Subject: Indian Mesa Sale - Bankruptcy Court Approval
From: [email-masked]
To: [email-masked], [email-masked], [email-masked], [email-masked]
Cc: [email-masked]
Date: Thu, 27 Dec 2001 16:33:29 -0800 (PST)

The Bankruptcy Court has approved our sale of the IM Project to AEP.  The Court's formal order will be entered sometime Friday morning.  With this approval, we expect to close the sale either Friday or Saturday.  Approval was conditioned upon our agreement to the following procedures with respect to the net sale proceeds (approximately $108mm):  

	-	$25mm will be returned to Enron (repayment of the post-petition working capital loans made to EW); 
	-	$10mm will be retained by EW for working capital to use over the next 2 weeks; 
	-	$78mm (the remaining balance) will be set aside in a restricted account of EW, pending approval by the creditor's committee of the use of those funds for payment of existing obligations and for ongoing working capital by EW.  

We have until 15 January to obtain creditors' committee approval for the use of the remaining balance, at which time if no approval is obtained, we can ask the BK Court to rule on the matter.  Obtaining creditors' committee approval will require that we (a) demonstrate that the continued operation of EW as a going concern is in the bankruptcy estate's best interest (because it will enhance or at least maintain the value of EW for sale) - this demonstration will need to be made by Enron (Mark) and CSFB (Matt), and will need to include an overview of EW's value on sale, including arguments why there is significant value in the EW - Americas business unit notwithstanding the short-term issues facing the US business, and an update on the sale process; and (b) demonstrate the legitimacy of EW's current obligations and future working capital needs - this will need to be done by Umanoff and Westbeld (we initially projected that we would need approximately $54mm of the $78mm through the end of Q1, a likely closing date for sale of EW; Mike and his team will be scrubbing these numbers over the next week).  We are targeting early in the week of Jan 7 to make our case to the creditors' committee, although no firm date has been set.

One final note - a representative of GE attended the BK court hearing and is aware that our request to use the remaining balance to pay our past due obligations (including $9mm owing to GE) was denied pending implementation of the above procedure.  We can expect continued pressure from GE.

Call me with any questions.