RE: Longview DASH Request

Louise,

Cancellation charges have been the focus because the cash is provided by e-Next banks (turbopark). The cash paid to date is less than the actual contractual obligation to date. We do not need balance sheet cash to continue, but we need to come up with B/S cash if we terminate. Hopefully the following clarifies:

Cash Payments to Date:
GE7FA 13,328
ST 909
HRSG 1480
Interest 350
Total: 16,067

Next Payments:
GE7FA 1,566 Nov 21
ST 2,849 Dec 1
HRSG 2,960 Dec 1
These are estimates - the timing of the actual payments depends upon when the vendor completes some of the work - payment based on milestones

Cancellation Charges:
10/31: $23MM
11/1: $24MM
11/30: $28.3MM
Each day from 11/1 to 11/30 the cancellation charge increases by approx $150K

DASH is based on contractual exposure, not cash out the door, hence the request at this time. In addition to looking for opportunities to sell the equipment and the project, we are looking into the ST and HRSG contracts to make sure the vendors are not in any sort of breach.

-----Original Message-----
From: Kitchen, Louise
Sent: Monday, October 29, 2001 5:56 PM
To: Schneider, Chip
Cc: Calger, Christopher F.
Subject: RE: Longview DASH Request

sorry missing the message

When are the payments and how much are they if we keep moving forward as I am not prepared to write down a 23mm loss.

Payments and payment dates please.

Thanks

Louise

Please say not soon too.
-----Original Message-----
From: Schneider, Chip
Sent: Monday, October 29, 2001 7:26 PM
To: Kitchen, Louise
Cc: Calger, Christopher F.
Subject: Longview DASH Request

Louise:

A termination of equipment associated with the Longview project on or before 10/31/01 will require Enron to write-off approximately $23 million, not inclusive of approximately $3 million in development costs to date.
To extend orders for equipment to 11/30/01 will cost an additional $5.3 million in cancellation charges.
To extend orders for equipment to 12/31/01 will cost an additional $8.7 million (inclusive of the $5.3 million above, therefore, net $3.4 million) in cancellation charges.

Termination at any time between now and year-end 2001 provides no material recovery potential for money spent.

Regards,

Chip Schneider
713-853-1789
ECN2864