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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Mark E Haedicke X-To: Jordan Mintz X-cc: X-bcc: X-Folder: \Mark_Haedicke_Oct2001\Notes Folders\Sent X-Origin: HAEDICKE-M X-FileName: mhaedic.nsf Yes, for the time being until we get someone in Alan's group. Mark Jordan Mintz/ENRON@enronXgate 02/22/2001 09:18 AM To: Mark E Haedicke/HOU/ECT@ECT cc: Subject: FW: (BN ) AIG Declines to Pay Flashpoint Bonds, Triggers 18-Not Mark: Who should I contact regarding legal coverage for this project? Insurance--Lou Stoler? Jordan -----Original Message----- From: Glisan, Ben Sent: Thursday, February 22, 2001 7:23 AM To: Fastow, Andrew S.; Kopper, Michael; Deffner, Joseph; Schnapper, Barry; Brown, Bill W.; Chivers, Paul; Howard, Kevin; Lipshutz, Cheryl; Thirsk, Jeremy; Mintz, Jordan; DeSpain, Tim Subject: FW: (BN ) AIG Declines to Pay Flashpoint Bonds, Triggers 18-Not All: Be careful of paying for insurance wraps. Lots of noise in the system about insurance companies not paying. I met with Chase last week and their credit guys expressed extreme skepticism over the efficacy of insurance wraps. Tim: Talk to the market to ensure that our A1/P1 facility is still viewed as an A1/P1 risk. Joe & Jordan: Scrub down the credit reserve policy, we need to make certain that we are in absolute compliance with the documents. If not we need to clean up the documentation ASAP (it seems highly unlikely that we would not be making significant claims under that policy this year). Ben ----- Forwarded by Ben Glisan/HOU/ECT on 02/22/2001 07:21 AM ----- Barry Schnapper@ENRON 02/13/2001 03:12 PM To: Ben Glisan/HOU/ECT@ECT cc: Subject: FW: (BN ) AIG Declines to Pay Flashpoint Bonds, Triggers 18-Not fyi ----- Forwarded by Barry Schnapper/Corp/Enron on 02/13/2001 03:12 PM ----- Sarah Wesner/ENRON@enronXgate 02/13/2001 02:20 PM To: dblack1@enron.com@SMTP@enronXgate, Brad Blesie/Corp/Enron@ENRON cc: Charles Delacey/HOU/ECT@ECT, Barry Schnapper/Corp/Enron@Enron Subject: FW: (BN ) AIG Declines to Pay Flashpoint Bonds, Triggers 18-Not Following is the article menioned in yesterday's meeting. AIG Declines to Pay Flashpoint Bonds, Triggers 18-Notch S&P Cut 2/8/1 13:3 (New York) AIG Declines to Pay Flashpoint Bonds, Triggers 18-Notch S&P Cut London, Feb. 8 (Bloomberg) -- A pair of ``AAA''-rated bonds issued by Flashpoint Ltd. suffered an 18-notch downgrade by Standard & Poor's after a unit of American International Group Inc. said it won't pay on insurance that guarantees the bonds. The $149.1 million of bonds, named Hollywood Funding No. 5. and No. 6, were sold by the U.K. company to finance films and television shows. S&P assigned its top rating to the securities because they're guaranteed by Lexington Insurance Co., a subsidiary of AIG, the world's largest insurer. Investors who bought the zero-coupon bonds were to be repaid by the revenue from a basket of films. When the films didn't make enough to cover those payments, the insurance policy was designed to kick in. Lexington, though, said it won't cover the shortfall because the film company broke its contract. Now, S&P regards the bonds as ``vulnerable to nonpayment,'' and rates them ``CCC-.'' ``There has never been a downgrade of that magnitude in Europe,'' said Kurt Sampson, head of structured finance ratings at S&P. ``We are voicing our concern about the implications for the capital markets. The degree of our concern is evident by the fact we are going public with this.'' S&P, which downgraded the Hollywood bonds on Friday, said Lexington's actions have prompted it to review other securities insured by Lexington in case the insurer seeks to ``raise defenses to the payment'' due on other bonds. Joe Norton, AIG's spokesman, said the company won't comment on the bonds. Graham Johnson at Flagship Group, which handles press communications for Flashpoint, said the company regards the bonds as ``not a matter that it's appropriate for them to comment on.'' Credit Suisse First Boston, which managed the private sale of Flashpoint's six Hollywood Funding bonds, also declined to comment. Cash Shortfall Hollywood Funding No. 5, a $48.4 million dollar bond, was due to be repaid on Jan. 5, according to people familiar with the security. Bondholders haven't been paid, and agreed to wait for two months before triggering a default because Lexington is investigating whether the issuer broke its contract with the insurer, S&P said. ``The policies were to provide for sufficient funds to pay the notes in full, should revenues in the trustee's other accounts be insufficient,'' S&P said. ``S&P believed that the original policies'' would pay out under any circumstances, ``and that any such matters were not supposed to constitute a defense to payment on the policies.'' S&P's defines ``AAA'' ratings as those applying to issuers with an ``extremely strong'' ability to meet their obligations. The rating company also said that Lexington won't be meeting shortfalls on Hollywood Funding No. 6, a $100.7 million bond maturing on June 18, because the issuer broke its contract by not making as many films at it agreed to. --Alice James in the London newsroom (44) 207 330 7195, or ajames@bloomberg.net, with reporting by Sean Farrell /mg Story illustration: {HOLFUN 0 6/18/01 <Corp< DES <GO<} for the terms of one of the bonds. NI CRA NI BON NI EBN NI ABS NI INS NI RED NI COR NI FILM NI TV NI ENT NI LAW NI ENH NI EUB NI PVT NI WIN AIG US <Equity< CN -0- (BN ) Feb/08/2001 18:03 GMT
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