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Enron Mail |
-----Original Message----- From: Stabler, Frank Sent: Wednesday, October 24, 2001 2:32 PM To: Fastow, Andrew; Donahue, Jeff; Ricky Waddell/Enron@EnronXGate; Randelyoung4@hotmail.com; Koogler, David Subject: Status CEG/CEG-Rio Transaction Current state of play: ASEP took the transaction off of their agenda for their October 25 meeting. Reason was that some directors complained that the required 10 day public notice of the meeting was not given in time. Head of ASEP has committed to Petrobras (as well as to Orlando Puppin) that the transaction will be on the agenda for a November 14 meeting and should be approved that day. Petrobras is getting this commitment in writing and will forward to us. The approval process is that ASEP sends a letter supporting approval to Vagner Victor. Vagner Victor sends a letter to the Governor requesting that he issue a directive. Petrobras has said that if they get the letters form ASEP and Vagner Victor then they will waive having to wait on the Governor issuing the directive as a condition to close. Petrobras has assurances from ASEP and Vagner Victor that they will provide the recommendation letters soon after the November 14 meeting. Petrobras wants to target Monday November 19 for pre-closing and November 20 for closing in Houston. On Monday, Richard Olm secured the approval of the Brasoil board for the transaction -- final internal approval required. Petrobras has instructed their lawyers to meet with our lawyers next week to finalize the closing documents. Petrobras has assured me that the money is ready offshore to complete the deal. Petrobras has been working with us and Bank of America to set up the accounts they will need to complete the subsequent transactions. Petrobras has their accountants in our Rio office this week to make sure they have all the documents necessary for completing the deal. Petrobras knows that there are issues in CEG (concerning gas supply and tariffs) that are scheduled for the November CEG board meeting that they would vote yes on but that Enron would veto. We will probably delay that vote but Petrobras realizes that a decision must be made soon in order not to affect the operations of CEG. Neither party has the right to unilaterally terminate the transaction. Under the PSA the transaction will terminate if not completed by December 31, 2001. Based on input from various sources in Brazil and on the actions and demeanor of Petrobras, my judgement is that the delay is being caused by ASEP due to bureaucracy and politics associated with this high profile transaction with a state company. Petrobras is not acting like a company that does not want to close. As difficult as it is, my recommendation is to extend our purchase price agreement and wait for the new target date.
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