Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Faisel Khan – Citigroup.
Faisel Khan – Citigroup
Was there anything else, besides the change in the economic conditions or the liquidity requirements that caused you guys to re-look at this business and possibly divest it. Was there anything else that happened in a part of the business that caused you to rethink your strategy here?
Larry Weyers
Well, I think the change in the environment was certainly the primary reason. We’ve been very successful in building [TEGE] and it has contributed to our success and our shareholder value for several years. We have chosen now to monetize that business in an effort to adjust our risk profile in the existing environment. And I think that’s consistent with our asset management initiative and, also our portfolio approach to managing risk.
When you see a change in the environment, we adjust the portfolio much like we did, when we sold our nuclear plant or the oil and gas exploration and production company in 2007. The environment’s clearly changed for [TEGE], while relies on liquidity in the financial markets and that liquidity is impacted by the volatility of the commodity prices, which has been extreme in the past year or two. So we believe that that change in the environment is enough reason for us to adjust the strategy.
Faisel Khan – Citigroup
Assuming that it’s a difficult market, assuming that it could be difficult to sell this business entirely to someone else, how long would it take you to wind down that business, because it looks like, on your balance sheet, it’s roughly $2 million to $3 million of assets and $2 million to $3 million in liability. So what’s the duration of that book and how long would it take you to completely unwind that position?
Larry Weyers
I think Mark can provide some specifics on that, but we intend to substantially wound down by the end of 2010 and we will be pretty far wound down by the end of 2009. Mark, you have any more specifics on your portfolio?
Mark Radtke
Yes, I think if you look at the statistics associated with the news release that went out last night, you can see the duration of the forward contracts and the vast majority drop off in the next two-year timeframe, and a very significant portion drop off at the end of 2009. So we took all of that into account when we can up with this glide path, if you will, lowering the guaranteed target from the $2.6 billion at the start of the year to $1.1 billion at the end of the year and then that rate would continue.
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