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Enron Mail |
---------------------- Forwarded by Ted Murphy/HOU/ECT on 02/22/2000 04:26 PM
--------------------------- Steve W Young 02/21/2000 10:45 AM To: David Port/Corp/Enron@ENRON cc: David Weekes/LON/ECT@ECT, Tim Poullain-Patterson/LON/ECT@ECT, Robert Quick/LON/ECT@ECT, Fernley Dyson/LON/ECT@ECT (bcc: Ted Murphy/HOU/ECT) Subject: Re: Barcelona D Weekes is working with Tim P-P to address the resulting questions and should have a briefing memo together for distribution tomorrow. We will follow up to answer Rick's questions at that time. The major issues/questions are still a bit fluid since this just surfaced but presently include the following: Issues/Questions Exposure - Spread sheets in Liquids and CAS show dramatically different exposures of roughly US$ 68 MM (peak, now closer to $ 47 MM) for spreadsheets and US$ 13 MM for CAS. I asked Tim to detail the anticipated exposure in coming weeks (ie. timing of cargoes in transit net of anticipated payments to be received). Controls - Delayed mailing of Invoices by up to 30 days in some cases. Various other controls issues need to be addressed including where were the triggers in the system that should have flagged the issues earlier. Legal Documentation - Why contract volumes were significantly exceeded and no documentation prepared to support trades once the 330k mtpy annual limit was breached? The effect apparently was trades being done without contractual support. Deliverables Accelerate Feb month end payments (approx. 30 MM). Disallow deferred payments from Muentes (up to 75 days in some instances) if customers are paying more quickly. Current contract, now effectively expired, allows deferral of payments (1/3 each month starting with end of month of discharge). Assign future A/R's directly from third parties on the other side of Muentes. Create a lock box for future payments to avoid receiving $'s via Muentes. Execute JV documentation that has now been outstanding for some time. Goals - in sequential order: reduce exposure to Muentes, paper non-documented transactions already done (ie. beyond volume limits of current contract, review mid/back office systems to avoid future problems, improve structure via JV or other interim steps if JV execution is still some time off. D Weekes - Get with Ross Koller to make sure no new business is done with Muentes (beyond fulfilling new commitments). Likewise, you or Hardy need to get with Tim P-P and R Quick in order to assure all are on the same page and agree the best way forward for this relationship. Based on info. in hand, there does not appear to be an issue with Muentes' ability to perform (please confirm). Therefore, care should be taken to maintain the relationship; however, I don't see the benefit in doing new deals with Muentes (beyond fulfilling current commitments) until the exposure is brought down. Muentes does not appear to justify additional exposure based on my conversation with Hardy last week. So, before the credit limit is reconsidered, the structure needs to be improved where payments bypass Muentes (via lockbox or another alternative) and A/R's assigned directly to ENE. The new JV documents may take steps to improve the structure; however, this needs to be confirmed as it has been some time since the JV docs. have been circulated. SY From: David Port @ ENRON 18/02/2000 19:10 To: Steve W Young/LON/ECT@ECT cc: Ted Murphy/HOU/ECT@ECT Subject: Barcelona Steve I had a brief conversation with Rick today and Barcelona came up. My sense is that he is expecting an autopsy that answers how it happened (including) how the exposure ran up but didn't get flagged in the right places. Is somebody taking care of this ? D
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