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Enron Mail |
Susan,
Per my earlier e-mail, we have finalized the credit terms for this ISDA (see attached credit worksheet). Also, please make note to change the definition for Net Worth that used in the drafts. The draft versions defined Net Worth with Notes Receivable subtracted out. This should be changed and the the Net Worth definition that is normally used in the ISDA should be replaced. Finally, please make PanCanadian Petroleum Limited a specified entity. Once this draft is complete, can you please have Sara review. Thank you, Russell ---------------------- Forwarded by Russell Diamond/HOU/ECT on 08/02/2000 03:47 PM --------------------------- From: Russell Diamond 08/02/2000 10:31 AM To: Sara Shackleton/HOU/ECT@ECT cc: Susan Bailey/HOU/ECT@ECT Subject: [Fwd: Credit Support Annex] Ya Hoo, I think we may have this one done ------finally. Please review the e-mails below with respect to the Minimum Transfer Amount. If you recall, this person had been at a conference in which the speaker suggests the Min. Transfer Amount be at least twice that of the Collateral Rounding. The Speakers point, which I can understand to an extent, has to do with discrepancies in valuing Mark-to-market between the two counterparty's. I can accept this, and will accept PanCanadian's proposal of a $100,000 Minimum Transfer and $100,000 collateral rounding. Please let me know your thoughts. Also, I have attached and amended credit worksheet per my discussions with PanCanadian which incorporates our credit resolutions. Thanks Russell ---------------------- Forwarded by Russell Diamond/HOU/ECT on 08/02/2000 10:14 AM --------------------------- "Harry Wijsman" <Harry_Wijsman@pancanadian.ca< on 08/02/2000 09:51:00 AM Please respond to Harry_Wijsman@pancanadian.ca To: "Diamond, Russell" <russell.diamond@enron.com< cc: Subject: [Fwd: Credit Support Annex] Russell, For your review. Based on this explanation I recommend a minimum transfer amount of $100,000 and a rounding amount of at least $100,000. Also, PanCanadian Energy Services Inc.'s CFO is willing to accept the Minimum Net Worth indicator in the MAC clause but has requested the threshold amount to be $100,000,000. In my opinion this is reasonable as you are setting the credit limit threshold relatively low at $2,000,000. If you are in agreement with the above, I believe this completes the negotiation of the agreements and we can move toward preparing execution copies. Please let me know....regards, Harry Content-Transfer-Encoding: 8bit Return-Path: <aohara.lnk@ispi.net< Received: from virusscan.pcp.com ([162.139.69.194]) by CalgaryMail.pcp.com (Netscape Messaging Server 4.05) with SMTP id FYMA0A00.8UY for <Harry_Wijsman@pancanadian.ca<; Tue, 1 Aug 2000 08:09:46 -0600 Received: from 162.139.8.3 by virusscan.pcp.com (InterScan E-Mail VirusWall NT); Tue, 01 Aug 2000 08:08:42 -0600 (Mountain Daylight Time) Received: by trojan6.pcp.ca; id IAA02001; Tue, 1 Aug 2000 08:01:52 -0600 From: <aohara.lnk@ispi.net< Received: from unknown(206.131.193.33) by trojan6.pcp.ca via smap (V5.5) id xma001987; Tue, 1 Aug 00 08:00:53 -0600 Received: (from nobody@localhost) by basie.ispi.net (8.9.3/8.9.3) id JAA08753; Tue, 1 Aug 2000 09:07:38 -0500 (CDT) Date: Tue, 1 Aug 2000 09:07:38 -0500 (CDT) Message-Id: <200008011407.JAA08753@basie.ispi.net< X-Authentication-Warning: basie.ispi.net: nobody set sender to aohara.lnk@ispi.net using -f To: Harry_Wijsman@pancanadian.ca Reply-To: aohara.lnk@ispi.net References: <3985F709.C14A8D32@pancanadian.ca< In-Reply-To: <3985F709.C14A8D32@pancanadian.ca< MIME-Version: 1.0 Content-Type: text/plain User-Agent: IMP/PHP3 Imap webMail Program 2.0.11 Sender: aohara.lnk@ispi.net X-Originating-IP: 206.26.231.211 Subject: Re: Credit Support Annex Hi Harry. Thanks for your note. It is my understanding that when the ISDA Credit Support Annex was first drafted, the drafters had a couple of concerns about transfers so they addressed each concern differently. The minimum transfer amount is used to avoid de mininimus transfers (remember that the original participants were all banks and finance houses doing large dollar deals together with daily marking to market). The drafters provided the option of rounding to avoid conflicts as to what the transfer amount should be. The original thought probably was to set rounding limits quite high so that even if Party A and Party B had different numbers, the rounding would be large enough to avoid disputes. You may recall that I used an example of one party calculating that the delivery amount should be $1.6 million and the other calculating a delivery amount of $1.8 million. If rounding is up in integral units of $500,000, the transfer would be for $2 million, thus avoiding the conflict. Some parties choose to use either minimum transfer amount or rounding--but not both. When parties use both, they should examine whether the numbers they have chosen for rounding don't interfere with minimum transfer amount and vice versa. Many times, an otherwise due transfer isn't made because the rounding or minimum transfer numbers effectively change the transfer amount. Rounding needn't be less than half of the minimum transfer amount. Parties should understand, though, that either can interfere with a transfer otherwise due. If you have further questions, please advise. Quoting Harry Wijsman <Harry_Wijsman@pancanadian.ca<: < Ann, < < I attended and enjoyed your recent class on the above subject in < Calgary. < < During this class you mentioned a most effective stucture under < parargraph 13(b)(iv) Thresholds was to have the "minimum transfer < amount" set at twice the amount of the "rounding ". You provided an < explanation of this structure which I did not understand or write down. < < Can you please provide me with this detailed explanation again by return < < E-mail. < < Your assistance is most appreciated. Thank You < < Regards...Harry < < < < <
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