Message-ID: <31348262.1075841377449.JavaMail.evans@thyme> Date: Tue, 29 Jan 2002 07:02:57 -0800 (PST) From: stuart.zisman@enron.com To: jayne.south@weil.com, kelli.walsh@weil.com, stephen.youngman@weil.com Subject: Bridgeline Cc: gerald.nemec@enron.com, n..gray@enron.com, chris.meyer@enron.com, joe.parks@enron.com, stewart.seeligson@enron.com, eric.gonzales@enron.com, brian.redmond@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable Bcc: gerald.nemec@enron.com, n..gray@enron.com, chris.meyer@enron.com, joe.parks@enron.com, stewart.seeligson@enron.com, eric.gonzales@enron.com, brian.redmond@enron.com X-From: Zisman, Stuart X-To: 'jayne.south@weil.com', 'kelli.walsh@weil.com', 'stephen.youngman@weil.com' X-cc: Nemec, Gerald , Gray, Barbara N. , Meyer, Chris , Parks, Joe , Seeligson, Stewart , Gonzales, Eric , Redmond, Brian X-bcc: X-Folder: \ExMerge - Parks, Joe\Deleted Items X-Origin: PARKS-J X-FileName: joe parks 6-26-02.pst Per our conversation, The following is a list of questions pertaining to Bridgeline that need to = be answered in order for us to fully evaluate our possible courses of actio= n. In addition, I have attached an electronic version of a Batch Funding R= equest which lays out the Bridgeline ownership structure and walks through = one of the two transactions with Bridgeline that is currently being contemp= lated. 1) We need to understand what the effects might be of terminating the Gas = Storage and Transportation Agreements between ENA and Bridgeline ("S&T Agre= ements"). Specifically, what is the likely remedy for such a termination? = (dissolution of the partnership? reallocation of profit sharing or voting = control?). We are sending over the relevant documents including the Contri= bution Agreement and the Side Letter Agreement which stipulates the methodo= logy for calculating damages in the event of termination of these agreement= s. Also, we need to consider whether the S&T Agreements will be construed = as leases of real property and if so what effects that distinction will hav= e on ENA's ability to reject those agreements as part of the bankruptcy pro= ceedings.; 2) What can Enron do in order to block or fend off any attempt to purchase= our interests in Bridgeline pursuant to the "buy-sell" provisions of the P= artnership Agreement? Would filing voluntary petitions in bankruptcy on be= half of the 4 limited partners achieve this result? Remember, the biggest = concern in this area is Enron's inability to counter any purchase proposal = with a proposal of its own (given our current lack of access to $); 3) What rights might Enron have to initiate a termination of the Partnersh= ip Agreement? Could we reject the Contribution Agreement (is it sufficient= ly executory?)?; 4) What is the impact of a termination of the Partnership Agreement (i.e. = is it reasonable to think that we would get our contributed assets back and= return to the status quo?)?; 5) Should we proceed with the transaction that is proposed in the attached= Batch Funding Request (especially the early contribution of the Napoleonvi= lle Storage Cavern (which Enron is already obligated to contribute under th= e Contribution Agreement no later than 7/1/2002))? We need to recognize th= at if we are unwilling to do this, Bridgeline will likely lose any interest= in proceeding with the remainder of the transaction (resulting in numerous= other problems with other counterparties). We also spoke about your preparing a letter to Texaco in response to their = letter (pursuant to which they claim to be the sole member of Bridgeline LL= C) and the related Unanimous Consent. =20 Also be advised that there is another transaction that is currently being c= ontemplated between Bridgeline and ENA. ENA, as the holder of both storage= and transport rights under the S&T Agreements, has title to approximately = 1.9 BCF of gas in Bridgeline's storage. ENA owes approximately $2.4 millio= n to Bridgeline under the S&T Agreements ($1.2 million is pre-petition and = the remainder is post-petition). Initially, Bridgeline rejected our reques= ts to release the gas in storage so that we could sell it (they claimed tha= t they had a right to do this because they have a common carrier lien on th= e gas). We responded by letting them know that we felt they were violating= the automatic stay. They have since agreed to hold only those volumes of = gas which are needed to secure ENA's pre-petitions obligations and have tol= d us that they would release approximately 1.5 BCF of gas if we paid the $1= .2 million for post-petition amounts. We do not want to pay these amounts = as doing so would be tantamount to acknowledging the common carrier lien. = In other words, if we pay the $1.2 million of post-petition amounts to Brid= geline and later determine that Bridgeline did not have the authority to re= quire payment of those amounts prior to releasing the gas, we have done our= creditors a disservice (and will likely never see that $1.2 million again)= . Thank you in advance for your efforts and please call ASAP if you need anyt= hing else from us in order to fully consider the questions raised above.