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Enron Mail |
Sara,
I hope you are having a good vacation and are not looking at your emails until you return. I just wanted to get you up to date on a couple of items. Bolivia--Randy asked if we have ever done any research on whether we could do derivatives in Bolivia. I told him I thought we had checked on this and determined that Bolivia was not one of the countries that had been surveyed, but that I would check with you to be sure. I think he is asking since we are looking at doing physical deals there and the next thing the business guys always want to do is financial trades. Colombia--There is a new group of commercial guys who want to do electricity trading (and gas trading???) in Colombia. I have passed this request on to Mark who is looking at it. I think we will run into the same problems we had last year with the gas trading proposal. Susan Baily found the Colombia financial and physical trading survey for me to give to Mark and I faxed some other memos I found in my files here. There is a lot of memos on structures that had to do with the earlier trading vehicles and joint ventures which I did not send. I also did not send the memos relating to our efforts to get financial trading allowed. Bob Carter worked a lot on that issue but the commercial interest died before we saw any tangible results with the Colombia political process. Brazil--Don lobbed a bomb last week to Randy and then casually mentioned it to me after the fact. Don asked Randy to set up a swap vehicle in Brazil so that Don can do his financial trading with Argentina from Brazil. This is some speculation on my part but I think Don doesn't like the current structure of having to run his financial trades with Argentine counterparties through Houston. He does not have the ability to direct and control the process of negotiating and trading for Argentina through ENA which is problematic for him since for tax reasons we are telling him anything of substance has to come from ENA in Houston. Don asked Randy, who asked Andrea Bertone, to set up a swap vehicle in Brazil to trade with Argentine counterparties. Obviously Don could control the negotiating and trading from Brazil and his operational problem is solved. As you know this may create a whole host of other problems that cannot be solved as easily. I will discuss with Andrea today my initial thoughts on the issues raised by this proposal. First the tax issues may make Brazil a difficult place to make any money on a trading operation, tax will need to be brought in first thing to analyse the structure. Second, we may not be able to trade cross border swaps without regulatory problems, we will need to speak with Antonio Felix and others at Tozzini to start reviewing the structure. Third, there may be significant currency issues involved that need to be reviewed at the same time we look at the tax and regulatory issues. If we are able to overcome these issues then we will need to review the substantial legal and operational issues raised by such a structure. The ISDA agreement, which would be in English, would need to be reviewed by local counsel to ensure that all of the substantive provisions including arbitration, limitation of liability and collateral structures would be enforceable in Brazil when entered into with Argentine counterparties. Operational issues such as who will be responsible for the negotiation of masters, drafting of confirmations etc. would also need to be addressed. Argentina--I think the Acindar swap issue has gone away. Pat emailed though that they are now looking at an option structure. I do not know what they mean by "option" or what the new structure would be. I will let you know what I find out. Call when you get back and I can update you on where things stand. Brent
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