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Enron Mail |
ENA is proceeding with a number of volumetric production payment
transactions. Generally, the producer will want to establish the pricing through a swap mechanism prior to the actual closing of the VPP and prior to the syndication of the VPP. For example, Preston Exploration entered into a swap last Friday with ENA to establish the VPP pricing on a transaction to be closed this week. At the VPP closing the Preston position in the swap will be transferred to ECT Merchant Investments Corp. (a wholly owned sub of ENA and VPP buyer); therefore, the swap counterparties will then be ECTMI and ENA. As the VPP is syndicated (planned prior to year end), the original Preston swap position will be further assigned/restated to the syndicate VPP buyer (generally a Texas LP 99.9999% owed by an unrelated Trust). Upon the last transfer, the swap will not be between two Enron subs. Based upon viewing other VPP structures, it is my understanding that these swaps do not need the RMT tax treatment since the swap is carried as an affiliate swap only as an interim step. Please advise. I will be preparing the swaps on the basis of the foregoing absent your direction otherwise. As noted in my voice mail, I also need to visit with you about RMT in general. Thanks. Mary. Cordially, Mary Cook Enron North America Corp. 1400 Smith, 38th Floor, Legal Houston, Texas 77002-7361 (713) 345-7732 (phone) (713) 646-3490 (fax) mary.cook@enron.com
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