|
|
Enron Mail |
Richard:
Kathy finished her questions at the end of the day yesterday.? Her approach was very helpful to Enron, and also PaineWebber, even to the point of skipping pages in documents that referred to either of them.? Enron's name was mentioned probably three or four times in three days (and then only in questions, not in answers). Kathy's themes were: ??????? 1.? At the time of the offering, portions of the hot mill were incomplete, and the hot mill was not really operating. ??????? 2.? The design of the cold mill was flawed. ??????? 3.? The role of SDI in the managment of NSM was greatly exaggerated in the offering presentations.? [Kathy did not seem to be be saying (as other have) that the role of the Management Co. was exaggerated.] ??????? 4.? Nucor was really Stickler's first choice for SDI's role, but Nucor pulled out becasue of substantive concerns, e.g., flawed design of cold mill.? Stickler lied when he told others that Nucor just wanted too much money.? (Based on what I have seen so far, I don't think we know yet why Stickler and Nucor did not make a deal.) ??????? 5.? By late April 1998, if not before, NSM managment and directors knew that the projections in the offering materials were way off, as NSM's own internal budget was much different.? (Roland and I showed you these documents when we were last in Houston.)? A substantial portion of the offering funds were still in trust at this time (how much???), and the bondholders should have been told (when they could still pull back some of their money if they wanted to) that the projections on which they had invesfted were not correct.? [If this argument were developed and had legal merit, it could hurt Enron, as its affiliates or employees were (a) "initial purchasers" in the offering, (b) a member of the management co., and © a member of the NSM board.] ??????? Kathy was never clear in her questioning whether she regarded SDI as a defrauder or a defraudee.? At times she seemed to be saying that SDI knew bad things about NSM and the mill and concealed them or permitted others to lie about them.? At other times she seemed to be inviting Busse to say that he was lied to. ??????? There is no question that Kathy regards David Stickler as the number one bad guy and David Wheeler (NatWest) as number two. ??????? Busse's principal themes were:? (1) SDI agreed only to a very limited role; (2) all of the problems were soluble IF NSM had good management.? NSM turned out to have terrible managment.? Busse and everyone else were lied to about that, and that is why NSM failed. ??????? I had not realized before this week that, by the time of the closing, the Management Co. had only 3 members (SDI and affiliates of McDonald and Enron.)? [Stickler was appointed manager of the Management Co.]? If Enron has a problem in this case, it will likely arise out of the combination of enron's two roles--i.e., involved in the offering itself and then in the follow on management of NSM. ??????? I suggest that, if I can't make progress with Hirschmann next week,? we (Milbank) notice and take Legg-Mason's deposition (assuming that the other defendants agree--and maybe even if they don't.)? It's time to stop letting Legg Mason have a free ride. Steve This e-mail message may contain legally privileged and/or confidential information. If you are not the intended recipient(s), or the employee or agent responsible for delivery of this message to the intended recipient(s), you are hereby notified that any dissemination, distribution or copying of this e-mail message is strictly prohibited. If you have received this message in error, please immediately notify the sender and delete this e-mail message from your computer.
|