Bascially, we will need to spend another $7.5 million on 11/30 to keep the equipment orders alive.

The spreadsheet below may help.

The line "Incremental Cash Spend" is what Enron will need to pay at the end of each November and December.  The line "Cancellation + E-Next Interest" is Enron's cancellation exposure (binding commitment to the equipment vendors and E-Next) to the extent we cancel on those dates.


 

 -----Original Message-----
From: 	Calger, Christopher F.  
Sent:	Monday, October 29, 2001 11:06 PM
To:	Kitchen, Louise; Schneider, Chip
Subject:	RE: Longview DASH Request

Louise,

Cancellation charges have been the focus because the cash is provided by e-Next banks (turbopark).  The cash paid to date is less than the actual contractual obligation to date.  We do not need balance sheet cash to continue, but we need to come up with B/S cash if we terminate.  Hopefully the following clarifies:

Cash Payments to Date: 
GE7FA		13,328
ST		909
HRSG		1480
Interest 	350
Total:		16,067

Next Payments:
GE7FA		1,566		Nov 21
ST		  2,849		Dec 1
HRSG		2,960		Dec 1
These are estimates - the timing of the actual payments depends upon when the vendor completes some of the work - payment based on milestones

Cancellation Charges:
10/31:		$23MM
11/1:		$24MM
11/30:		$28.3MM
Each day from 11/1 to 11/30 the cancellation charge increases by approx $150K 
   
DASH is based on contractual exposure, not cash out the door, hence the request at this time.  In addition to looking for opportunities to sell the equipment and the project, we are looking into the ST and HRSG contracts to make sure the vendors are not in any sort of breach.

-----Original Message-----
From: Kitchen, Louise 
Sent: Monday, October 29, 2001 5:56 PM
To: Schneider, Chip
Cc: Calger, Christopher F.
Subject: RE: Longview DASH Request

sorry missing the message

When are the payments and how much are they if we keep moving forward as I am not prepared to write down a 23mm loss.

Payments and payment dates please.

Thanks

Louise

Please say not soon too.
 -----Original Message-----
From: 	Schneider, Chip  
Sent:	Monday, October 29, 2001 7:26 PM
To:	Kitchen, Louise
Cc:	Calger, Christopher F.
Subject:	Longview DASH Request

Louise:

A termination of equipment associated with the Longview project on or before 10/31/01 will require Enron to write-off approximately $23 million, not inclusive of approximately $3 million in development costs to date.
To extend orders for equipment to 11/30/01 will cost an additional $5.3 million in cancellation charges.
To extend orders for equipment to 12/31/01 will cost an additional $8.7 million (inclusive of the $5.3 million above, therefore, net $3.4 million) in cancellation charges.

Termination at any time between now and year-end 2001 provides no material recovery potential for money spent.

Regards,

Chip Schneider
713-853-1789
ECN2864


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