Message-ID: <30021413.1075862150739.JavaMail.evans@thyme> Date: Mon, 5 Nov 2001 23:09:15 -0800 (PST) From: nikita.varma@enron.com To: nikita.varma@enron.com Subject: From The Enron India Newsdesk - Nov 6th newsclips Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable X-From: Varma, Nikita X-To: Varma, Nikita X-cc: X-bcc: X-Folder: \PYBARBO (Non-Privileged)\Y'barbo, Paul\Inbox X-Origin: Ybarbo-P X-FileName: PYBARBO (Non-Privileged).pst THE FINANCIAL EXPRESS, Tuesday, November 06, 2001 Dabhol Power slaps asset transfer notice on MSEB Similar story also appeared in the following publications: THE HINDU, Tuesday, November 06, 2001 DPC serves notice to MSEB=20 THE INDIAN EXPRESS, Tuesday, November 06, 2001 DPC serves asset transfer notice on MSEB DECCAN CHRONICLE, Tuesday, November 06, 2001 Enron ready to switch off DPC=20 THE HINDU BUSINESS LINE, Tuesday, November 06, 2001 DPC serves asset transfer notice=20 THE TELEGRAPH, Tuesday, November 06, 2001 Enron One Step Closer To Quitting Dabhol=20 THE DECCAN HERALD, Tuesday, November 06, 2001 DPC serves asset transfer notice on MSEB THE ASIAN AGE, Tuesday, November 06, 2001 DPC serves Asset Transfer Notice to MSEB=20 THE HINDUSTAN TIMES, Tuesday, November 06, 2001 DPC slaps asset transfer notice on MSEB BUSINESS STANDARD, Tuesday, November 06, 2001 Dabhol serves asset transfer notice on MSEB THE ECONOMIC TIMES, Tuesday, November 06, 2001 DPC serves asset transfer notice; MSEB nonchalant THE TIMES OF INDIA, Tuesday, November 06, 2001 Dabhol serves MSEB with asset-transfer notice THE FREE PRESS JOURNAL, Tuesday, November 06, 2001 MSEB served asset transfer notice by DPC Regional Publications which carried similar stories: Loksatta, Lokmat, Maha= rashtra Herald, Statesman, Pioneer, Dainik Jagaran, Punjab Kesari, Anand Ba= zar Patrika ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE FINANCIAL EXPRESS, Tuesday, November 06, 2001 MSEB justifies rescinding PPA to panel, Sanjay Jog=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ BUSINESS STANDARD, Tuesday, November 06, 2001 Dabhol domestic lenders to meet in Singapore , S Ravindran=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE ECONOMIC TIMES, Tuesday, November 06, 2001 Enron could sell major assets ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE FINANCIAL EXPRESS, Tuesday, November 06, 2001 Dabhol Power slaps asset transfer notice on MSEB The Dabhol Power Company (DPC), in yet another attempt to legally corner th= e Maharashtra State Electricity Board (MSEB), on Monday served an asset tra= nsfer notice on the latter and thereby set in motion the valuation process = of Dabhol's assets including the liquified natural gas (LNG) plant in conne= ction with the termination of the power purchase agreement (PPA). However, = MSEB, which has rescinded its PPA with DPC on May 29 for the material misre= presentation and default on the availability of power, has decided not to t= ake cognisance but take future course of action after seeking advice from i= ts solicitors. "Consequently, DPC is left with little choice other than to = serve the transfer notice on MSEB, which draws us closer to final terminati= on of the PPA and the ultimate recovery of damages as allowed under the pro= ject documents," the DPC said in a statement.=20 However, the MSEB chairman Vinay Bansal in his reaction told The Financial = Express that "the transfer notice served by DPC is quite an expected move. = The company has resorted to this move to follow the PPA which we have alrea= dy rescinded." "This action follows more than two years of late payments an= d defaults in payments from MSEB and a repudiation of the PPA by MSEB. The = transfer notice is an important step in the asset valuation process agreed = to by all parties to the PPA and is necessary to protect the interests of D= abhol's sponsors, lenders and other stakeholders. Following this transfer n= otice, the final termination notice is likely to be served in the near futu= re to continue the legal process against MSEB," the DPC said in its stateme= nt. The MSEB would be required to pay damages of around Rs 35,000 crore tow= ards revenue compensation and demobilisation costs.=20 According to DPC, it would still prefer to resolve this dispute amicably th= rough a negotiated purchase by the Government of India and Indian financial= institutions (IFIs) of the foreign sponsors equity including offshore lend= er's debt. However, ongoing discussions between DPC and GoI/IFIs are yieldi= ng no significant progress towards a fair and reasonable solution, the comp= any said. DPC, which has already served three preliminary termination notic= es in May, September and October to the MSEB by declaring its intention to = opt out of the distressed Dabhol project after recovery of at least $1.2 bi= llion, has issued the transfer notice under Clause 17.8 (c) of PPA. After i= ssuance of asset transfer notice, the DPC would launch the process of evalu= ating the operating assets, preparation and auditing of provisional termina= tion statement, preparation of legal documentation in order to issue a fina= l termination statement in terms of schedule 11 of the PPA.=20 Independent accountants and valuers would be appointed by the party termina= ting the PPA within 15 days of issuance of transfer notice. The provisional= termination statement would be prepared by the terminating party and submi= tted to the accountants within 45 days of the transfer notice or if later, = then within seven business days following the receipt of the valuer's certi= ficates as per schedule 11 of the PPA. The accountants would be required to= issue a certificate to both parties certifying the same after reviewing th= e basis of the provisional termination statement. Thereafter, a final termi= nation would have to be prepared by the terminating party and submitted to = the accountants prior to the transfer date (the date of serving final termi= nation notice).=20 The Enron Virodhi Andolan convener Pradmuna Kaul has welcomed the DPC's dec= ision to serve the asset transfer notice and termed it as an endgame of Enr= on project. "We are concerned but the Government of India (GoI), Government= of Maharashtra (GoM) and MSEB are not putting out its cards to put Enron o= n defensive. The GoI, GoM and MSEB should prepare a full case including fra= ud, public interest and public policy against Enron in a bid to force the l= atter to carry out fair and correct business calculation and asset valuatio= n. Enron should not be allowed to claim fancy compensation under the asset = transfer notice and final termination notice," he added.=20 MSEB objects to DPC move , Sanjay Jog=20 Mumbai, Nov 5IN a preemptive move, the Maharashtra State Electricity Board = (MSEB) has taken a strong objection to the Dabhol Power Company's (DPC) mov= e to serve asset transfer notice and appointment of experts, valuers and ac= counts under the power purchase agreement (PPA) in view of its decision to = rescind the PPA on May 29. MSEB, which recently heaved a sigh of relief aft= er the Supreme Court (SC) on November 2 extended the status quo until Janua= ry 2002, in its communication of August 23 to the DPC had made it clear tha= t the question of appointment of any experts, valuers and accountants did n= ot arise as it has already rescinded the PPA. "As the rescission alongwith = other disputes and differences are pending final determination by the Mahar= ashtra Electricity Regulatory Commission (MERC), DPC ought to desist from t= aking any step as suggested," MSEB said.=20 Accordingly, the board has already refused to participate or give its conse= nt to such appointments. MSEB sources told The Financial Express that the D= PC was seeking to take improper advantage of the stay of the proceedings be= fore the MERC secured by the board. Also, the DPC was seeking to circumvent= and/or defeat the orders passed by the SC by resorting to issuance of prel= iminary termination notices (PTN) and asset transfer notice. "By these acti= ons, DPC is seeking to alter the status quo and is attempting to achieve in= directly which the company has been restrained from doing directly," source= s said.=20 The MSEB sources said that the board was of the opinion that in view of the= recent orders passed by the SC, MSEB has been prevented from proceeding fu= rther with its case before the MERC until the issue relating to the Commiss= ion's jurisdiction is decided by the Mumbai High Court. The preliminary ter= mination notices issued in May, September and October were the subject matt= er of MSEB's petition before the MERC. According to MSEB, DPC was driving t= he board to give up its case relating to the rescission of the PPA and the = illegality of the PTNs. MSEB reiterated that the disputes and differences o= f non-payment raised by DPC through its PTNs were pending adjudication by t= he MSEB in its petition filed on May 25 this year.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE FINANCIAL EXPRESS, Tuesday, November 06, 2001 MSEB justifies rescinding PPA to panel, Sanjay Jog=20 The Maharashtra State Electricity Board (MSEB) in its presentation before t= he visiting Parliamentary Assurance Committee (PAC) on Monday justified its= decision to rescind power purchase agreement (PPA) and suspend power purch= ases from Dabhol Power Company (DPC). "Today, despite installed capacity be= ing only about 15,000 mw there is no base load shortage even without DPC," = MSEB said. According to MSEB, it paid a whopping Rs 3,500 crore for the pur= chase of 6,700 million units from DPC during May 1999 and April 01 and sold= the same power for Rs 1,000 crore at a paltry Rs 3 per unit (by incurring = a loss of Rs 2,500 crore). As against this, MSEB had to purchase DPC power = at around Rs 7 last year when a competing supply of 2,500 mw was available = from eastern region at less than Rs 2 per unit to other states. MSEB chairm= an Vinay Bansal accompanied by the state principal energy secretary VM Lal = and MSEB officials told the visiting parliamentary assurance committee that= the merit order despatch issued by Maharashtra Electricity Regulatory Comm= ission (Merc) required it to draw the most expensive DPC power. The order r= estricted DPC power purchases to about 250 million units per month, which w= as about 40 per cent plant load factor (PLF).=20 However, the PPA envisaged the plant as a base load station at 90 per cent = PLF. The committee chairman and former union minister S Venugopal (Telugu D= esam Party) after its interaction with the MSEB and state government offici= als told The Financial Express that "the MSEB has made a presentation on it= s functioning and also on its power purchase agreement with DPC. They have = also submitted the Madhav Godbole committee reports. We will submit these r= eports to the Government of India." Further, MSEB argued that it has been q= uite punctual in the payment of power purchase bills to DPC and added that = it had and would pay interest for delays. However, MSEB pointed out that DP= C was correcting monthly availability statements despite admission of short= fall in supply against declaration. DPC has yet to pay rebate served by MSE= B for the default on the availability of power. According to MSEB, it has r= escinded the PPA on May 29 for material misrepresentation by DPC. Ironicall= y, other states were unwilling to make base load purchase commitments. On t= he implementation of its memorandum of understanding with the Centre, MSEB = said that it would complete the installation of 1,672 time of day meters by= December, implement 100 per cent metering after tariff correction and intr= oduce computerised billing. According to MSEB, it has reduced the outstandi= ng dues to below one month billing. In addition to this, implementation of = Ahluwalia committee report would address another Rs 400 crore of dues.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ BUSINESS STANDARD, Tuesday, November 06, 2001 Dabhol domestic lenders to meet in Singapore , S Ravindran=20 Foreign lenders to the Enron-promoted Dabhol Power Company (DPC) are finall= y set to give the go-ahead to the company for serving the final termination= notice (FTN) to the Maharashtra State Electricity Board (MSEB). The deadli= ne for DPC to serve the FTN expires on November 19, 2001. The FTN will be t= he culmination of a series of measures that started with DPC serving the pr= eliminary termination notice in May this year. In a related development, do= mestic lenders to the 2,184 mw power project are meeting in Singapore on No= vember 8 and 9 in a last-ditch effort to save the project.=20 Institutional sources said the lenders will take a close look at the offers= of BSES and the Tatas for the project. Given a choice, the banks and insti= tutions are not willing to run the project themselves even if they are offe= red the project at a hefty discount. "Our business is to lend and not to ru= n a power project," said a senior banker. The latest provocation for the fo= reign lenders is the ruling by the Supreme Court last week restraining DPC = from encashing a Rs 136-crore letter of credit issued by the MSEB till Janu= ary 2002. "It is a simple case. The letter of credit issue should be delink= ed from the problems surrounding the project. Instead, MSEB has gone to cou= rt and the matter has now got delayed. Under these circumstances it makes p= erfect sense to serve the final termination notice," said sources in the fo= reign lenders consortium. "DPC has already approached us seeking permission= to serve the FTN. So far, we had not taken a clear-cut decision. After the= Supreme Court ruling, we are very much inclined to assent to serving the F= TN," sources added.=20 The overseas lenders have a combined exposure of about $1 billion in the $3= billion power project in Maharashtra. The foreign lenders include Bank of = America, Citibank, Credit Suisse First Boston, Japanese Bank for Internatio= nal Cooperation and ANZ Investment Bank. Even after the foreign lenders giv= e their permission to serve the FTN, the path will not be paved for interna= tional arbitration. MSEB and DPC are locked in a legal battle over the juri= sdiction of various disputes between them. While MSEB is keen on the issue = being resolved by the state power regulator, the Maharashtra Electricity Re= gulatory Commission, the power company is keen on going to the Court of Arb= itration in London.=20 ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ---------------------------------------------------------------------------= ------------ THE ECONOMIC TIMES, Tuesday, November 06, 2001 Enron could sell major assets STRUGGLING energy giant Enron may have to sell power plants, pipelines and= even some of its energy trading assets as it seeks to head off a credit cr= unch and restore investor confidence, investment bankers said. While Housto= n-based Enron lined up $1 billion of new credit last Thursday, it still suf= fered a second credit rating cut amid concerns about questionable financial= transactions that have triggered an investigation by the US Securities and= Exchange Commission. The deteriorating picture, including a drop of almost= 70 per cent in its share price in less than a month, has close watchers of= the company saying it will probably have to break itself up if it is to st= ay independent. "It will have to refocus on its core strengths and get out = of other businesses," said one investment banker close to Enron. There is a= lso the possibility of a full bid for the company given its market value ha= s now sunk to less than $9 billion. On Sunday, Britain's Independent report= ed that energy giant Royal Dutch/Shell Group may mount an $11 billion bid f= or Enron.=20 Still, most bankers think such an opportunistic bid is unlikely given the q= uestions hanging over Enron's balance sheet. During its third-quarter resul= ts announcement last month, the company said it expected over a billion dol= lars of writeoffs related to several soured investments, including broadban= d communications and water utility interests. It also announced an extra $1= .2 billion writedown of shareholder equity related to investments that were= not recorded on its balance sheet. The big challenge Enron now faces is to= decide what assets it could sell first and what is the best possible price= it can achieve from them, the bankers said. "In terms of classic corporate= finance, the question they should ask is: 'Do I get enough money that repr= esents equity?'" said Alan McFarland, a Wall Street veteran and co-founder = of merchant bank McFarland Dewey. (Reuters)