|
|
Enron Mail |
I am meeting w/ John tomorrow. You are welcome to join.
Richard Lydecker@ENRON 02/14/2001 03:43 PM To: Richard B Sanders/HOU/ECT@ECT cc: John Enerson/HOU/ECT@ECT Subject: Re: Can Fibre Lackawanna Richard, I echo John's desire to have all our ducks lined up to avoid the additional $4.5 million funding. Although this amount is not huge by Enron standards, in this case any further funding has no chance of recovery and would be an immediate writeoff. As you know, this "project" has had extremely high visibility. We need to leave no stone unturned! Thanks. Dick. John Enerson@ECT 02/14/2001 02:16 PM To: Richard B Sanders/HOU/ECT@ECT cc: Richard Lydecker/Corp/Enron@Enron Subject: Can Fibre Lackawanna I have received notice from Can Fibre Lackawanna that there are in default under the payment obligation under the Subordinated Loan Agreement. The Subordination provisions state that until the Senior Debt is paid off in full, the Subordinated Lenders (thats us) can not accelerate, foreclose, etc. There is not 180 day period. There is nothing. Nonetheless, this does highlight the need to get these documents reviewed by counsel and start to weigh our options and strategy. This is specially true for matters with respect to the Construction Completion and the additional $4.5 million that remains unfunded. The letter of credit backing the $4.5 million obligation expires on June 30, 2001. At that time we have an argument that we will not replace the letter of credit and because they are in default, we are not going to fund. I think we should start having outside counsel get up to speed on this now. Can Fibre knows we do not want to fund and so it is better to be prepared. An analysis would include. 1. Review of the applicable conditions to fund the $4.5 million and make sure that all steps are taking to hold them to the letter of the agreement. In particular, since they tests are under the terminated EPC contract, we want to make certain that no rights have been waived. Also, we want to put them on notice that they have to follow everything to the letter and we need to develop any strategy or experts to contest any certifications. 2. Review the documents to see if there is any wiggle room based on the current default. 3. Understand our obligations. The loan agreement requires us to fund $4.5 million upon completion (regardless of the posting of the letter of credit). By being in default, does that provide us a defense to funding. Can they cure the default and make us fund. What does bankruptcy do to this scenario. Let me know your thoughts and who we can talk to regarding these issues.
|