Re: GE Plastics Facts

Rodney, if this deal is such a long put why did you push me into this process?

You should have made the call to kill it.

Regards
Delainey
---------------------- Forwarded by David W Delainey/HOU/ECT on 10/18/2000
09:54 AM ---------------------------

From: Rodney Malcolm 10/17/2000 07:32 PM

To: David W Delainey/HOU/ECT@ECT
cc: Raymond Bowen/HOU/ECT@ECT, Marty Sunde/HOU/EES@EES
Subject: Re: GE Plastics Facts

Dave, Marty,

In general moving the deal to just a Selkirk deal minimizes a lot of the
concerns surrounding centralized decision making etc. The plant manager is
on board
as is Doron Grossman. As a result the sales part should be largely completed
but the deal is far from closed. I believe driving to closure with margin
with GE in 2000 will be a challenge. I haved attached some information
regarding Marte's other questions and would be happy to discuss with the team.

David W Delainey
10/16/2000 09:42 AM
To: Rodney Malcolm/HOU/ECT@ECT, Raymond Bowen/HOU/ECT@ECT
cc: Marty Sunde/HOU/EES@EES
Subject: Re: GE Plastics Facts

Rodney, from what you told me it sounds like GE is willing to play on the
Selkirk asset so the sales cycle should be largely completed. Can you answer
Marty's other questions?

Regards
Delainey
---------------------- Forwarded by David W Delainey/HOU/ECT on 10/16/2000
09:39 AM ---------------------------
From: Marty Sunde@EES on 10/15/2000 09:05 AM
To: David W Delainey/HOU/ECT@ECT
cc: Harold G Buchanan/HOU/EES@EES, Dan Leff/HOU/EES@EES, Karen S
Owens@ees@EES, Mark Frevert/NA/Enron@Enron@ECT, Rodney Malcolm/HOU/ECT@ECT,
Raymond Bowen/HOU/ECT@ECT
Subject: Re: GE Plastics Facts

Hi David,
I'll give you a response with the hope of seeing more information that would
change my mind. If you are asking for my opinon, it is difficult to be
supportive of moving ahead on a transaction like this give the fairly
significant obstacles (these are usually deals killers) that Rodney
describes. What I couldn't read into Rodney's write up were other
undocumented factors that you might change the probability, like:

Is there an Sr. executive champion that is willing to "influence" the GE
negotiating team into getting a deal done, even if the terms are less
desirable than what Rodney laid out as their requirements?
Are the willing to extned the term so that there isn't a capital tail?
Is there any real compelling motivation for this GE Plastics team to change
from current practice? Do we know what that is and what the deadline for
action for change is?
Could Rodney suggest alternatives to address the obstacles and show the
potential impact on the margin in the deal?
Is there some other component of this deal that is so compelling to the
prospect that we can attach these pieces to that?

Realistically, based on what is written, the deal you are describing sounds
like it would have a low probability to close, surely in 2000.
HOWEVER< if there exenuating circumstances like you feel like we just need to
win this at all costs, there are values not being calculated that the client
would recognize, there are senior execs at GE Plastics behind this looking
for a way to close this, or anything else that is convincing your origination
team that they have a winner here....then, lets find out what that is and go
for it.

I wasn't exactly sure what you were asking for. If it was my opinion, that
is above. If it was to put more resource on it to try to make the
probability go up, I'll be glad to help. If it is some other, just let me
know.

I would suggest we just start with trying to get more information from Rodney
and team regarding why they are convinced this can be contracted for with
margin in 2000. I would love to participate and do what we can to make this
work out, as long as we all agree that there are reasonable approaches to
raising the probability of victory.

Thanks

David W Delainey@ECT
10/13/2000 09:47 AM
To: Harold G Buchanan/HOU/EES@EES, Marty Sunde/HOU/EES@EES, Dan
Leff/HOU/EES@EES
cc: Lou L Pai/HOU/EES@EES, Mark Frevert/NA/Enron@Enron, Rodney
Malcolm/HOU/ECT@ECT, Raymond Bowen/HOU/ECT@ECT
Subject: GE Plastics Facts

Guys, I would like your opinion on this potential transaction. This has been
sold through GE for some time and it is reasonably likely that if we employed
some additional resources that this could be completed over the next quarter
or so.

Ultimately, Rodney and his team would like to see EES take control of the
deal with EIM folks staying involved to ensure continuity and to assist to
closure. Assuming that the sales process is largely completed, I see some
value for Enron to take this deal including:
a) $200 M in TCV for 2000;
b) $3 to $5 M in value;
c) GE on our EES resume of companies which will help in future sales to the
large industrial customers;
and d) provides an "in" to the GE family of companies which could result in
significant up-sell capability in the future if we provide a quality product.

Regards
Delainey
---------------------- Forwarded by David W Delainey/HOU/ECT on 10/13/2000
09:36 AM ---------------------------

From: Rodney Malcolm 10/12/2000 07:37 PM

To: David W Delainey/HOU/ECT@ECT
cc: Raymond Bowen/HOU/ECT@ECT
Subject: GE Plastics Facts

Dave,

The GE Plastics facility is located in Selkirk NY just south of Albany and
produces polystyrene and polyphenyleneoxide. The deal value is roughly $4-5
million NPV of which $3-4 million may be markable income.

The obstacles to closure are:
- the projected savings have gone from 27% to 20% when GE said they wanted
more
- there is some capital recovery at the end of year ten that GE would have to
pay us and they are not yet agreeable to,
- the savings include $1 million in O&M savings and it will be very difficult
to get to closure with them letting us do the O&M

Deal Stats Are:

Electricity 230,000 mwh/yr $12 million/yr
Steam 430,000 lbs/yr $3 million/yr
Gas 470,000 mmbtu/yr $2 million/yr
O&M $3 million/yr
Total $20 million/yr

10 year contract, total contract value $200 million.

Let me know if you need any further information.
Thanks,
Rodney