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Enron Mail |
Please find below the dial-in numbers for tomorrow's conference call in
preparation for next week's formal board meeting: Topic: Briefing re: TBS from Fede Cerisoli for Enron's board members Date: March 23rd Time: 1h00pm or 3:00 pm Houston Time 4h00pm or 6:00 pm S?o Paulo/Rio de Janeiro Time Host: Eddy Daniels (Fede Cerisoli) Dial In Numbers: International: 847 619 8039 Domestic: 800 991 9019 Participant Code: 667 22 85# To facilitate the discussion during the call, I'm enclosing the following material: Draft of the Board Meeting presentation. A summary/diagram of the project's supply agreements. A diagram of the Yabog pipeline to assist us during the briefing on the TBS-Andina capacity release transaction. Thank you very much. From: Eddy Daniels on 03/22/2001 07:21 AM CST To: James A Hughes/Enron@EnronXGate, James Derrick/Enron@EnronXGate, Mark E Haedicke/HOU/ECT@ECT, Rebecca McDonald/Enron@EnronXGate cc: Federico Cerisoli/SA/Enron@Enron, Erwin Landivar/SA/Enron@Enron, Gabriela Aguilar/SA/Enron@Enron, John Novak/SA/Enron@Enron Subject: Re: Notice of Meeting of Directors of TBS on March 28, 2001 I thought it might be helpful to provide a little background on the reasons for the March 28 board meeting. By tomorrow morning, Federico and his team will distribute talking points with details of the various matters listed on the agenda. If you would find it useful, Federico and I are available for an informational conference-call in preparation for the board meeting which could be held on Friday, March 23, either at 3 pm Houston time, or at 1pm Houston time. Please let us know of your preference. TBS is a Cayman company whose principal purpose is to facilitate the supply of gas to the Cuiaba power plant in Brazil. It is essentially a service company and its only assets are contractual rights related to the gas supply and transportation agreements. Enron owns 72.5%, and Shell owns 27.5%. Until now, the board has consisted of only Enron designees. Shell has had a right to designate a board member since late 1998, and has recently designated Dr. Johannes Walzebuck as their designee for TBS (and to serve on other boards related to Cuiaba). Until now, the board functioned largely by unanimous written resolutions. Shell is also minority shareholder of the asset-owning entities related to the Cuiaba project: EPE (power plant co.), GasMat (Brazilian side of pipeline spur) and GasBol (Bolivian side of pipeline spur). Pursuant to various agreements, Shell is obligated to fund its proportional share of the capital expenditures required to develop the project. Essentially, the agreements require that the parties consult from time to time to determine an "Agreed Budget." The project companies make monthly cash calls per the Agreed Budgets and the shareholders then fund the cash requirements. Due to various construction problems and delays, the main project entities (EPE, GasMat & GasBol) have seen significant increases in the proposed Agreed Budgets. The once friendly operating relationship between Shell and the project companies has turned cold, with Shell insisting on strict observance of contractual formalities, objecting to proposed increases to the Agreed Budgets pending further consultations, and defaulting on nearly $13 MM of cash calls in the past few weeks. Rebecca McDonald and Pete Weidler have become personally involved in discussions with senior representatives of Shell to resolve the problems. It is these tensions with Shell that have led to us call for a live TBS board meeting instead of the more usual action by written resolutions. We expect that Shell may vote against approving the budgets, even though TBS's budget is quite small and has not increased beyond the level approved by Shell previously. While Shell has a contractual right to object to increases (at EPE, GasMat & GasBol) and to decline to participate in further funding (leading to their dilution), they have no right to refuse to fund the obligations to which they have already agreed. The board still can approve the budgets it deems necessary, thus giving TBS's managers corporate authority to continue operations under the budgets. Shell remains obligated to fund its proportionate share of the Agreed Budget for TBS, notwithstanding any potential vote against the budget. It is quite possible that Shell will not raise unnecessary obstacles in the TBS board meeting given the relatively small amounts at stake (less than $1 million). Their real concerns lie in the asset owning companies. However, we must be prepared for potential noncooperation. As indicated, I understand that an informative presentation will be distributed to you late this evening and TBS's management will be available to answer your questions Friday afternoon. If I can be of further assistance, please let me know. Best Regards, Eddy Daniels Eddy Daniels 03/20/2001 05:18 PM To: Johannes.Walzebuck@shell.com.br, James Derrick/Enron@EnronXGate, Mark E Haedicke/HOU/ECT@ECT, Rebecca McDonald/Enron@EnronXGate, James A Hughes/Enron@EnronXGate cc: Federico Cerisoli/SA/Enron@Enron, Nancy Muchmore/NA/Enron@Enron, Denise Almoina/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, pnazro@velaw.com Subject: Notice of Meeting of Directors of TBS on March 28, 2001 Please find attached a notice of a board of directors meeting for Transborder Gas Services Ltd. for next Weds., March 28, 2001. The meeting will be held immediately after presentations to the shareholders' representatives (Enron & Shell ) in Cuiaba, Brazil and will start at 11:00 am local time (9am Houston time). There will be a telephone call-in number for board members who can not attend in person which will circulate later this week. Regards, Eddy Daniels
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