FW:

-----Original Message-----
From: Mccrory, Ian
Sent: Friday, November 23, 2001 7:50 PM
To: Murray, Julia; Aronowitz, Alan
Cc: St. Clair, Carol; Mccrory, Ian
Subject: RE:

JULIA,

I HAVE ADDED THE BELOW COMMENTS IN CAPS. THESE ARE FROM AN INTERNATIONAL POINT OF VIEW ONLY. AS DISCUSSED, PAUL HANKS IS YOUR BEST BET FOR DOMESTIC (IE WITHIN CANADA/USA).

Thanks so much for all of your help. The following is a recap of the questions asked.

1. Describe the types of transportation used by ENA/Enron to transport raw materials and finished product.
2. Identify states through which ENA/Enron transports raw materials and finished product.

3. Describe the goods, materials, or product used inthe ordinary course of business, if any, that are imported from outside of the US. Approximately what percentage of the total goods, materials, and products in the ordinary course of business are imported?

* THE ONLY IMPORT IS STEEL (SLABS, COILS, AND A VERY SMALL VOLUME OF PIPE WHICH WAS BEING FAZED OUT ANYWAY). IMPORTS WERE MUCH HEAVIER EARLIER IN THE YEAR BUT A STRATEGIC DECISION TO SEVERELY LIMIT IMPORTS WAS MADE A COUPLE MONTHS AGO DUE TO ANTI-DUMPING CASES INVOLVING MANY COUNTRIES. WE CURRENTLY HAVE ON THE BOOKS SMALL VOLUMES OF IMPORTS OF COIL FROM MEXICO (RAIL) AND A FEW OCEAN IMPORTS FROM ASIA AND EASTERN EUROPE. TOTAL VOLUME OF OCEAN IMPORTS WE HAVE ON THE BOOKS EXPECTED SOON IS ONLY ABOUT 20,000 MT FOR SHIPMENT IN THE NEXT 2 MONTHS. I AM NOT CERTAIN OF THE MEXICAN VOLUME BUT I KNOW IT HAS DECLINED A LOT RECENTLY AND IS NOW QUITE SMALL (I WILL CHECK THIS). DEL'S GUESS OF A 2001 AVERAGE OF 40% STEEL IS PROBABLY RIGHT BUT THIS NUMBER WILL DECLINE DUE TO THE ABOVE MENTIONED STRATEGIC DIRECTION CHANGE.

WE ALSO DID A "1 OF" IMPORT OF 6,000 MT OF ORIENTED STRAND BOARD (PLYWOOD SUBSTITUTE) FROM IRELAND BUT THIS COMMODITY IS DUTY FREE AND WILL LIKELY NOT BE REPEATED.

NO PULP, RECYCLED OR NEWSPRINT IS IMPORTED WITH THE EXCEPTION OF STADACONA ORDERS FROM CANADA AND THAT VARIES WITH SOURCING CALCULATIONS EVERY MONTH.

2 Describe the goods, materials, or products, if any, that are exported from the US. Approximately what percentage of the total goods, materials, or products produced by the Debtors are exported?

RECYCLED - A LARGE PORTION OF TOTAL VOLUME IS EXPORTED TO ASIA. MY GUESS IS ABOUT 25-50% IS EXPORTED AND THIS IS GROWING.

LUMBER - NONE

STEEL - NONE

NEWSPRINT - VERY SMALL AMOUNT IS EXPORTED FROM STADACONA (ABOUT 10% OF PRODUCTION OR ABOUT 35,000 MT). WE HAVE A LONG POSITION IN MALAYSIA AS WE PURCHASED 5000 MT OF NP FROM A MILL THERE FOR SALE WITHIN ASIA. I BELIEVE 3000 MT IS STILL TO BE SOLD. NOTHING ELSE IS EXPORTED.

PULP - NO PULP EXPORTS FROM ENA FROM THE US. ENA DOES HAVE APPROX 26000MT OF INVENTORY IN EUROPE (BELGIUM, NETHERLANDS, GERMANY, ITALY). WE ALSO HAVE 4000 MT OF PULP INVENTORY IN INDONESIA. ALL THESE WAREHOUSES ARE ON RATE AGREEMENTS BUT NOT CONTRACTS. WE ARE IN THE PROCESS OF STANDARDIZING AN ENRON CONTRACT TO TAKE TO THEM. ENA ALSO HAS INVENTORY IN NORTH AMERICA BOTH AT SHIPPING TERMINALS AND INLAND WAREHOUSES BUT I AM NOT AWARE OF THE VOLUMES (THIS IS DOMESTIC)

3. Do you employ any customs brokers? What serrvice do they perform on behalf of ENA/Enron?

WE ONLY EMPLOY 2 CUSTOMS BROKERS AND THEY CALCULATE THE CUSTOMS DUTIES AND MISC CHARGES (VERY SMALL BUT ALSO COLLECTED BY CUSTOMS). THEY FILE THE IMPORT DOCUMENTS WITH CUSTOMS ON OUR BEHALF (THEY HAVE POA). I AM ALMOST CERTAIN THAT WE PAY DUTY TO CUSOMS DIRECTLY AS THE 2 BROKERS DO NOT MAINTAIN ANY ENRON FUNDS FOR FUTURE PAYMENTS. THEY RECEIVE A FLAT FEE PER ENTRY WHICH IS USUALLY VERY LOW SUCH AS $100-150/ENTRY.

4. Besides customs duties that are imposed on imported on imported and exported goods, material, and products are there any additional fees associated with the importation or exportation of goods?

NO FEES FOR EXPORTATIONS OR IF THERE ARE, THEY ARE NEGLIGIBLE (FREIGHT FORWARDER DOES THE 1 PAGE ENTRY ON THE INTERENT ON OUR BEHALF).

OTHER CHARGES THAT ARE PAYABLE ARE VERY SMALL COMPARED TO DUTIES WITH THE EXCEPTION OF ANY ANTI-DUMPING DUTIES WHICH ENRON AVOID BY NOT DOING BUSINESS WITH COUNTRIES WHICH WOULD TRIGGER SUCH DUTIES TO BE IMPOSED. OTHER SMALL FEES WOULD BE "HARBOR MAINTENANCE FEES" WHICH IS A FRACTION OF 1 PERCENT OF CARGO VALUE SO VERY SMALL.

THERE MAY BE 1 OR 2 OTHER SMALL FEES IN ADDITION TO THE HMF BUT I DO NOT HAVE DETAILS ON THEM AND THEY ARE ALSO VERY SMALL.

5. What is the standard operating peocedure for payment of customs obligations?

I BELEIVE WE PAY DIRECTLY TO CUSTOMS BUT I WILL HAVE TO DOUBLE CHECK. EITHER WAY, I AM CERTAIN THAT WE PAY CUSTOMS AS PER GENERAL INDUSTRY PRACTICES.
6. How often are customs duties and customs broker charges paid?

THEY ARE PAID IN FULL FOR EACH SHIPMENT SHORTLY AFTER THE SHIPMENTS CROSS THE BORDER OR LEAVE BOND.

7. What is the average monthly accrued and unpaid customs duties?

I WILL HAVE TO CHECK INTO THIS AS I DON'T WANT TO MISLEAD YOU WITH A GUESS BUT IT IS QUITE LOW AND SOME OF THE COMMODITIES MAY BE DUTY FREE (MEXICO COILS AS PER NAFTA I BELIEVE).

STEEL IMPORT VOLUMES WILL LIKELY WIND DOWN TO NEAR ZERO SHORTLY.

8. Is there a letter of credit or surety bond posted to secure customs obligations?

THERE HAS NOT BEEN A BOND DONE DURING MY TENURE AT ENRON SO FAR AND I DOUBT ANY SUCH SECURITY HAS EVER BEEN POSTED.

In addition, please advise re warehouse and storage costs as well, i.e., costs, types of contracts, etc.

FOR BALL PARK OF MONTHLY INTERNATIONAL FREIGHT COSTS BORN BY ENRON, IT DEPENDS IF CARGO IS SOLD CFR OR PURCHASED FAS/FOB (ENRON PAYS FREIGHT):

STEEL - TERMS WILL CHANGE DEPENDING ON ACCESS TO THE BEST TRANSPORT RATES SO WE MAY PAY ALL CHARGES 1 MONTH AND NONE THE NEXT OR SOMEWHERE INBETWEEN. FREIGHT CHARGES PAID BY ENRON MIGHT BE AROUND $100,000/MO.

LUMBER - NONE

PULP - SOME MONTHS WILL HAVE MANY SHIPMENTS AND SOME WILL HAVE NONE SO A HEAVY MONTH MIGHT BE $500,000 AND A LIGHT MONTH MIGHT BE ZERO.

NEWSPRINT - WE ESSENTIALLY DON'T PAY ANY FREIGHT AS ALL NP IS BOUGHT DELIVERED. HOWEVER, STADACONA EXPORT TO THEIR EXISTING CUSTOMERS (COLOMBIA AND UK) WORKS OUT TO APPROX $250,000/MO IN FREIGHT.

RECYCLED - WE EXPORT APPROX 10000 MT/MO AND THE PLAN IS FOR ENRON TO CONTROL ALL FREIGHT SO THIS COULD WORK OUT TO $150,000-250,000/MO IN FREIGHT.

Thanks again. Julia

PLEASE GIVE ME A CALL ON MY CELL IF THERE IS ANYTHING ELSE I CAN DO. I CAN GET A LOT MORE ANSWERS ON MONDAY BUT I REALIZE THIS MIGHT BE A BIT LATE.

IAN