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Enron Mail |
I had a brief conversation this morning with John Suttle (Credit) and it=
=20 looks like he's going to insist on the CSA. We are going to talk tomorrow= =20 and go through the whole agreement to get the rest of his comments. While = we=20 have documentation for transactions entered into prior to execution of a=20 master agreement, the extent of their revisions makes me very uneasy. Many= =20 of these points are very serious and if they can not agree we will have=20 trouble coming to agreement even on the short form documents. It would be= =20 helpful if they could explain the changes rather than just sending us a=20 mark-up. Following are my points responsive to their revisions: Part 1 (a) The addition of our affiliates has the affect of expanding the= =20 possible defaults too broadly and we cannot agree to these changes (for=20 example, this would mean that if any Enron affiliate went into bankruptcy= =20 this agreement would be in default). (g) This provision provides additional flexibility without any credit risk= =20 to the other party. It should remain in place unless IBJ can articulate a= =20 reason to remove it. Part 3 The language inserted is much to vague. Our original version spells= =20 out exactly what is expected of the parties. If the documents we listed ar= e=20 not acceptable, IBJ should tell us now what would be acceptable and if we= =20 agree we will put it in the agreement. Part 4 (f) By deleting the word "not" in this provision, IBJ is saying tha= t=20 payments due to each other with respect to the same transaction will not ne= t=20 (i.e. if we are paying fixed and they are paying floating, we each have to= =20 make the full payment to the other rather than netting the two amounts to o= ne=20 payment). This is not acceptable. (h) If IBJ will use their NY branch as agent, we should use Enron Corp or E= NA. Part 5 (a) Our suggested language allows the purchaser of an option to=20 receive payments due even though technically in default under another=20 provision of the agreement. Our position is that if there are no other=20 possible payment requirements due from the purchaser, the option should be= =20 honored. © The section we delete requires that the market makers be in the same= =20 city. For many markets in which we participate, it is very difficult, if n= ot=20 impossible, to find multiple market makers in the same city.=20 (e) The change to 10 business days is much too long. This means we can no= t=20 have certainty as to the terms of the transaction for two weeks! We can go= =20 as high as three days if necessary but even that is beyond common market=20 practice. (g) Their changes remove the ability to set off against obligations owed t= o=20 multiple Enron companies if they default and only allows set-off with each= =20 IBJ branch as a separate entity. This may not be an issue if we will never= =20 trade or otherwise transact with them in any other Enron company and if we= =20 will never do business with any other branch of IBJ. We usually don't like= =20 to restrict ourselves that way. (i) We absolutely insist on the confidentiality of our transactions. If= =20 there is some revision to this section they would like we can discuss it bu= t=20 wholesale deletion is out of the question. (j) As with Part 1 (g) this section adds flexibility to both parties while= =20 maintaining flexibility within the corporate family. Given the frequency= =20 with which Enron moves businesses around within the family, this section is= =20 important to us. (k) This section results from an experience we had with a counterparty tha= t=20 went into bankruptcy (and therefore default) while they were in the money. = =20 We disputed the amount owed and under the terms of the agreement (without o= ur=20 revision) we would have owed them interest at their cost of funds - a rathe= r=20 high rate given their status as a bankrupt. We feel the non-default rate i= s=20 more appropriate. (m) I can't imagine why they wouldn't want this section included - it=20 protects us both. (n) You know more about this than I. Part 6 These are all important issues for us and we can discuss them=20 individually if they object for some articulated reason. If these provisio= ns=20 are not included here they will need to be included in each confirmation (a= =20 significant burden for our back office systems which are not set up for it)= =20 and we need to know now if they object to any of them. Other revisions that they have made are acceptable unless Credit objects. = I=20 hope this is helpful and sorry to have run on so long. I'm happy to discus= s=20 any of these issues at greater length if you want. It sounds to me like=20 IBJ's expectations regarding execution of documents are a bit high given th= e=20 volume and nature of their comments. =09John Viverito@ENRON =0909/05/2000 09:06 PM =09=09 =09=09 To: Tom Bruce-Jones/LON/ECT@ECT =09=09 cc: Jonathan.Whitehead@enron.com@ECT, Kevin Cordesman/HOU/ECT@ECT, S= teven=20 Kleege/HOU/ECT@ECT, Mark Taylor/HOU/ECT@ECT =09=09 Subject: Re: Fw: IBJ ISDA MASTER AGREEMENT Tom- As far as the progress on the ISDA documentation, I am awaiting feedback fr= om=20 both legal and credit in Houston. =20 Could you provide me with the details of the proposed transaction(s). I no= te=20 that I have copied Mark Taylor on this correspondence, as I will need to ge= t=20 his input regarding our most efficient going forward strategy. Thanks, John =09Tom Bruce-Jones@ECT =0909/05/2000 09:36 AM =09=09 =09=09 To: John Viverito/Corp/Enron@ENRON =09=09 cc: Jonathan.Whitehead@enron.com, Steven Kleege/HOU/ECT@ECT, Kevin= =20 Cordesman/HOU/ECT@ECT =09=09 Subject: Re: Fw: IBJ ISDA MASTER AGREEMENT John I have just had IBJ on the phone again asking for a progress report on the= =20 ISDA docs. Have we managed to move this forward, bearing in mind Labour Da= y,=20 since he is very keen to commence trading on Monday next. He suggested tha= t=20 he would be comfortable in trading prior to the implementation of the docs= =20 for these initial trades as per Jonathon's previous comments in past mails.= =20 Are we comfortable doing this if we cannot resolve the issues on the docs? They are also very keen to see the draft confirms for the proposed trade=20 (Steve, I have just heard from Rob in the vid conf that the proposed volume= s=20 may prove difficult to take on the books??). Please advise as to our=20 capability so that I can convey this to him in the morning. Best regards Tom From: John Viverito@ENRON on 01/09/2000 02:48 CDT To: "Yamato Konishi" <yamato.konishi@ibjbank.co.jp< cc: hirohide.yabuki@ibjbank.co.jp, Jonathan.Whitehead@enron.com,=20 kazunobu.maeda@ibjbank.co.jp, teruyo.suzuki@ibjbank.co.jp,=20 Tom.Bruce-Jones@enron.com=20 Subject: Re: Fw: IBJ ISDA MASTER AGREEMENT =20 Dear Mr. Konishi- Thank you for your comments. We will attempt to respond to you prior to th= e=20 holiday in the US, but if we are unable to do so, we will respond shortly= =20 thereafter. Best regards, John Viverito =09"Yamato Konishi" <yamato.konishi@ibjbank.co.jp< =0909/01/2000 02:31 AM =09=09=20 =09=09 To: <John.Viverito@enron.com< =09=09 cc: <Jonathan.Whitehead@enron.com<, "Tom Bruce-Jones"=20 <Tom.Bruce-Jones@enron.com<, "teruyo.suzuki" <teruyo.suzuki@ibjbank.co.jp<,= =20 "Maeda san" <kazunobu.maeda@ibjbank.co.jp<, "hirohide.yabuki"=20 <hirohide.yabuki@ibjbank.co.jp< =09=09 Subject: Fw: IBJ ISDA MASTER AGREEMENT Dear Mr.Viverito Attached Word file is ISDA draft amended by our legal desk. (please take the amended points as our comment on your draft) Please check it all and kindly reply ASAP. (CSA is not acceptable as I mentioned you before, and we'll check your LETTER OF CREDIT after the schedule is almost agreed) In your draft, we cannot understand the meaning of "EDGAR" on page4, so please show us what it is. We are very hoping to conclude this process rapidly. So, I very much appreciate it if you could send back your comment before Holiday in U.S.(4th Sep) (it's ok if only the rough prospects of concluding ISDA) Best regards, Konishi IBJ Tokyo 81-3-3214-1008 ----- Original Message ----- From: "Teruyo Suzuki" <teruyo.suzuki@ibjbank.co.jp< To: "Yamato Konishi" <yamato.konishi@ibjbank.co.jp< Sent: Friday, September 01, 2000 3:58 PM Subject: Re: IBJ ISDA MASTER AGREEMENT < ISDA Draft=10=07I=10_X=10"?=10,d=10`-=10=07t=10,?=10,?=10,?=10,?=10,?=10_= B=10-?=10-O < ----- Original Message ----- < From: "Yamato Konishi" <yamato.konishi@ibjbank.co.jp< < To: <John.Viverito@enron.com< < Cc: <Jonathan.Whitehead@enron.com<; "Tom Bruce-Jones" < <Tom.Bruce-Jones@enron.com<; "teruyo.suzuki" <teruyo.suzuki@ibjbank.co.jp<; < "Maeda san" <kazunobu.maeda@ibjbank.co.jp< < Sent: Wednesday, August 30, 2000 9:59 PM < Subject: Re: IBJ ISDA MASTER AGREEMENT < < < < Dear Mr.Viverito < < < < Thank you very much. < < Now we start checking your draft and maybe we can return comment on thi= s < < Friday. < < < < Please be advised following points at this time. < < 1)Part 6 on the schedule is needed to be deleted. < < We think that it's enough if the terms in Part 6 are referred in the < < individual confirmation. < < 2)ISDA Credit support annex is not acceptable < < Unfortunately, we don't have internal system for concluding CSA with < < non-financial entity. < < < < Please keep support us for concluding ISDA ASAP for our business in nea= r < < future. < < If any question, please feel free to contact me. < < < < Best regards, < < Konishi /IBJ Tokyo 81-3-3214-1008 < < ----- Original Message ----- < < From: <John.Viverito@enron.com< < < To: <yamato.konishi@ibjbank.co.jp< < < Cc: <Jonathan.Whitehead@enron.com< < < Sent: Wednesday, August 30, 2000 5:31 PM < < Subject: IBJ ISDA MASTER AGREEMENT < < < < < < < Dear Mr. Konishi, < < < < < < Attached hereto, is the draft ISDA documentation, for your review. < < < Included are the Schedule, the Credit Support Annex and the Enron Corp. < < < Guaranty. < < < < < < I apologize for the delay in the preparation and distribution of thes= e < < < documents. < < < < < < We look forward to receiving your comments. < < < < < < Best regards, < < < < < < John Viverito < < < < < < < < < (See attached file: IBJ Schedule 30.08.00.doc)(See attached file: IBJ < CSA < < < 30.08.00.doc)(See attached file: IBJ EC guarantee 30.08.00.doc) < < < < < - IBJ Schedule 31.08.00.doc
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