|
|
Enron Mail |
Ken, Thanks for your message. Communication, even if it is brief, from yo=
u is absolutely critical at this time. While Enron has a very tough road a= head, I think I can speak for several people on my team that we are support= ive of the non-Dynegy route regardless of the option we ultimately plan to = pursue. I know the best thing I can do for Enron is to sell our remaining = assets to either BG or another counter party. I am committed to this task = and we will continue to focus on BG, but we need to be prepared that it may= be necessary to take a different path to sell the India E&P assets. In a = strange way, the termination of the Dynegy merger may actually help the E&P= sale because it takes away the automatic loss of operatorship ONGC was usi= ng as leverage. Depending on Enron Corp.'s plans, we may have a much stron= ger message to play with our Indian partners and the GOI. They should be c= oncerned that we will keep ownership and operatorship long term, and they s= hould also be concerned that we will not want to spend the capital to expan= d the projects (something the GOI/ONGC really wants to do). After you anno= unce Corp's plan, I will go to India and meet with our partners and the GOI= in this regard. =20 Based on your note below and earlier comments, I know the trading business = is a key component to your future core operations. I am supportive of that= decision because I saw the enormous value it can generate in the right cir= cumstances. As I have mentioned before, I think the company should sell bu= sinesses such as the E&P company that are non-core. It is the right thing = to do, especially in these circumstances. However, some of the non-core bu= sinesses generate good cashflow (like the E&P company) and we have to be ca= reful in this environment to make sure the company supports the "valuable" = non-core businesses until they can be monetized. =20 I also know most of your senior advisors are disciples of the trading busi= ness. Because they grew up in that environment, they are very comfortable = and knowledgeable of this business model and there will be tremendous press= ure to maintain certain trading activities or people for the future even wh= en the near-term value is questionable. I hope somebody at the table asks = the question, if we focus our limited financial resources to maintain this = future benefit, have we lost a "valuable near-term non-core" resource? I k= now these decisions are not easy or clear-cut, but in this new paradigm th= is could happen pretty easily since most of the players at the table do not= understand Enron's non-core businesses or what it takes to optimize near-t= erm value. This comment is not intended to offend anybody, but it is a conc= ern. For example, Enron made financial commitments of $10.5 million to our staf= f to maintain operations and sell our assets. We've sold everything except= EOGIL and we have negotiated mutually acceptable PSA's with two different = companies for EOGIL, but due to some extra-ordinary circumstances, this has= proven to be a tough sale. As I mentioned in the first paragraph, I think= we can get there, but it may take a little more time and we need to mainta= in staff during the interim.=20 I recognize everything has changed due to recent events. I am not asking f= or a handout because that is the way it was before or anything like that. = My point is the company will have to make tough decisions regarding which i= ndividuals to incentivize and I believe the existing commitments to the E&P= team should be maintained even though this is a non-core business. Reaffi= rming the company's commitment to the $10.5 million will give us a good pro= bability of keeping enough of the core staff to achieve our goals and monet= ize the assets soon. I recognize that $10.5 million is not a trivial sum of= money, but without these individuals we stand to lose $50 to $100 million = in the next 12 months; therefore, I have believe this is the right decision= for Enron. I believe EGEP is one of the "valuable" non-core businesses, but if this be= comes a point of controversy I would at least like the opportunity to prese= nt my case in person to one of you.=20 Thanks for taking the time to read my note.=20 Jeff -----Original Message----- From: =09Ken Lay - Office of the Chairman =20 Sent:=09Wednesday, November 28, 2001 4:23 PM To:=09DL-GA-all_enron_worldwide1 Subject:=09Update As you have heard, Dynegy is terminating the merger agreement today. Among= other things, this means we are now free to pursue other alternatives - wh= ich we are actively doing. As a consequence of uncertainty about the deal = - and now Dynegy's announcement - Enron's debt was downgraded to below inve= stment grade levels today by S&P, Moody's and Fitch. =20 In response to this action, we have initiated a plan to protect value in ou= r core trading and other energy businesses. At the same time, we are neari= ng the completion of the business review process announced last week. Once= this process is complete, we will be conducting a comprehensive restructur= ing of our business. Regrettably, but unavoidably, this will include the s= ale of non-core assets and the implementation of a comprehensive cost savin= g plan, including layoffs.=20 We are taking these actions to focus our resources on preserving the value = of our core businesses, retaining our employees who are key to our future s= uccess, and maintaining relationships with our trading counterparties. Thi= s must be our priority to establish a more solid footing for the rest of En= ron. I know you have serious concerns about what this all means for you. Althou= gh, there are no guarantees, you should know that we are still in this figh= t and remain absolutely committed to protecting the value of the ongoing bu= sinesses of Enron. All I can ask is that we all be supportive of each othe= r, stay focused on our work as best we can, and stick together while we wor= k to overcome these latest challenges. Even six or so weeks ago, none of us could have imagined that we would be w= here we are today. We will not recover in six weeks what we have lost, but= we will work to stabilize and then rebuild this great company. As always,= I appreciate the extraordinary contributions each of you make. Thank you. Ken
|