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Enron Mail |
Mark, I wanted to make you aware of a DASH that will be circulated in the
next day or so regarding the sale by Enron Canada of its entire interest in Invasion Energy Inc., a private oil and gas company. The Canadian subsidiary of The Wiser Oil Company made an offer to acquire all of the shares of Invasion as well as the debt owing to ECC and an overriding royalty granted to ECC by Invasion. ECC owns approximately 65% of the issued and outstanding shares of Invasion, has debt outstanding from Invasion in the amount of CDN. $23 million and the royalty, which is valued at approximately CDN $2.2 million. The DASH outlines the benefits to ECC of this transaction, which are significant given that we are realizing an approximate 83% return on our equity investment and 19% return on the debt. The total purchase price (for all shares as well as the Enron debt and Enron royalty) is in the amount, prior to adjustments, of CDN $53 million. Other than standard closing risk inherent in any transaction of this nature, the only real legal risk, which I have identified in the DASH, is regarding the survival of representations and warranties. We have mitigated the risk associated with such survival by: 1. Restricting the survival period to 6 months following closing 2. Capping the aggregate liability for all claims to CDN $7 million 3. Including a requirement that no claim may be made until the aggregate amount of all claims exceeds CDN $500,000, which amount is then deductible against all claims made 4. Making all vendor's obligations several and restricting each vendor's liability for claims to its proportionate share of such claims 5. Entering into a separate agreement with the principal shareholders creating a holdback escrow in the amount of CDN $4 million, which is proportionately contributed to by such principal shareholders. I will initial the legal execution line for your execution. Call me if you would like to discuss this matter further. Thanks Greg
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