Message-ID: <6927296.1075844491799.JavaMail.evans@thyme> Date: Wed, 13 Sep 2000 04:06:00 -0700 (PDT) From: peter.keohane@enron.com To: mark.taylor@enron.com, sara.shackleton@enron.com, tana.jones@enron.com Subject: RE: Alberta PPA Financing Cc: dpef@blakes.com, soma.ghosh@enron.com, william.bradford@enron.com, sharon.crawford@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: 7bit Bcc: dpef@blakes.com, soma.ghosh@enron.com, william.bradford@enron.com, sharon.crawford@enron.com X-From: Peter Keohane X-To: Mark Taylor, Sara Shackleton, Tana Jones X-cc: dpef@blakes.com, Soma Ghosh, William S Bradford, Sharon Crawford X-bcc: X-Folder: \Sara_Shackleton_Dec2000_June2001_1\Notes Folders\Notes inbox X-Origin: SHACKLETON-S X-FileName: sshackle.nsf Mark, further to our converstaion this morning, I attach the latest version of the swap financing structure with RBC DS. The idea is to have the swaps prepay a funded amount which is then repaid through the swap structure over the term of the transactions (1 year). Please note that rather than determining the one year PV value of the funded amount and interest at time = 0 relative to a fixed price, with monthly settlements then occuring in the normal course based on market movements, I understand that it is neceassary to have interest payments settled monthly with a bullet principal repayment by settlement at the end of the one year term. Some explanatory notes: 1. Bill Bradford's group is putting the credit terms together. Once that occurs we will need to have drafts to RBC DS ASAP. 2. Enron Canada Corp.'s obligations will be guaranteed by Enron Corp. to the extent outlined in the credit worksheet. 3. It is fundamental to the structure for Global Finance that there not be any net collateral exposure. In other words, collateral thresholds must offset or mirror each other such that if, for exapmle, Enron Canada is required to provide $50MM of margin to RBC DS, Financing SPV will also have to provide $50MM of margin to Enron Canada Corp., notwithstanding that Enron Canada Corp. ought really not be exposed unless there is a market movement having an exposure value in excess of the funded amount of $300MM. (NOTE: The actual amount required to complete the purchase of the PPA is C$235,840,000, the first installment of C$58,960,000 having already been funded by an intercompany loan from Enron Canada Corp. to Enron Canada Power Corp.) 4. In terms of documentation, the swaps should be documented under ISDA Masters. I understand that there may be an ISDA Master in place between Royal Bank of Camada and Enron North America Corp. and also one in place also with Enron Corp. (this will need to be confirmed). As the transactions need to be at the Enron Canada Corp. level, however, I suggest that ISDA Masters need to be prepared between Enron Canada Corp. and RBC DS and between Enron Canada Corp. and Financing SPV on the same terms as the current ISDA Master between Enron North America Corp. (or Enron Corp.) and Royal Bank of Canada, subject to the credit terms provided by Credit. The individual transactions themselves would then be documentd on transaction Confirmation Letters. I am not fussed as to who prepares the paper and it might be easiest for your group to do so. Please also note that external legal opinions may be required in respect of Enron Canada Corp. and Enron Corp. Blakes is prepared to provide legal opinions for Enron Canada Corp. and whatever advice or support is necessary. 5. Once the funding occurs to Enron Canada Corp., it will be advanced by intercompany loan to Enron Canada Power Corp. to acquire the PPA, and I will look after this aspect of the transaction. 6. Please note that Enron Canada Power Corp. must put the Government in funds on Friday Spetember 22nd. ---------------------- Forwarded by Peter Keohane/CAL/ECT on 09/13/2000 09:12 AM --------------------------- Soma Ghosh 09/12/2000 05:41 PM To: Peter Keohane/CAL/ECT@ECT, Andre Templeman/CAL/ECT@ECT cc: Subject: RE: Alberta PPA ---------------------- Forwarded by Soma Ghosh/HOU/ECT on 09/12/2000 06:40 PM --------------------------- Soma Ghosh 09/12/2000 10:06 PM To: Cris Sherman/HOU/ECT@ECT, Peter Keohane/CAL/ECT@ECT cc: Subject: RE: Alberta PPA Chris, As promised, I am forwarding details of 'SwapCo'. I would be grateful if you would confirm that this entity works for us & resolves the 97%/3% hedge issue.If you need anything else re. the entity please let us know. Catherine will shortly forwarded the final version (hopefully!) of the pre-pay structure as discussed in our meeting. Regards, Soma ---------------------- Forwarded by Soma Ghosh/HOU/ECT on 09/12/2000 04:00 PM --------------------------- "Ellison, Mike" on 09/12/2000 09:15:56 PM To: "'Soma.Ghosh@enron.com'" , "'Catherine.Clark@enron.com'" cc: "'Brian.Kerrigan@enron.com'" , "McArthur, Ian" , "Fleming, Blair" , "Darby, Giles" , "Bermingham, David" Subject: RE: Alberta PPA Soma, apologies, note that in the diagram there is no TRS between RBCDS & BF Capital, just straight finance agreement. Mike -----Original Message----- From: Ellison, Mike Sent: Tuesday, September 12, 2000 9:08 PM To: Soma.Ghosh@enron.com; 'Catherine.Clark@enron.com' Cc: Brian.Kerrigan@enron.com; McArthur, Ian; Fleming, Blair; Darby, Giles; Bermingham, David Subject: RE: Alberta PPA Soma, as discussed, here is the proposed structure plus suumary involving BF Equity Capital an unaffiliated LLP.? We believe this to solve the accounting issues.? Please review and confirm.? Please also detail any specific further information that you require to be happy with BF Equity Capital.? Can I suggest that all parties have a conference call at 10.00am Houston time tomorrow to ensure we have agreement on the structure and the way forward. Please confirm Thanks, Mike -- ? - Enron Canada - Alberta PPA - BF Equity Partners 12 Sep.ppt