United Way Report |
Attached is the Enron Americas GasTrading violation memo for August 16, 2001.
The Office of the Chairman for Enron Americas is responsible for printing out a hard copy of this memo, signing and returning the hard copy to Chris Abel at 3560f, who will forward it to RAC to obtain their signature.
Thank You
| 8/16 Business Unit Natural Gas Violation |
The court held a hearing today on the motion by some of the plaintiffs for an order regarding the preservation of documents.
The motions were directed primarily to Arthur Andersen and, to a lesser degree, to Enron.
None of your names were mentioned at the hearing.
Arthur Andersen and one of the plaintiffs' lawyers had agreed on a proposed order for preserving documents.
Other plaintiffs' lawyers said that the agreed order was not stringent enough.
With respect to Enron, there is some doubt as to whether the court can enter any order regarding Enron, because that may be the exclusive purview of the bankruptcy court.
Although the issue of which attorney should be appointed lead counsel was not technically before the court, most of the hearing was consumed with the various plaintiffs' lawyers arguing that the court should select them to be lead counsel.
The court said that it would not rule on the motion regarding preservation of documents until after 3:00 tomorrow.
All of the plaintiffs' lawyers are to get together in the next 24 hours to see if they can agree amongst themselves as to what they want the court to do.
The court said she would also consider whether Arthur Andersen was willing to agree to whatever order plaintiffs' all might agree upon.
The judge suggested that she would be selecting the lead plaintiff (and counsel) within the next few weeks.
| Report on Hearing Today |
Attached are the Enron Global Markets EOL Crude 24/7 Trading violation memos for Net Open Position, Maturity Gap Risk and VAR for August 17, 2001.
The Office of the Chairman for Enron Global Markets is responsible for printing out hard copies of these memos, signing and returning the hard copies to Chris Abel at 3560f, who will forward them to RAC to obtain their signature.
Thank You
| 8/17 Business Unit EOL Crude Violations |
Attached is the Enron Americas GasTrading violation memo for August 17, 2001.
The Office of the Chairman for Enron Americas is responsible for printing out a hard copy of this memo, signing and returning the hard copy to Chris Abel at 3560f, who will forward it to RAC to obtain their signature.
Thank You
| 8/17 Business Unit Natural Gas Violation |
We have extended the campaign for three more days!
As of this morning, we are at 91.69% of our goal and 70% participation.
The 70% participation rate includes those who have completed the on-line pledge process, but may not have contributed (427 out of 4,655 have chosen not to contribute).
The contribution rate is 64%.
We also have a total of 56 Alexis de Tocqueville members which surpasses last year's total of 49.
Out of those 56, 19 are new members!
The next three days are crucial to exceeding our $2.9M goal.
Thanks for all that you can do to help make this happen.
Please let me know if you need anything else.
Thanks, Kathy
| Updated Report |
Rather than hold a meeting to discuss the Finance Comm.
meeting scheduled for Monday, Feb. 11, I have asked Laura Valencia to schedule a conference call with Pug Winokur and the three of us to discuss the agenda and the presentation materials.
Please watch for this meeting on your calendar, or let me know if you have already been in contact with Pug such that no meeting is necessary.
Also, pls.
note that the Board and Committee meetings will be held in NYC.
If you do not have other reasons to travel to NYC, I suggest you connect via teleconference.
Thanks.
Paula
| Finance Comm. Mtg. on 2/11 |
Rod, Stan and Rick, Pursuant to your request, I have visited PGE last week and had conversations with the respective PGE employees.
Below are my conclusions and analysis.
In Retrospect (Jan-01 - Sep-01) Background During this period PGE has negotiated a Power Cost Adjustment (PCA) mechanism that limits PGE risks and rewards.
According to this mechanism, PGE is responsible for only 10% of the costs in excess of $232.5 MM.
Earlier in the year, PGE has accumulated the length for the 2001-2002 period that appreciated in value significantly as prices were increasing.
Since liquidations on the hedges are included in the power costs, this value has offset the company's power costs and pushed the total cost of power in the deadband, where PGE wears 100% of risks and rewards.
Earnings Impact As prices continued to decline against the long position, PGE incurred significant power costs from its hedge liquidations and moved through the deadband, where the Company wears 100% of the downside.
Other items that impacted earning included: - reduced load during the period - reserves for CA receivables - losses in spec trading For the remainder of the PCA, through the end of Sep-01, PGE is only responsible for 10% of the incurred power costs.
Analysis In my opinion, the following factors have affected PGE's decision to maintain the length in a bearish market: - bullish or not as bearish sentiment among traders - reliability issues: PGE has significant political and financial repercussions for being caught short in a blackout - psychological fears of tight power supplies and potential blackouts/brownouts, mainly because of recent situation in CA Next 15 Months (Oct-01 - Dec-02) PGE has agreed to implement a similar PCA mechanism for the next 15 months.
Below are the highlights: - PGE is currently negotiating the base cost level with the PUC.
This is a critical step to ensure that PGE's estimate of the 15-months baseline power costs, as agreed with the PUC, is equal to or greater than the actual costs for the period (~$984 MM) - the new PCA provides for tighter bands (+/- $28 MM for 100% exposure) - transmission costs, resulting from load variations are not factored into the PCA mechanism - Given tighter bands, PGE will begin to place greater emphasis on the spec book - MTM earnings Beyond 2002 PGE is naturally short beyond 2002 (load exceeds generation and hedges).
PGE could begin discussions with the PUC on the structure of a new PCA mechanism to limit their risk and rewards; or move towards greater deregulation.
There is a possibility that PGE will loose some of its industrial commercial load during this time period, with an obligation to take them back at a standard offer.
In the meantime, the Company began purchasing power for the 2003-2004 time period to cover residential load.
Recommendations/Action Steps 1.
Design decision authority process for significant business decisions.
In retrospect, it would be helpful to analyze the value of the long position against the cost of reliability and make a decision accordingly.
Other examples: should PGE apply for a PCA mechanism past 2002, should PGE be purchasing power for 2003-2004.
Also, participate regularly in the PGE Risk Management Committee meetings.
2.
Continue to improve trading controls (missed a deal earlier in the year resulting in a $10 MM loss in the spec book).
Significant improvements have been made since then.
- move settlements function under middle office to ensure segregation of duties - currently reports through the commercial function - capture option exposure ASAP or prohibit option trading: PGE has an option trade in the books that is not captured in the risk management and reporting framework (position, P&L and VaR) - develop processes for capturing other exposures: Interest rates, embedded in commodity cash flows and assets Foreign currency, resulting from transactions with Canadian counterparties in CAD$ Heating Oil #2, PGE has ~ 1 MM Bbls in storage at the Beaver Plant Coal, two-year contract for supply of coal to the Boardman Plant 3.
Daily reporting of PGE risks: VaR, Positions and P&L, notifications of limit violations; as well as, notification of important transactions (purchase of 2003-2004 power) 4.
Input/coordination with EWS on important trading decisions.
Insights from the West Desk could help PGE make better trading decisions.
5.
Periodic review of trading controls - add PGE to the list of Doorstep projects.
I would be glad to provide additional details.
Vlady.
| PGE Summary |
Here are my thoughts on some of Pug's comments (Karen has faxed the memo from Pug I believe): 1 Roles of Audit and Finance Committees I agree with the distinction he draws and I don't see why the entire Board should not see risk/return information.
We can tweak the policy to bring this to the fore.
2 Post-Audit I'll talk to Gorte 3 Capital Allocation Complex.
Charges for risk capital would not be as difficult as allocating funding.
Building balance sheets is key.
4 Trading Limits In my last tome I have effectively limited the use of D-VaR to the levels specified by the concentration buckets, so I think we have satisfied that concern.
With position limits I would argue that ones needs them where VaR does not "callibrate" well, for example with Steel trading where there is no observable options market, you need more metrics to tell you about the risk.
Conversely in US Gas I think the market is fairly deep and the VaR tells us much about the risk.
Also, in a similar fashion to "model approval" under Basle Capital Adequacy rules, the quality of the risk administration process and other controls could make us more comfortable about just using VaR.
5 Reporting Policy Section 4.1.2.3.1 talks about violations and notifications.
He is asking should he not be called for a five day loss (c) and an ETL excess (d), in addition to the usual corporate VaR breach and one day loss > VaR.
I think the five day loss actually would warrant a Pug call because under the new method (5 day loss > 225% of VaR), the number could be very large (but also less likely).
For ETL I would advise against having a Pug call on this since we still need to get the metric bedded down properly (and all the usual arguments about the math played out).
The phrase "at their discretion" to which he refers means that the Risk Committee can tell who they like about violations, as they deem necessary - so its just built-in flexibility.
6 Liquidity We are cranking this right now.
Other news Gas off approximately 15c across the strip today - Friday was quiet.
George has made $9m over the last 5 days as crude has come off 50 - 60c ENE is $36 (horrible) DP
| Pug's Fax |
Experience the best of the oil and gas world at SPE 2001: An E&P Odyssey.
This premier industry event, SPE's Annual Technical Conference and Exhibition, will be held on 30 September - 3 October at Ernest N. Morial Convention Center in New Orleans.
Professionals from around the world attend to advance their careers through 13 technical discipline tracks Eight one-day and ten two-day short courses Presentations by industry leaders including the Opening General Session , "The Global Oil Industry in the 21st Century," which features speakers such as Harry Longwell, Senior Vice President/Director of Exxon Mobil Corp., and Nader Sultan, Deputy Chairman and CEO of Kuwait Petroleum Corp. Establishing relationships with more than 8,000 participants 400 leading-edge E&P companies in the exhibition hall Hands-on demonstrations of SPE products and services at the SPE Pavilion Networking opportunities at the Annual Banquet and the President's Luncheon Register now to be part of SPE's premier event!
| Experience the best of the oil and gas world at SPE 2001 |
It's the last day and only $135,000 more to go!
We're at 95.35% of our $2.9M goal, 70% contribution rate, and 75% participation rate.
I've attached the latest report so you can see how your business unit or functional group is doing.
The final push is on.
Wouldn't it be great to get to $2.9M by 5:00 p.m. today!
Please call if I can help you in any way today.
I know we can get there.
Thanks for all of your help, Kathy
| Updated UW Reports |
Shona, As per my memo to you on August 13th, I am scheduling a kick-off meeting with individuals to discuss a daily tie-out process across all global risk applications/reports, i.e.
DPR, Infinity, RisktRAC (VAR and Benchmark) and CAS.
This would provide proof (or a trail to what is missing) that required information from all risk books, commodities, and business units are appropriately reported on a daily basis.
As stated earlier, without a robust global books application, the daily process currently in place provides little assurance that "everything" rolls up correctly.
It also does not include Infinity.
My suggestion for attendance at this meeting, in addition to you, Beth and I, is as follows: Stacey White Todd Hall Sheila Glover/Clara Carrington
| Daily Tie Outs Across Risk Systems |
The following reports have been waiting for your approval for more than 4 days.
Please review.
Owner: Karen K Heathman Report Name: Brad Larson Days In Mgr.
Queue: 4
| Expense Reports Awaiting Your Approval |
At the last RAC Departmental meeting concern was expressed that the vacant positions within RAC were not being filled as quickly as hoped.
I would therefore like to keep you all updated as to where we stand with new joiners.
Recent new recruits include: Rudi Zipter (Director - MRM) who has transferred from Houston, Shane Miller (Senior Specialist - MRM) and Ravi Tumuluri (Associate - U/W) and I would like to welcome them all to RAC.
Looking forward we have several new people coming on board in the next few months and I have outlined their provisional start dates below: Credit John Collenette (Snr Director) - 5 November Mike Mumford (Director) - 3 September Blair Van Zant (Director) - 1 October Tracy Ngo (Director) - September Simon Hockenhull (Snr Specialist) - 2 September Adam Bauer (Specialist) - 27 August (Sydney office initially) Shane Forster (Sr.Specialist) - 24 September Market Risk Michel Gantois (Director) - December/January Erik Beekman (Specialist) - 17 September Underwriting Christian Pearce (Associate) - 10 September I realize that, in addition to increasing our capacity, new starters also require a fair amount of indoctrination/training.
Many members of our team as well as RAC-Houston and much of EEL have put a large amount of time and effort in the selection of these people, all with the consideration of adding people that will fit in and provide some level of unique experience/insight.
We believe that these new starters will provide an excellent complement to our existing skill sets.
Please do your best to welcome these new people, take advantage of their capabilities as well as give them the benefit of your knowledge and experience.
Hopefully these additions will allow us to effect an intellectual capital transfer that benefits us all and makes this a better place to work in all respects.
Please let me know if you have any questions or concerns.
Ted
| New Starters |
First of all my thanks to Vladimir for visit to PGE and the analysis work he did.
After reviewing your PGE Summary memo, I think it would be helpful to meet and discuss the Recommendation/Action Steps in more detail.
I will have my assistant call to establish a mutually agreeable time.
| PGE Risk Manageent Analysis |
Mark, The word on the street is that the NewPower folks are getting further in trouble (ie) strange trading activity, etc.
Looks and smells a little like the old EES.
Couple of opps: - get another shareholder on-side and demand an Enron led audit to confirm financial and operating health; - followed up by hostile exit of mgt team if significant issues arise.
Issues: - obviously pushes us into another level of complicity/fiduciary in a blow up or bankruptcy not unlike the issues we faced with Kafus et al; however, given our continued interest a significant control issue could result in a significant acceleration of a write-off of our existing position plus any outstanding credit.
I would recommend we force the management team to submit to a detailed audit as a part of a united shareholder iniative - Lets discuss.
Rick Buy, what is our current credit position?
Greg/John, do you have a view on this one?
Rick Causey, we probably need a more "permanent solution" ot the NewPower issue.
Regards
| NewPower |