Lousie,

I would be grateful if you could review the transaction below, which will require your approval.   As outlined below the client 'Borealis'  wishes to change the terms of the contract given our current situation.  RAC is comfortable with the changes, as it will result in a significant saving in storage costs and allow the LPG trader to flatten his book. Further, whilst there maybe the potential of MTM movement between the $180 purchase price from Borealis and the subsequent sale (index related price) back to the counterpart, this will be netted out.  RAC has significant risk appetite for this counterpart, which is a sound credit, rated E5.  The only issue is whether Houston has sufficient resources or are willing to pay the storage costs early, which could range between $1,200,000-?1,400,000.  If this is feasible I will recommend that we negotiate a discount of $15 on storage costs (saving $600,000) as opposed to $10.  


Kind rgds,

Nish



 -----Original Message-----
From: 	Petersen, Bo  
Sent:	27 November 2001 17:45
To:	Patel, Nish
Subject:	London - LPG Book





Enron put 40,000 MT of Propane in storage under a term agreement (contract QA 8318)  in a facility 
in Sweden,  managed and owned by a company called Borealis.  Enron, under the contract, agreed 
to pay $45 per MT for the right to utilize the storage.  
Due to Swedish law,  Enron can/could not have title to the product in Sweden and Borealis paid Enron, 
under a pre-agreed price formula,  $186 per M/T.   Upon Enron's sale of the product and subsequent 
lifting a payment of the $186 + $45 (storage fee) would become due to Borealis.  The likely timeframe
for selling the product would be Jan. 2002 as that is the highest OTC swap price mkt which in turn
would mean payment to Borealis would be due on 30 days past B/L. ie early Feb.

Borealis are very concerned about Enron's ability to meet it's payment obligation and has suggested
a transaction that in several ways would suit the LPG book.

Pls let me know if you need further information.

Bo Petersen 

1.	An upfront payment (this week)  of the storage payment with a reduction of 
$10-$15 dollars for the storage fee.  $400,000-$600,000 savings

2.	Borealis would purchase the Product in tank at an indexed related price
which would fit the London LPG book very well

3.	The contractual obligations to lift the storage tons would be further complicated
by the fact that the one physical trader most likely will not be here much longer.


Pls let me know if you need further information.

Bo Petersen