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Enron Mail |
Let's get together on this and have a conference call. Thanks.
From: William S Bradford 12/27/2000 05:12 PM To: Jeffrey A Shankman/HOU/ECT@ECT cc: Don Black/HOU/EES@EES, Tracy Ngo/PDX/ECT@ECT, Elizabeth Sager/HOU/ECT@ECT Subject: Morgan Stanley Power Desk Jeff, It is my understanding that you will be speaking with Simon Greenshields at Morgan Stanley ("MS") tomorrow. I have outlined the facts as I know them in regards to our position with PG&E. Enron Energy Marketing Corporation ("EEMC") has four outstanding purchases from PG&E Energy Trading - Power LP ("PG&E"). One of these transactions PG&E has backed with a purchase from MS. We have not been disclosed exact terms of the transaction PG&E has with MS. The terms of our transaction with PG&E are as follows: EEMC purchases 100MW around the clock 1/1/2001 to 12/31/2002 from PG&E with delivery point of SP15 at price of $29/Mwh This transaction is currently in-the-money $130mm. We are proposing to assign EEMC's position to EPMI and then EPMI would agree to take assignment from PG&E its position with MS in return for unwinding EPMI's transaction with PG&E. Our net book value would remain unchanged but we would transfer credit exposure to MS rather than PG&E. It is my understanding that MS is currently posting margin to PG&E above some threshold within the Master contract between PG&E and MS. With the assignment EPMI would assume the contract under its Master agreement. The current agreement has no executed margining agreements but we have been exchanging margin above a $15mm bilateral threshold. Enron would be willing to either not require collateral on the deal or take the collateral under the current terms negotiated but not yet documented. If we choose to take collateral, MS can post either cash or letters of credit. If they post cash, EPMI contractually can invest those funds as we see fit but will be required to pay interest at the Fed Funds interest rate. Give me a call if you have any questions. Bill
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