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Enron Mail |
In my summer update about the acquisition of MG Plc and the integration of=
=20 the metals business into Enron, I reported that we were aiming to complete= =20 the integration by the end of the year. I am pleased to report that we are= =20 well on the way to meeting this target. =20 September was a busy month for the metals business as it brought with it bo= th=20 the co-location of the London and Tokyo-based metals staff with Enron=01,s= =20 offices and the first quarter of combined reporting under Enron Europe. =20 Ensuring a smooth transition for both the metals staff and the metals syste= ms=20 into our London headquarters took a tremendous amount of co-ordination by= =20 teams across the company on the part of the former MG team and the=20 integration team at Enron Europe. Nevertheless, =01&D-Day=018 arrived with= minimal=20 problems and the metals team open for business as usual on the morning of= =20 September 18th. =20 Another key initiative that commenced during September was the re-positioni= ng=20 of the MG worldwide metals business as Enron Metals. With the exception of= =20 the Henry Bath & Son Limited warehousing division, which will remain as=20 currently named, the re-branding initiative was kicked off in the UK and=20 followed by Japan and the US. The re-branding initiative is on going with= =20 all other remaining regions set to undergo completion of the name change by= =20 the end of November. Enron Metals is represented throughout the world. I have attached a region= al=20 office summary that depicts Enron Metals=01, locations (Appendix I). In light of the progress that has been made since the summer, I thought it= =20 would be helpful to provide you with a brief recap of Enron Metals=01, core= =20 business areas and identify those members of the metals team who will be=20 leading commercial efforts moving forward.=20 Merchanting Division The Merchanting Division, led by Michael Farmer (+44 (0)20 7783 2049), is a= =20 worldwide copper merchant, one of the top three independent merchants of=20 copper concentrates and nickel and the leading European merchant of recycle= d=20 non-ferrous metals. Core activities of the merchanting division are:=20 ? Merchanting of Non-ferrous Metals =01) Enron Metals trades as a principal= with=20 producers and consumers, buying and selling non-ferrous metals and=20 concentrates (particularly copper, aluminum and nickel), exchanging qualiti= es=20 and locations and lending and borrowing metals. ? Global Stockholding =01) Through its affiliate, Henry Bath & Son Limited,= =20 Enron Metals holds stocks of non-ferrous metals at warehouses around the=20 world. ? Merchanting of Recycled Metal =01) Enron Metals trades as a principal wit= h=20 suppliers and consumers of non-ferrous metal for recycling. Enron has=20 augmented its European recycling platform through the acquisition of assets= =20 of W&O Bergmann, the leading German Recycling Business. =20 Financial Services Division The Financial Services Division, led by Michael Hutchinson (+44 (0)20 7783= =20 2079), provides market-making and trading services to Enron Metal=01,s phys= ical=20 metals trading business through futures trading as a member of the London= =20 Metal Exchange and as a member of COMEX in New York. The Financial Service= s=20 Division will continue to be comprised of brokerage activities for LME and= =20 COMEX contracts and be a market-maker for both futures and options contract= s=20 on the LME and COMEX and in OTC metals contracts.=20 With much of the metals business moving to online trading, significant effo= rt=20 has been put into getting metals contracts incorporated into EnronOnline=01= ,s=20 portfolio of product offerings since the metals business=01, integration in= to=20 Enron this summer. Today on EnronOnline we are trading six metals (Copper,= =20 Aluminium, Nickel, Zinc, Lead and Tin) with over 150 products available. Enron Metals now has almost 800 financial counterparties on the books, with= =20 300 of these having EnronOnline accounts. Trading volumes have increased= =20 from a couple of trades per day in September to a high of 300 in October. T= he=20 attached charts depict the established metals results compared to the start= =20 up of US natgas (Appendix II). Origination Enron Metals established a London-based commercial unit under the direction= =20 of Eric Gadd, Vice President-Global Metals Origination which is focused on= =20 completing highly structured and long-dated transactions. It will integrat= e=20 with existing merchanting and financial service competencies to lever up=20 earnings creation. Currently, the origination team is working on a number = of=20 Q4 transactions in Australia and the Americas. The deal pipeline for Q2 ha= s=20 prospects in not only these regions but also Europe/Africa and the Middle/F= ar=20 East. Close and regular communication between the metal origination team= =20 and other business units inside Enron is essential if we are to succeed in= =20 building a new capability to achieve earnings targets and deliver sharehold= er=20 value through Enron Metals. Your active involvement and close co-operation= =20 here is appreciated. Warehousing (Henry Bath & Son Limited) =20 The Warehousing operations, led by Ed Dablin, operate under the name of Hen= ry=20 Bath & Son Limited. Henry Bath has been in business for more than 200 year= s=20 and maintains a global operation for the physical handling and storage of= =20 non-ferrous metals, including zinc, tin, copper, nickel, lead and aluminum.= =20 Henry Bath provides support to both the Merchanting and Financial Services= =20 Divisions, and also engages in independent warehousing operations. Its cor= e=20 activities include worldwide storage of metals and other products such as= =20 cocoa, general goods and worldwide shipping services.=20 Presently, Henry Bath maintains over three million square feet of storage= =20 worldwide (most of which is leased), with the largest facilities located in= =20 the United Kingdom (Liverpool, London, Bristol, Immingham), the Netherlands= =20 (Rotterdam), Spain (Bilbao, Barcelona), Singapore, and the United States (N= ew=20 Haven, New Orleans and Los Angeles). Rob Soeldner is managing the integration efforts for me. Please feel free= =20 to contact him at +44 (0)20 7783 7169 with any questions regarding the=20 business. Regards John Sherriff
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