Message-ID: <21534876.1075854438837.JavaMail.evans@thyme> Date: Fri, 4 Aug 2000 09:52:00 -0700 (PDT) From: david.delainey@enron.com To: rob.milnthorp@enron.com Subject: Re: Tembec and US Originators Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: David W Delainey X-To: Rob Milnthorp X-cc: X-bcc: X-Folder: \David_Delainey_Dec2000\Notes Folders\All documents X-Origin: Delainey-D X-FileName: ddelain.nsf Rob, we may be saying the same thing here - for the EES outsourcing proposition (which is more than just asset management) as being defined by Rodney et al should be managed together by Industrial Origination and ECC. Although, I would agree that ECC should lead the sale process. My view is that we should not and will not recreate the structuring, customer facing and execution requirements in Canada and Mexico required to do these deals. It is an important strategic iniative for ENA to complete a number of these deals. The problem is that a clear target list, joint accountabilities and schedule between the groups has not been rolled out which was discussed at Columbia Lakes. All other industrial business other than P&P commodity/asset business is the perview of ECC. Ultimately, I have not seen any outsourcing transactions from Canada in the deal structuring/due diligence queue. The US group can help get these done and can help in the pitch. Regards Delainey ---------------------- Forwarded by David W Delainey/HOU/ECT on 08/04/2000 04:40 PM --------------------------- Rob Milnthorp 08/03/2000 04:17 PM To: David W Delainey/HOU/ECT@ECT cc: Bryan Burnett/HOU/ECT@ECT, Rodney Malcolm/HOU/ECT@ECT Subject: Re: Tembec and US Originators Dave, my thoughts regarding your note: This is not what we agreed to in Columbia Lakes. You were very clear on the point that ENA Industrial Marketing had enough to do South of the border. We have staffed up our Industrial Marketing Team in Toronto and are covering all industrials (on a full-time basis) which meet our load threshold in Ontario. Unlike the U.S., Ontario is a relatively small market where we can and have complete coverage. Paul and his group have done a tremendous job at positioning Enron in this marketplace, demonstrating our core competencies, and developing credibility. The last thing I want is some marketer up here from the U.S. selling the box without knowing how to fill that box (ie does not know the market fundamentals, rules or regulatory regime). This does nothing for Enron as it confuses the customer on who they should be talking to and destroys whatever credibility we had created to date. I have attached for your reference, a status report on industrial coverage. Perhaps the problem lies in how we are defining outsourcing. As you know, there exists a continuum from portfolio management through to the energy island concept. Enron Canada has been pitching the entire outsourcing continuum recognizing that for many of these industrials, they will want to walk before they run. The majority that we have talked to are interested in portfolio management, our market expertise & information, wholesale settlement services, and assistance with market opening readiness. I cant imagine how a U.S. originator could talk to or offer these services to Canadian Industrials. This is clearly in Enron Canada's wheelhouse. With respect to the opposite side of the outsourcing continuum, it makes total sense to have ENA utilize its resources in pursuing energy island, asset outsourcing type structures. With these opportunities, I see ENA taking the lead with ECC second chair. Where these opportunities are identified by ECC, we will forward these to the appropriate ENA originator. To date, ENA and ECC have worked well on Blue Circle, Terra, Co-Steel and Nexfor. As for Tembec, I am confused with what you mean by not changing the deal team. Kelli Metcalf has been up here twice talking to Tembec about a cogen in an area that does not make any economic sense. Jan and Paul have met with Tembec a number of times and we have had extensive discussions with Tembec specific to Ontario, Portfolio Management, Wholesale Settlement Services, Supply Procurement, and Asset Optimization. I realize that Bryan Burnett has an excellent relationship with Tembec and we should leverage off of this, but to simply "keep ECC in the loop" is fundamentally absurd and is not in Enron's best interests. Regards Milnthorp David W Delainey 08/03/2000 12:09 PM To: Rob Milnthorp/CAL/ECT@ECT, Max Yzaguirre/NA/Enron@ENRON, Rodney Malcolm/HOU/ECT@ECT, Bryan Burnett/HOU/ECT@ECT, Raymond Bowen/HOU/ECT@ECT, Paul Devries/TOR/ECT@ECT cc: Subject: Tembec and US Originators Guys, to end all arguments, I would suggest the following protocol which is similar to what was discussed at Columbia Lakes: a) P&P swaps and anything to do with the network strategy/assets in the paper sector in Canada and Mexico - Industrial Origination; b) Pure energy commodity positions and stand-alone energy assets (no outsourcing) for all industrial segments in Canada and Mexico - ECC or Enron Mexico; c) Energy outsourcing for all industrial segments in Canada and Mexico - I would like Enron Canada and Enron Mexico to develop a written target list in which ECC, Enron Mexico and the Industrial Origination groups would work together to develop, sell and execute on the most profitable and value adding outsourcing product for the industrial customer in Canada and Mexico - ECC and Enron Mexico's understanding of the energy markets in Canada and Mexico coupled with the customer facing, product development and execution skills in Houston should provide a winning team. I am asking for the three teams to clearly identify the outsourcing targets, lead sales and structuring people and the timing as far as starting discussion with each target customer (ASAP). I would hope that the Mexican and Canadian teams would lead the sales process and the Houston team lead the structuring, customer facing and execution but I will let you decide the optimum mix. Either way, I am expecting this target list completed and agreed to in the next two weeks for Canada and Mexico; and d) for Tembec I don't think it makes sense to change the deal team at this point; however, the US team will keep the Canadian team in the loop and if the products become non-outsourcing related the deal should be passed to ECC. Regards Delainey ---------------------- Forwarded by David W Delainey/HOU/ECT on 08/03/2000 12:31 PM --------------------------- Rob Milnthorp 08/03/2000 09:46 AM To: David W Delainey/HOU/ECT@ECT cc: Subject: Tembec and US Originators Dave, attached is some of the background correspondence in anticipation of our meeting with Brian Burnett. Regards Milnthorp ---------------------- Forwarded by Rob Milnthorp/CAL/ECT on 08/03/2000 09:29 AM --------------------------- Angela McCulloch 07/27/2000 11:07 AM To: Rodney Malcolm/HOU/ECT@ECT, Edward Ondarza/HOU/ECT@ECT, James A Ajello/HOU/ECT@ECT cc: Rob Milnthorp/CAL/ECT@ECT Subject: Tembec and US Originators Rodney, Edward, Jim - We've been over this issue a number of times and I thought we had reached resolution when we last met with Delainey. My understanding with respect to coverage of Canadian Industrials is as follows: 1.) ENA to take lead on industrials that have facilities in both US and Canada and will co-ordinate coverage with ECC with respect to Canadian Facilities. 2.) ECC to take lead on industrials that have Canadian Facilities only. 3.) With respect to Canadian Pulp & Paper Industrials, ENA will cover Pulp & Paper Swaps and SPV structuring. ECC will cover these industrials for all other Enron products (i.e. power, gas, services, etc.) Again, coverage needs to be co-ordinated. Specific to Tembec, I share Paul's concerns on why ENA would send 2 people to talk to Tembec re: outsourcing when Tembec is across the hall from ECC, ECC has an established relationship, and Tembec is a Canadian Company with no US facilities. It is my hope that we can resolve this amongst ourselves without having to get Dalainey involved. I would suggest a conference call next week. In the interim, Paul will forward a CA to Tembec in contemplation of an outsourcing arrangement. Regards, Angela McCulloch for Rob Milnthorp Assistant to Rob Milnthorp (403) 974-6738 ---------------------- Forwarded by Angela McCulloch/CAL/ECT on 07/27/2000 11:04 AM --------------------------- Paul Devries 07/25/2000 01:30 PM To: Rob Milnthorp/CAL/ECT@ECT cc: Subject: Tembec and US Originators Rob, We just had a very good meeting with Tembec about Energy procurement and energy outsourcing. While the meeting went well, I am very confused about the Enron team making the pitch to them. My understanding is that the Canadian originators - particularly the Toronto team for Eastern Canadian companies will be responsible for everything except for pulp and paper swaps and to some extent, new SPV's. In this instance, 1. Tembec is a Canadian Company 2. All their assets are in Canada 3. Jan has been working with Tembec people in their largest facility 4. We know the executive team at Tembec 5. We clearly are very knowleadgable in all aspects of the Ontario energy market which is their focus right now 6. We understand and are pitching the overall energy outsourcing arrangement similar to the US pitches With this in mind, I am not sure why Kellie Metcalf and Bob Anderson flew up here (6 hours flight time there and back, $4,000 to $5,000 in flights and hotels) for a 4 hour meeting with Tembec. Kelly was quite vocal in saying that this is a client they want to serve out of Houston. I have stated to her that that does not make any sense in terms of efficiency and costs and knowledge of the market where Tembec's assets are. Obviously, much of the technical engineering work would and should be done by the engineering team put together in the Industrial Services Group should a deal be struck. However, the commercial negotiations and marketing should be led by this office!!! I thought this had been agreed to already. We managed to piece up the meeting and deliver the "Enron" message, but going forward we need to have this resolved. Cheers, Paul D