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Enron Mail |
Dick, you are doing the right things - if you run into timing issues in the
future do not hesitate to give me a call directly. Regards Delainey ---------------------- Forwarded by David W Delainey/HOU/ECT on 10/10/2000 09:51 AM --------------------------- Richard Lydecker@ENRON 10/09/2000 04:27 PM To: David W Delainey/HOU/ECT@ECT cc: Jeff Donahue/HOU/ECT@ECT, Raymond Bowen/HOU/ECT@ECT Subject: Re: Basic Dave, I agree with your perspective on this. Building another theoretical model in the Basic situation seems naive to me. This company is and has been in a financial death spiral. For months, all involved on the ENA side have been focused on a probability that the Basic situation would result in a writeoff of a very significant piece of the Merlin debt and nothing for the equity. The deal we are working on is at the high end of the projections reviewed with the rating agencies on recovery for the Merlin debt and actually gets us at least some chance of recovery on our equity. I do not agree that no effort has been made to market the company. As you recall, we worked very intensively in trying to support an IPO which would take out the debt. Despite many attempts to structure a successful offering (and a series of difficult concessions by Enron), the IB finally pulled it. The S-1, by the way, was about the ugliest I have ever seen. We carefully evaluated seeking an industry purchaser. Our conclusion was that this risked losing significant value, would require a good deal of time, and had virtually no likelihood of equalling the recovery we have would achieve if we can do the deal on the table. This evaluation was reinforced with the contacts we have had with industry players. In any liquidation there is always the possibility that another path could possibility capture more value. In this case especially, I think we have a very good idea of reality and are making an uniformed decision to recommend a better-than-exected exit. This is not a firesale. We will continue to work constructively with RAC in a non-confrontational mode on Basic. Be assured, however, that if I feel there is a real risk of process getting in the way of achieving our objectives, I will raise a red flag. Dick. David W Delainey@ECT 09/29/2000 11:34 AM To: Rick Buy/HOU/ECT@ECT cc: David Gorte/HOU/ECT@ECT, Jeff Donahue/HOU/ECT@ECT, Richard Lydecker/Corp/Enron@Enron, Raymond Bowen/HOU/ECT@ECT Subject: Re: Basic Rick, I disagree - the DASH had an implication unsubstantiated that the current deal on the table is a bad one. I believe that RAC should provide a clear opinion or say directly that the analysis is deficient. It is too easy to state the obvious. Regards Delainey ---------------------- Forwarded by David W Delainey/HOU/ECT on 09/29/2000 11:17 AM --------------------------- From: Rick Buy on 09/29/2000 10:18 AM To: David W Delainey/HOU/ECT@ECT cc: David Gorte/HOU/ECT@ECT, Jeff Donahue/HOU/ECT@ECT, Richard Lydecker/Corp/Enron@Enron, Raymond Bowen/HOU/ECT@ECT Subject: Re: Basic In my opion this DASH did exactly what it was supposed to do - prompt a dialog on whether we are getting an adequate price for this asset. My understanding is that no model was built to value an alternative nor was there any effort to market the company. If we want to "take the money and run" (whhich in this case is probably the right decision) fine, but we should know what we are leaving behind, especially given the current commodity price environment. Rick
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