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Enron Mail |
It has been ten very hectic days since I last broadcast an update. As most
of you know we have had significant issues with El Paso regarding their willingness to cooperate in the monetization of the Mesquite Notes we were to receive in the transaction. The worst issues have revolved around the structure and strength of the El Paso parent contingent guarantee and the structure and necessary Mesquite and El Paso disclosures required to monetize the Notes. Accordingly we made a proposal to El Paso on Wednesday of last week to change the fundamental structure of the transaction. Our proposal was to have El Paso provide us with a commodity contract under ISDA documents (but without a collateral threshold) and the usual unconditional parent guarantee that was "in the money" with payment terms identical to the deferred payments we were to receive under the Mesquite Notes. El Paso obtained the necessary clearances for such a transaction Friday night. We now expect to pursue this structure instead of the more difficult 144A monetization. I have attached a Transaction Summary and a transaction diagram to help explain the specific of our proposal. In addition, I have attached a revised offer analysis; we now expect slightly lower monetization costs. With the 144A issues off the table we believe that we will now be able to sign a Transaction Agreement by the end of next week. We also expect it to be much easier to satisfy by year end the resulting shorter list of conditions precedent to closing. There have been some other minor changes the most significant of which is that Merlin will not be selling its $30mm of SubNotes as part of this transaction. Please call if you have any questions.
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