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Enron Mail |
The Supreme Court hearing for the case in India regarding the alleged
improper bidding and award of the Panna/Mukta block concluded today. Our legal team's opinion is very optimistic based on the way the proceeding progressed and also on the actions of the chief judge during the concluding arguments of the case today in India. The panel of three judges will now take approximately 2 months to write their opinion and that should complete this case. While I probably shouldn't speculate on the outcome, I will summarize my opinion of the important points: 1) there is little doubt that the Panna/Mukta award to Enron/Reliance/ONGC will stand, and 2) it is highly unlikely that the judges will request the PSC to be renegotiated, the contract was portrayed and generally accepted by the panel as a very fair deal for the GOI. According to my general counsel, Stephen Wallace, the only concern our team has is that the judges were quite critical of the CBI (the government group that investigated Reliance for wrong doing in the bid process) during that portion of the testimony and there is a possibility that they could request an additional investigation. Our team puts the likelihood of the judges ordering a new investigation at less than 50%. There is downside to such a decision in that it creates uncertainty, but the focus would be on Reliance, not Enron. Enron was very prepared on the commercial and the legal front and our team, as expected, carried the load for this case even though we were not the primary defendants. Enron presented the major rebuttal to the CPIL assertions because the others were not prepared and then later "coached" the others to help them prepare appropriately. This was a much more intensive case than people were assuming it would be last year and we were very fortunate to be extremely well prepared and well represented. Based on the above information, I do not think this issue "CPIL lawsuit" should impact any future decisions we make regarding the Panna/ Mukta/Tapti assets. This outcome basically eliminates one of the two issues impeding the progress of the project I showed Joe, our proposal to sell Panna/Mukta/Tapti, that we call Project Janus. We believe we have a unique opportunity to realize exceptional value for these assets through an arrangement with our partner. The strategy we have mapped out should allow us to close the transaction prior to year-end and it has very positive cash flow and neutral financial implications (minimal if any gain due to the step-up last year) for the company. The only remaining hurdle is a tax issue that we are currently working. jeff
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