Message-ID: <32045526.1075844540970.JavaMail.evans@thyme> Date: Thu, 24 Feb 2000 07:43:00 -0800 (PST) From: sara.shackleton@enron.com To: mark.taylor@enron.com Subject: Re: Margaux/Whitewing Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Sara Shackleton X-To: Mark Taylor X-cc: X-bcc: X-Folder: \Sara_Shackleton_Dec2000_June2001_1\Notes Folders\Sent X-Origin: SHACKLETON-S X-FileName: sshackle.nsf no From: Mark Taylor 02/24/2000 02:50 PM To: Sara Shackleton/HOU/ECT@ECT, Shari Stack/HOU/ECT@ECT, Carol St Clair/HOU/ECT@ECT cc: Subject: Re: Margaux/Whitewing Do any of you guys know about this deal? ---------------------- Forwarded by Mark Taylor/HOU/ECT on 02/24/2000 02:49 PM --------------------------- Scott Sefton 02/24/2000 11:32 AM To: Mark Evans/LON/ECT@ECT cc: Stuart Schardin/LON/ECT@ECT, Mark - ECT Legal Taylor/HOU/ECT@ECT, Nora Dobin/Corp/Enron@ENRON Subject: Re: Margaux/Whitewing Mark, I finally got to speak with Mike yesterday. The short answer is that Nora Dobin in Global Finance legal will be your contact person on everything other than the swap. Mark Taylor (or his designee) will handle the swap. We will rely heavily on Ron Astin and Trena Chandler of V&E to assist us on the Whitewing issues. In case you didn't know, Ron and Trena represented us in the creation of Whitewing (and its holding company Condor) and have been involved in all the subsequent Condor/Whitewing transactions. Because Jeff Eldredge has a significant role in Margaux, I hope having V&E involved here and in London will facilitate coordination on these issues. Cheers Scott Mark Evans 02/24/2000 08:55 AM To: Scott Sefton/HOU/ECT@ECT cc: Stuart Schardin/LON/ECT@ECT Subject: Margaux/Whitewing Scott, in Cynthia's absence, can you allocate someone else from your group to oversee this? As you can see, we are in need of some immediate assistance on Whitewing. Did you get the chance to speak to Mike Jakubik about Margaux? Can you help out with Houston coordination or shall I just get on with it with Mark Taylor and Jeff Hodge? Thanks. Mark ---------------------- Forwarded by Mark Evans/LON/ECT on 24/02/2000 14:47 --------------------------- Stuart Schardin 24/02/2000 11:52 To: rastin@velaw.com, tchandler@velaw.com, Ben F Glisan/HOU/ECT cc: Donette Dewar/HOU/ECT@ECT, Anne Edgley/LON/ECT@ECT, Mark Evans/LON/ECT@ECT, Maroun J Abboudy/LON/ECT@ECT Subject: Margaux/Whitewing Ron/Trina/Ben, I wanted to touch base with you on some Margaux-related issues for Whitewing and determine what the appropriate course of action is. As a brief description of the Margaux transaction, in case you have not been updated recently, the Margaux transaction will now occur through the synthetic transfer of risk to the Noteholders/Margaux equity. The method by which this occurs is as follows. Whitewing continues to hold the equity interests in the assets (excluding 56% of Trakya, ETOL, approx. 31.25% of Sutton Bridge, 50% of Nowa Sarzyna, and approx. 50% of Teesside, all of which are held by Enron). Whitewing enters into a fixed for floating swap with ENA, with Whitewing making a fixed annual payment to ENA in an amount representing the base case cash flows of the underlying assets and ENA making a floating payment to Whitewing that is initially equal to the fixed payment from Whitewing but is adjusted downward if certain identified negative things happen at the various projects (thereby transferring certain of the risks of the projects through the floating leg). Concurrently, Margaux (the Issuer) raises approx. $511 mm of capital and, through a whollly-owned subsidiary, purchases the floating leg (receiveable) from Whitewing for $511 MM. In other words, Whitewing enters into the swap and immediately monetizes its receiveable to Margaux. The net result is that Whitewing receives cash proceeds up front, and has a fixed payment obligation to ENA, and ENA has a floating payment obligation to Margaux. I've attached a structure diagram below. With this in mind, the following issues related to Whitewing have arisen. The tax group would like to characterize the payment ENA receives from Whitewing as a preferred partnership distribution (see attached note from Donette Dewar below). My question is how do we achieve this result. First, is Whitewing LP able to enter into this transaction itself, or does it need to occur at a subsidiary level? In other words, does the swap fall under the definition of "Indebtedness" (clause (viii) perhaps?) in the Whitewing LP Agreement, which is prohibited at the Whitewing level? If it cannot, is SE Acquisition the best candidate to be ENA's counterparty, or do we run into issues with the Natwest facility (although they'd likely consent since they will get repaid out of the proceeds of the transaction)? Once the issue of who is the appropriate counterparty has been determined, we need to discuss the mechanics by which we effect the transaction. If we are indeed going to open up the Whitewing LP Agreement, I suspect that AnnMarie will need to revisit the Allocation and Distribution sections, which is probably no easy task. If not, and the transaction will occur at a subsidiary level, we need to determine where. Also, I'm sure this transaction will require Certificateholder approval as it is in excess of the $40mm threshold. A final logistical issue that Donette raises in her note is who will be responsible for the legal work required at the Whitewing level. More generally, are there any other legal or other issues that you see with respect to this transaction from a Whitewing perspective? If you'd like to discuss the transaction further, please let me know. I'll be in Houston the early part of next week, so perhaps we can spend some time discussing these issues then. Thanks, and I look forward to seeing you next week. Best regards, Stuart ---------------------- Forwarded by Stuart Schardin/LON/ECT on 24/02/2000 11:09 --------------------------- Anne Edgley 24/02/2000 09:48 To: Stuart Schardin/LON/ECT@ECT cc: Subject: Re: Margaux - Whitewing Partnership amendment ---------------------- Forwarded by Anne Edgley/LON/ECT on 24/02/2000 09:49 --------------------------- From: Cynthia Harkness on 23/02/2000 12:28 CST To: Mark Evans/LON/ECT@ECT cc: Donette Dewar/HOU/ECT@ECT, Anne Edgley/LON/ECT@ECT, Maroun J Abboudy/LON/ECT@ECT, Stephen Dwyer/LON/ECT@ECT, AnnMarie Tiller/Corp/Enron@ENRON, James Ginty/Corp/Enron@ENRON, Ben F Glisan/HOU/ECT@ECT, Scott Sefton/HOU/ECT@ECT Subject: Re: Margaux - Whitewing Partnership amendment Dear All, I will be leaving Enron Global Finance this Friday to join Enron Broadband Services, Inc. You should refer any inquiries in this regard to Scott Sefton. It was a pleasure working with you and I wish you great success in finalyzing Margaux! Please do not hesitate to contact me if I can help you with anything in the future! All the best! Cynthia Mark Evans 02/23/2000 11:37 AM To: Donette Dewar/HOU/ECT@ECT cc: Anne Edgley/LON/ECT@ECT, Maroun J Abboudy/LON/ECT@ECT, Stephen Dwyer/LON/ECT@ECT, AnnMarie Tiller/Corp/Enron@ENRON, James Ginty/Corp/Enron@ENRON, Cynthia Harkness/HOU/ECT@ect Subject: Re: Margaux - Whitewing Partnership amendment Donette, these questions need to be directed to the Whitewing legal team. I believe this is Cynthia Harkness. I will then work with Cynthia to ensure her efforts are coordinated with ours. Mark Donette Dewar 23/02/2000 17:19 To: Mark Evans/LON/ECT@ECT, Anne Edgley/LON/ECT@ECT, Maroun J Abboudy/LON/ECT@ECT cc: Stephen Dwyer/LON/ECT@ECT, AnnMarie Tiller/Corp/Enron@ENRON, James Ginty/Corp/Enron@ENRON Subject: Margaux - Whitewing Partnership amendment As you may recall, the tax comments to the debt term sheet reflected a need for an amendment to the Whitewing partnership agreement to admit ENA as a partner. You also may recall that we briefly discussed the potential for legal/accounting/other issues that may arise as a result of any such amendment. So that the Whitewing process can be moved forward, would you please consider the following: 1. Have any legal/accounting/other issues been identified as resulting from an amendment to the Whitewing partnership agreement? 2. If so, what are the potential solutions to any such issues? 3. Have definite conclusions been reached regarding the economics of ENA's preferred return on the Whitewing interest, such that a draft of the necessary partnership allocations can be undertaken? 4. Has a decision been made regarding who will be charged with drafting the amendments? Will it be the Margaux legal team? The Houston Global Finance legal group? Other?? Thanks, in advance, for your consideration of these issues. Kindest Regards, DMD