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Enron Mail |
I ran two scenarios below to illustrate Enterprise Value in a sale
scenario. If a company is upside down (more debt than enterprise value), the losses to creditors are only reduced if someone overpays for the assets. Otherwise it just shrinks the enterprise value and debt $1:$1. The proceeds would first go to the secured mortgage bonds then to the unsecureds (they funded a good deal of the undercollection). Scenario 1 (at FMV) Current Sale Proforma Enterprise value 800 -200 600 Debt 1,000 -200 800 Loss $ (200) (200) Loss % -20% -25% Scenario 1 (at $100 over FMV) Current Sale Proforma Enterprise value 800 -200 600 Debt 1,000 -300 700 Loss $ (200) (100) Loss % -20% -14% -----Original Message----- From: Comnes, Alan Sent: Tuesday, February 20, 2001 5:14 PM To: Kingerski, Harry; Tribolet, Michael Cc: Dasovich, Jeff Subject: Re: Transmission Data/PG&E and SCE Harry, Thanks. Let me know what else I can do. Harry or Michael T: If you see anything that gives more details to the securitization proposal, I would like to see it. Once question I have is the assets are currently supported by corporate debt: probably to the tune of 50-60%. If the state buys that portion, it will reduce the debt coverage ratio of the corporate debt that now must be supported by only distribution operations. Thus, it would seem to me that some of the state purchase proceeds would need to go to retiring corporate debt before it could be used to pay down the undercollection. Alan Comnes
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