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Enron Mail |
Cc: cindy.stark@enron.com
Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: cindy.stark@enron.com X-From: Steve Duffy X-To: Stanley Horton X-cc: Cindy Stark X-bcc: X-Folder: \Stanley_Horton_1\Notes Folders\All documents X-Origin: HORTON-S X-FileName: shorton.nsf Stan: I understand completely, and we will do our very best to achieve your desired approach. The problem is this: Regardless of what the MOU says, we will have to go through a size/probability analysis on this deal. The deal is clearly material to EOTT. From an SEC perspective, the duty to disclose a pending deal depends upon how material the transaction is and how likely it is to occur. If a deal is very material, a lower degree of probability is needed before disclosure is required. The MOU itself is not totally determinative, although signing a document which looks like an LOI will increase the chances of having to disclose. In the present case, if Equilon's Board gives the go- ahead to deal with us exclusively, I feel there would be at least a 20% chance of closing a transaction (based upon past dealings with these folks). Accordingly, if/when that happens, we will need to take a hard look at the disclosure issue. We do not want to disclose prematurely, but I am pretty sure that this deal would be considered "material," and if we go forward with Equilon, I believe that we will need to disclose it at some point prior to closing (certainly after signing a PSA). We can delay disclosure for a period of time for legitimate business reasons, and the MOU we sign may not rise to the level of an LOI, but at some point---if we go forward with Equilon---we are going to reach a point where the size and probability of the deal will mandate disclosure. We don't need to make a decision at this point, we just need to be aware of these circumstances and manage the process accordingly. From a different perspective, we want to sign some kind of LOI with Equilon as soon as we feel comfortable doing so because we want the HSR waiting period to begin running. Equilon wants to close by November 1st. Please advise if you wish to discuss further. Thanks. SWD Stanley Horton@ENRON Sent by: Cindy Stark@ENRON 07/12/2000 02:04 PM To: Steve Duffy/Houston/Eott@EOTT cc: Subject: Re: Phoenix/Equilon Deal; CONFIDENTIAL ATTORNEY/CLIENT COMMUNICATION AND ATTORNEY'S WORK PRODUCT Steve: Let's start thinking about how we could structure the MOU so we wouldn't have to disclose the deal. I would rather not disclose a "tentative deal". Stan From: Steve Duffy@EOTT on 07/11/2000 01:47 PM To: Dana Gibbs, Lori Maddox/Houston/Eott@Eott, Stanley Horton/Corp/Enron@Enron cc: Joe Richards, rbaird@velaw.com, Susan Ralph Subject: Phoenix/Equilon Deal; CONFIDENTIAL ATTORNEY/CLIENT COMMUNICATION AND ATTORNEY'S WORK PRODUCT Joe R. will be sending out something in greater detail shortly, but it appears that Equilon's management would like to pursue a deal with us on an exclusive basis and that this decision is being forwarded to the Equilon Board for approval. If this acquisition goes forward, we will need to get organized---in the near term---on a number of logistical/due diligence tasks, but one thing we should start thinking about now is the "disclosure" issue. If the Equilon Board gives the go-ahead for Equilon to pursue this transaction , Equilon will probably want to sign a memorandum of understanding with us, and this may put us in a "disclosure" posture because at that point, we would be looking at a $65 million deal (approx.) with a closure probability of no less than 20% (in my judgment, based upon our past dealings with these people). Even without a signed document, the "size/probability" test would still be an issue for us to deal with. Everyone should be thinking about this issue as we await word from Equilon's Board. Thanks. SWD
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