Garcia Munte / Spain

FYI
---------------------- Forwarded by Jeffrey A Shankman/HOU/ECT on 10/06/2000
08:54 AM ---------------------------

From: Mike McConnell 10/03/2000 08:24 AM

To: Jeffrey A Shankman/HOU/ECT@ECT
cc:
Subject: Garcia Munte / Spain

FYI

---------------------- Forwarded by Mike McConnell/HOU/ECT on 10/03/2000
08:24 AM ---------------------------

John Sherriff
10/03/2000 12:38 AM
To: Steve W Young/LON/ECT@ECT
cc: Mike McConnell/HOU/ECT@ECT, Michael R Brown/LON/ECT@ECT
Subject: Garcia Munte / Spain

Steve - Can you please give Michael Brown, Mike McConnell and me an update on
this.

John
---------------------- Forwarded by John Sherriff/LON/ECT on 03/10/2000 06:40
---------------------------

Michel Decnop
02/10/2000 19:05
To: John L Nowlan/HOU/ECT@ECT, David Hardy/LON/ECT@ECT, Tani
Nath/LON/ECT@ECT, Ross Koller/LON/ECT@ECT, Anastasia Karabatsos/LON/ECT@ECT
cc: Chris Mahoney/LON/ECT@ECT, Steve W Young/LON/ECT@ECT, John
Sherriff/LON/ECT@ECT, William S Bradford/HOU/ECT@ECT, Tim Davies/LON/ECT@ECT

Subject: Garcia Munte / Spain

The situation of this file, which was on the last leg , is suddenly
worsening. (cargo payment exposure decreasing as follows : 19 million oct
3rd / 14.5 million oct 15th / 5 million oct 30th, zeroing in november as
we have stopped deliveries to GM - We continue only to supply KPC and Conti
cargoes direct to the third parties) .
Main cause is the fuel crisis in Europe, particularly in Spain, where
combination of prices kept low under government pressure, and blockade of
terminals by strikers, have cut the cash flow of GM, putting into peril the
above plan; and this is worsened by the attitude of the owner, who seems to
be unable to face the situation. He is now stopping his management effort to
sell the company, which was the only viable solution; the company being
unable financially to sustain the burden of carrying the strategic
inventories, a direct consequence of the increase of the trading volume in
the early 2000.
As a reminder, we have 20 million USD of strategic inventories in the name
(and paper control) of ECTRIC Spain. We need however to urgently get 3 more
documents to have paper title/possession of these, with always the risk
that a Spanish liquidator contest our position.
We could initiate the sale of these inventories, however as they are used by
GM in their strategic inventory figure, we immediately make GM unable to
continue their operations, as they will loose their operating licence and
stop payments...

GM general manager was here today, he was asking if Enron could step in and
save the company ; however, it doesnot seem to be possible without
increasing our exposure, which we have no appetite for..

We are going to meet asap GM President to put all possible pressure on him to
accept to sell the company to a third party (Tamoil/BP are potential
buyers), and sign the few documents missing, giving us full control of ECTRIC
Spain. We will then monitor situation on a daily basis; fear that we will be
in a difficult corner if Spanish conflict is not ending, and if company
cannot get sold.

Thanks
Michel