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Enron Mail |
David, you may be getting to the nub here. Ultimately, this is a lot more
art than science. It will be difficult to come up with a mathematic decision rule to manage this process. I am looking to the opinions of yourself, Ray, Dick and Jeff, given the facts in each case, does this appear to be a good trade given the market, the specifics of the company, the carrying costs of the asset and perhaps our desire to increase capital flow to higher return assets (ROCE <25%). This is clearly not a fire sale and I trust the opinion or consensus that comes from this group. As a result, I need to have a positve consensus from this group in each case. Regards Delainey ---------------------- Forwarded by David W Delainey/HOU/ECT on 09/29/2000 09:55 AM --------------------------- David Gorte 09/29/2000 09:48 AM To: David W Delainey/HOU/ECT@ECT cc: Rick Buy/HOU/ECT@ECT, Jeff Donahue/HOU/ECT@ECT, Richard Lydecker/Corp/Enron@Enron, Raymond Bowen/HOU/ECT@ECT Subject: Re: Basic Dave, Your comments on the Basic DASH are well-taken. We will clarify what RAC views as the current valuation of Basic as well as RAC's recommendation with respect to this divestiture and modify the DASH as quickly as possible. Your comments prompted a question with regard to ENA's divestiture strategy. Is it correct to assume that if we use a typical market liquidity premium of 30% (i.e., future divestiture proceeds are 70% of the expected terminal value at the divestiture date to account for potential changes in future market conditions) in a sale deferral scenario and this deferral results in a higher NPV at the RAC capital price than the proposed sale proceeds, ENA would elect to retain the asset? Or should a higher than "market" capital price be assigned by RAC to these assets earmarked for divestiture? Regards, Dave
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