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Enron Mail |
Jane:
I am meeting with John Suttle this afternoon to discuss the appropriate approach here. We will send you a note later on today. Alan Jane McBride@ENRON 11/28/2000 04:16 AM To: John Suttle/HOU/ECT@ECT cc: Alan Aronowitz/HOU/ECT@ECT, Mark Evans/Legal/LON/ECT@ECT, Sara Shackleton/HOU/ECT@ECT, David Minns/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT Subject: Re: credit for Nippon Chemi-con Dear John (and Sara this is a follow-up from my email to you of this morning our time), I think Morten-Eric is planning to call you again tomorrow morning and he may mention this but I am still trying to work out the best way to move forward on this. I have also today spoken with David Minns to see if he has done anything like this before. Having today had a closer look at the provisions you included and especially the three at the end (outstanding swap transactions, swaps to roll up under new master and credit provision of master to govern), I am a bit confused. Morten did say that you had said that these could be deleted but I wanted to make sure we were on the same track. In simple terms, this transaction with Nippon Chemi-con is a simple stand alone agreement to supply physical power. (There is not even an option for financial settlement in this one - although there will be in later ones). From the credit terms you have proposed I wonder whether you are thinking that we need a credit support annex or something similar because it will not be enough just to put in those terms you have included, additional provisions will be required so that those terms can work (and we don't have a master so we don't already have any of those). If so, I guess we need to link a CSA into the power contract. If Sara has done this before or can email me something along these lines I am very happy to have a go at it. If on the other hand this is less of an ISDA related issue (which I am starting to suspect) and is something that the lawyers doing physical electricity trading may have done before, perhaps it is better to ask them and not Sara. Have you dealt with anything like this with the physical traders before - suspect you may well have. I am attaching the latest draft of the agreement - FYI. I am really sorry if I seem pedantic or difficult (or less than smart) but I have never done anything credit related like this before and am very unsure about the best way to move forward in order to get a draft to the customer ASAP without imposing anymore than necessary on you all in Houston (or London if Mark Evans has any ideas). SO HELP!! (Grin!) Thanks John. I wont be in much before 9am tomorrow morning but would be happy to call you then or later at home, if you want to speak. Just let me know what suits you. John Suttle@ECT 2000/11/28 08:32 To: Jane McBride/AP/Enron@ENRON cc: Alan Aronowitz/HOU/ECT@ECT, Mark Evans/Legal/LON/ECT@ECT, Sara Shackleton/HOU/ECT@ECT Subject: Re: credit for Nippon Chemi-con Sara - Can you please help Jane in putting credit language into the confirmation of a Japanese deal? I have provided a worksheet with credit provisions that would normally go into a master or an omnibus confirmation. In this case, it will be an omnibus. Please let me know if I can do anything from here. John Jane McBride@ENRON 11/27/2000 05:11 PM To: John Suttle/HOU/ECT@ECT cc: Alan Aronowitz/HOU/ECT@ECT, Mark Evans/Legal/LON/ECT@ECT Subject: Re: credit for Nippon Chemi-con Hi John, Thanks for this, just wondering though, how do you usually get from this sort of table to the actual provisions to include in the contract. Alan, Mark, is there any easy way to do this? Thanks. Jane John Suttle@ECT 2000/11/28 07:05 To: Morten E Pettersen/AP/Enron@Enron cc: Jane McBride/AP/Enron@Enron, Joseph P Hirl/AP/ENRON@ENRON Subject: credit for Nippon Chemi-con Morten Erik - I recommend the credit terms provided in the attached document to be included in the Nippon Chemi-con contract. These are industry standard terms for a counterparty with credentials such as Nippon-Chemi-con, and these industry standards are what will enable Enron to syndicate the credit risk if we decide to do so in the future. After my discussion with Jonathan last week, I think it is clear that Credit is on the same page with your team in that we recognize the importance of getting this first deal booked. I think that in proposing the terms of your transaction to the counterparty though, Enron can begin educating the market as to the nature of the credit risk imbedded in the deal structure, and in doing so, begin setting the same standards we have in our other portfolios. The attached credit terms are not set in stone, but I think they are a good place to start. I will make myself available to you and the counterparty to discuss the credit terms, and we will be very willing to negotiate the terms in good faith. My point is simply that we should not enter into any of these transactions without fully discussing the credit implications with the counterparty. Please feel free to call me or write if you have any questions or concerns. John x30906
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