trip last week was disappointing on several scores:

1) veba debt found out to be 13 million dollars.  both an operator within gm 
and veba themselves confirmed these numbers to different people
within enron.

2) gm starting to not supply customers.  they have been living hand to mouth 
and cash flows are reaching critically tight levels.   both q8 and totalfina 
have 
not been able to get gasoline from gm since thursday of last week.  the 
stocking 
out of gasoline is more to do with the fact that gm's term gasoline supplier, 
vitol, 
will only supply them gasoline if they pre-pay their entire months volume.
we are looking to step-in and work gasoline thru ectric as we do gasoil 
presently.  
that means that enron sells the product to ectric and ectric hold the product 
in tankage 
and allow gm to prepay as they can (usually payments of around 500,000 
usd).   

3) without my going there I wouldn't have a clue that they were in these 
difficulties.  
the office lacks a commercial person to manage the business.  don antonio, 73 
year 
head of the company, insists on all negotiations going through some 
consultants
he has hired.  these consultants know little about the market and don't seem 
to
grasp the seriousness of the situation.  the only positive thing I can say is 
that they
are trying to push ectric as the only way forward for gm in their present 
situation.
this is positive because I believe of all the creditors we will continue to 
get paid 
the most since without us the business will fold tomorrow.  reason for this 
is that we
are the holders of the strategic stock which is required to be an operator 
and are
providing through the ectric jv structure a way to keep the business going.

4) strategy going forward would be to continue on the same course of trying 
to get
as much money as we can back without getting any more involved.  this is 
problematic
given we are beginning the process of transferring gm's better credit 
customers to 
ectric and raising the profile of ectric in spain.  also very frustrating 
given the lack of
commercial management within gm at the moment.  

5) at the moment we are pressing them for a cash flow statement.  this 
situation looks
bad given their practise of factoring receiveables to the banks, outstanding 
debt (we
know of 20 million dollars between enron and veba)  they have no inventory of 
their own, 
and no credit lines to get supply.  on viewing this situation in spain I 
phoned london 
looking to get increased credit line to gm under a secured line that would 
enable them
to keep the business going.  steve young suggest that we take advantage of 
this situation
to also get at least half of our existing unsecured debt changed to secured 
debt.  the
consultants were sceptical that don antonio had personal cash that he could 
put up in
an escrow acct.  we stressed to them that collateral assets would take much 
longer to
value and register and therefore would not be an immediate remeady to their 
cash flow 
problem.  no guarantee that don antonio will meet these conditions but from 
our impressions
of things he doesn't have much choice at the moment.  would be revealing if 
he is unwilling
or unable to do so because I think that would reflect the present leveraged 
state of don 
antonio or a disbelief that they are going to make it through this difficult 
time.
think that we have a head start on the other creditors in understanding just 
how critical gm's 
present condition is and should do all we can to keep them going while we try 
to get our 
unsecured debt paid back.   

6) gm had approached us about 6 weeks ago to buy the company or a share of it.
given that we might be put in a position of looking at some assets as 
collateral for 
present unsecured debt do we want to get some people down there to evaluate 
the 
worth of the company?   if we were looking for countries where some retail 
business
was a worthwhile hassle spain would certainly make the list.   from a trading 
perspective
I still feel if we could turn this business around the shorts would be 
valuable to the london
gasoil and gasoline books.  greatest concern here is that presently that 
would require us
to run the business so gm don't bring very much to the jv.  the gm customer 
base has
a good payment history and gm have significant storage capacity in a country 
short of
this infrastructure.  hard to find any romance in this at the moment but if 
we going to have
to invest so much effort to get our money back anyway it might be worthwhile 
doing a
more detailed appraisal of gm.  not sure what the value of their retail 
gasoline sites,
transportation company, branded name within spain, etc is worth?  we might 
get greater 
transparency from them if they think we are interested in taking an equity 
stake.
at the moment their greater fear is on us walking away completely and so to 
date they
have always tried to give us the most optimistic scenario.  

7) to review the present course of action is to assign over to ectric the 
customer we are
ok with on credit and work on getting these customers to undertake supply 
contracts.  
subject to credit and senior management approval, we would like to help gm in 
the
present cash flow squeeze by establishing some type of rolling weekly credit 
line.
this would have to be backed by cash or some kind of collateral and at the 
same time
as that is established the same would have to be done for some percentage of 
our
present unsecured debt.   

8) we should prepare a plan for the worse-case scenario.   
 
9) sorry to be so long-winded.   thoughts/comments??
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