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Enron Mail |
I stand corrected - we need to DASH everything over $500K.
Regards Delainey ---------------------- Forwarded by David W Delainey/HOU/ECT on 11/03/2000 08:25 AM --------------------------- David Gorte 11/02/2000 07:28 PM To: David W Delainey/HOU/ECT@ECT cc: Joseph Deffner/HOU/ECT@ECT, Mark E Haedicke/HOU/ECT@ECT, Rick Buy/HOU/ECT@ECT, John J Lavorato/Corp/Enron@Enron Subject: Re: Commodity / Embedded Finance Deals Dave, As of today, the Transaction Approval Process requires that any embedded financing over $500,000 needs to be DASHed. RAC, however, is close to finishing a new process for commodity embedded financings--both prepaids and tilted swaps--that would not require a full DASH but an abbreviated approval document based upon specified credit ratings, financing amounts, and maturities for transactions having standard credit documentation. For example, a $25 million, five-year exposure to a AAA counterparty with standard documentation is contemplated to be approved via this abbreviated approval document. This abbreviated approval document would only be available for transactions meeting these criteria if: (i) structured financing capacity were available, (ii) the funds flow issue created is manageable (both (i) and (ii) as confirmed by EGF), and (iii) the pricing met a threshold that included the structured financing cost, an appropriate credit spread/reserve, and a syndication risk premium. The abbreviated approval document is intended to expedite the approval of relatively straightforward embedded financings where a full DASH is impractical or inefficient. It is presently contemplated that the abbreviated approval document could be approved with two signatures: the Originator's and a RAC signature (either Bill Bradford's or mine), with business unit management and EGF receiving weekly updates on transactions approved via this document, but I would welcome your thoughts on this. In any event, I will provide you with the proposed abbreviated process by you for your review and concurrence before if it is implemented since the preponderance of these transactions are expected to be originated by ENA. Please let me know if you have any questions or comments. Regards, Dave David W Delainey 11/02/2000 09:25 AM To: Tim Belden/HOU/ECT@ECT cc: David Gorte/HOU/ECT@ECT, Joseph Deffner/HOU/ECT@ECT, John J Lavorato/Corp/Enron@Enron, Mark E Haedicke/HOU/ECT@ECT Subject: Commodity / Embedded Finance Deals Tim, I would argue that we should pursue this business as long as a) we are being adequately compensated for the financing and underlying commodity risk; b) we have very good paper; c) we are dealing with solid credits and are charging an appropriate risk adjusted cost of capital for the underlying financing; d) we have the ability to syndicate the capital or funds flow position if needed to manage cash issues and e) that RAC is comfortable that we are reaching these goals. Any imbedded financing or $5M or more should be DASHED. David, Joe and Mark should be your key contacts to ensure we are adequately managing these issues but I do not see any fatal flaw in the strategy if priced/managed well and we watch the funds flow issues. Regards Delainey ---------------------- Forwarded by David W Delainey/HOU/ECT on 11/02/2000 09:15 AM --------------------------- From: Tim Belden 10/31/2000 01:54 PM To: David W Delainey/HOU/ECT@ECT cc: Subject: Commodity / Embedded Finance Deals ---------------------- Forwarded by Tim Belden/HOU/ECT on 10/31/2000 10:57 AM --------------------------- From: Tim Belden on 10/31/2000 11:54 AM To: Dave Delainey cc: Subject: Commodity / Embedded Finance Deals ---------------------- Forwarded by Tim Belden/HOU/ECT on 10/31/2000 10:56 AM --------------------------- From: Tim Belden on 10/31/2000 11:52 AM To: John J Lavorato/Corp/Enron, Dave Delainey cc: Christopher F Calger/PDX/ECT@ECT Subject: Commodity / Embedded Finance Deals We have closed the following deals where we deliver power two a muni in the short term and get paid back power later on. These deals have both a commodity and a finance portion: Counterparty Loan Period Repayment Period Amount Financed Grant County 7/01 to 7/06 7/06 $4.7 million Grant County 5/01 to 7/06 7/06 $5.7 million Avista/Kaiser 7/2000 7/2000 to 7/2006 $31.3 million BPA/Kaiser 9/2000 7/2001 to 9/2001 $36 million Clatskanie 11/2000 to 9/2001 10/2001 to 9/2006 $5 million Eugene Water and Electric 1/2001 to 3/2002 11/2001 to 4/2002 $4.9 million Eugene Water and Electric 7/2001 to 12/2002 5/2002 to 12/2002 $7.3 million We are seeing demand for more of these. For example, Tacoma City Light is looking at $35,000,000 + in this type of structure. What do you guys need to know about this business and how much of an appetite do we have for this?
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