Message-ID: <32947560.1075854433947.JavaMail.evans@thyme> Date: Mon, 16 Oct 2000 02:42:00 -0700 (PDT) From: david.delainey@enron.com To: rodney.malcolm@enron.com, raymond.bowen@enron.com Subject: Re: GE Plastics Facts Cc: marty.sunde@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: marty.sunde@enron.com X-From: David W Delainey X-To: Rodney Malcolm, Raymond Bowen X-cc: Marty Sunde X-bcc: X-Folder: \David_Delainey_Dec2000\Notes Folders\All documents X-Origin: Delainey-D X-FileName: ddelain.nsf Rodney, from what you told me it sounds like GE is willing to play on the Selkirk asset so the sales cycle should be largely completed. Can you answer Marty's other questions? Regards Delainey ---------------------- Forwarded by David W Delainey/HOU/ECT on 10/16/2000 09:39 AM --------------------------- From: Marty Sunde@EES on 10/15/2000 09:05 AM To: David W Delainey/HOU/ECT@ECT cc: Harold G Buchanan/HOU/EES@EES, Dan Leff/HOU/EES@EES, Karen S Owens@ees@EES, Mark Frevert/NA/Enron@Enron@ECT, Rodney Malcolm/HOU/ECT@ECT, Raymond Bowen/HOU/ECT@ECT Subject: Re: GE Plastics Facts Hi David, I'll give you a response with the hope of seeing more information that would change my mind. If you are asking for my opinon, it is difficult to be supportive of moving ahead on a transaction like this give the fairly significant obstacles (these are usually deals killers) that Rodney describes. What I couldn't read into Rodney's write up were other undocumented factors that you might change the probability, like: Is there an Sr. executive champion that is willing to "influence" the GE negotiating team into getting a deal done, even if the terms are less desirable than what Rodney laid out as their requirements? Are the willing to extned the term so that there isn't a capital tail? Is there any real compelling motivation for this GE Plastics team to change from current practice? Do we know what that is and what the deadline for action for change is? Could Rodney suggest alternatives to address the obstacles and show the potential impact on the margin in the deal? Is there some other component of this deal that is so compelling to the prospect that we can attach these pieces to that? Realistically, based on what is written, the deal you are describing sounds like it would have a low probability to close, surely in 2000. HOWEVER< if there exenuating circumstances like you feel like we just need to win this at all costs, there are values not being calculated that the client would recognize, there are senior execs at GE Plastics behind this looking for a way to close this, or anything else that is convincing your origination team that they have a winner here....then, lets find out what that is and go for it. I wasn't exactly sure what you were asking for. If it was my opinion, that is above. If it was to put more resource on it to try to make the probability go up, I'll be glad to help. If it is some other, just let me know. I would suggest we just start with trying to get more information from Rodney and team regarding why they are convinced this can be contracted for with margin in 2000. I would love to participate and do what we can to make this work out, as long as we all agree that there are reasonable approaches to raising the probability of victory. Thanks David W Delainey@ECT 10/13/2000 09:47 AM To: Harold G Buchanan/HOU/EES@EES, Marty Sunde/HOU/EES@EES, Dan Leff/HOU/EES@EES cc: Lou L Pai/HOU/EES@EES, Mark Frevert/NA/Enron@Enron, Rodney Malcolm/HOU/ECT@ECT, Raymond Bowen/HOU/ECT@ECT Subject: GE Plastics Facts Guys, I would like your opinion on this potential transaction. This has been sold through GE for some time and it is reasonably likely that if we employed some additional resources that this could be completed over the next quarter or so. Ultimately, Rodney and his team would like to see EES take control of the deal with EIM folks staying involved to ensure continuity and to assist to closure. Assuming that the sales process is largely completed, I see some value for Enron to take this deal including: a) $200 M in TCV for 2000; b) $3 to $5 M in value; c) GE on our EES resume of companies which will help in future sales to the large industrial customers; and d) provides an "in" to the GE family of companies which could result in significant up-sell capability in the future if we provide a quality product. Regards Delainey ---------------------- Forwarded by David W Delainey/HOU/ECT on 10/13/2000 09:36 AM --------------------------- From: Rodney Malcolm 10/12/2000 07:37 PM To: David W Delainey/HOU/ECT@ECT cc: Raymond Bowen/HOU/ECT@ECT Subject: GE Plastics Facts Dave, The GE Plastics facility is located in Selkirk NY just south of Albany and produces polystyrene and polyphenyleneoxide. The deal value is roughly $4-5 million NPV of which $3-4 million may be markable income. The obstacles to closure are: - the projected savings have gone from 27% to 20% when GE said they wanted more - there is some capital recovery at the end of year ten that GE would have to pay us and they are not yet agreeable to, - the savings include $1 million in O&M savings and it will be very difficult to get to closure with them letting us do the O&M Deal Stats Are: Electricity 230,000 mwh/yr $12 million/yr Steam 430,000 lbs/yr $3 million/yr Gas 470,000 mmbtu/yr $2 million/yr O&M $3 million/yr Total $20 million/yr 10 year contract, total contract value $200 million. Let me know if you need any further information. Thanks, Rodney