Message-ID: <23386934.1075859108167.JavaMail.evans@thyme> Date: Tue, 27 Nov 2001 13:38:06 -0800 (PST) From: w..delainey@enron.com To: raymond.bowen@enron.com Subject: EFS: Construction Services and Facility Services Groups Cc: dan.leff@enron.com, janet.dietrich@enron.com, vicki.sharp@enron.com, s..muller@enron.com, jimmie.williams@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable Bcc: dan.leff@enron.com, janet.dietrich@enron.com, vicki.sharp@enron.com, s..muller@enron.com, jimmie.williams@enron.com X-From: Delainey, David W. X-To: Bowen Jr., Raymond X-cc: Leff, Dan , Dietrich, Janet , Sharp, Vicki , Muller, Mark S. , Williams, Jimmie X-bcc: X-Folder: \David_Delainey_Jan2002\Delainey, David W.\Sent Items X-Origin: Delainey-D X-FileName: ddelain2 (Non-Privileged).pst Ray, in EES, the Construction Services (also known as EFS) companies operat= e on a stand alone basis from Enron and have clear liquidation value to the= parents - EES and Enron Corp. It is my opinion that we should be trying t= o "un-buckle" these companies from Enron over the short term to ensure thei= r continued viablility as we find a sale. In my view un-buckling means a) = stop the factoring of any Construction Services receivables that end up mov= ing cash out of Construction Services up into the parents; b) utilizing tho= se receivables plus, if necessary, Enron's interest in Construction Service= s to obtain sufficient collateral to renew the St. Paul surety bond. This = surety bond is necessary to continue contracting; and c) terminate the swee= ping of cash from Construction Services bank accounts to Corp immediately. = There will be a meeting early next week with St Paul to renew the surety b= ond. I am hopeful that meeting these conditions will be enough to reinstat= e the surety bond. The Construction Services group employs approximately 2= ,600 people and is worth (given current backlog) between $100 and $125 mill= ion dollars. Mark and his team are actively trying to sell over the next 6= 0 to 90 days and we control 100% of the stock of this company. The other part half of the former EFS is the Facility Services group (also = know as ServiceCo). Again, these companies largely operate independently of= Enron and have going concern value outside of Enron. Currently, we have o= utside technology and financial partners in the Facility Services Groups th= at make it impossible to factor receivables or move cash out of Facility Se= rvices bank accounts without the approval of the board which includes sever= al outside directors. We currently own approximately 85% of the firm that = employs approximately 1,400 people and is worth minimum $50 million dollars= (cash value). Mark and his team are actively trying to sell or otherwise = dispose over the next 60 to 90 days. EES also manages several joint ventures (DSM and O&M related mostly) with c= ustomers where we would have to have outside approvals to move cash out of = these entities. These include Owens Corning Energy LLC (Owens Corning), LE = Hesten Energy LLC (Lily), Tenant Services Inc. (Simon Properties), EBC Prop= erty LLC and Enron Distributed Energy Services LLC. In all cases, we need = to be observant of corporate governance issues with these entities. As officers, I thought it prudent to ensure that you and your team had all = available information. I would also like your approval to move forward wit= h my recommendations for the Construction Services group as above. We appreciate everything you are doing. Regards Dave Delainey