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Enron Mail |
FYI
---------------------- Forwarded by Andrea Calo/ENRON_DEVELOPMENT on 01/05/2000 07:48 PM --------------------------- Lynn Aven 01/05/2000 07:57 PM To: Andrea Calo/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Andrea Bertone/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Brent Hendry/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Dan Feather/Enron_Development@ENRON_DEVELOPMENT, Sami Arap/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Michael Guerriero/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT Subject: Re: Enron-Azurix Energy Management Services Agreement Thanks for the list of activities that will be performed for Azurix. There are both US and Argentine tax issues that need to be addressed related to these services. US Tax Issues Where will the services listed be performed? Will the services be provided by an Enron affiliate or will they be subcontracted to third parties? To the extent that the services are performed by Enron affiliates in Argentina, there should be no issue with the income being subject to US tax. However, it should be noted that if an Enron Argentine entity provides the services but requires assistance from a US affiliate, the income may be subject to US tax as well as Argentine taxes. To avoid the US tax at the Argentine entity, the Enron US entity could bill the Enron Argentine entity for services but the high Argentine withholding tax on services rendered in Argentina by offshore companies probably gives you a worse result. Therefore, we need to analyze the sourcing of the services to make sure that we have taken into account all possible US income tax exposure. Argentine Tax Issues EAS ( I assume this is the new name for Enron International Argentina S.A.) is a possible candidate for the entity to transact this business. It has current losses and net operating loss carryforwards that would be utilized by any income generated by the EES activity. Now is probably a good time to discuss with Argentine management the direction of the business to determine if EAS is an appropriate entity or whether we want to set up a special purpose entity. I think that EAS is owned directly out of the US. The only issue with using EAS is that it will be difficult to get any earnings generated by the EES project back to Corp (or even out of Argentina for that matter) difficult. First, it would be best to convert EAS from an S.A. to a limited company. Secondly, Enron Corp and Enron PIpeline Company which currently own 100% of EAS would have to contribute their interests to a special purpose Cayman Island company. This may or may not be able to be done without paying US tax. If EAS has any appreciated assets, such appreciation would be subject to US tax when contributed to the Cayman Island company. Please arrange a time and we can discuss these issues in more detail. Regards Lynn Andrea Calo 04/25/2000 04:05 PM To: Lynn Aven/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Subject: Re: Enron-Azurix Energy Management Services Agreement Lynn, I know you have been expecting this information. Please find attached the services EES wants to provide to Azurix, and the mails regarding this issue below. Please give me a call if you need further information. Thanks. Regards, Andrea From: Dan Feather on 04/25/2000 11:16 AM To: Andrea Calo/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Michael Guerriero/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Pablo Acevedo/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Andrea Bertone/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Sami Arap/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Brent Hendry/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT Subject: AZX List of Services Andrea, Attached is the list of services as we discussed this morning. Please give me a call if you have any further questions. Thanks. Dan 4891-3604 (15) 4188-6243 ---------------------- Forwarded by Andrea Calo/ENRON_DEVELOPMENT on 04/25/2000 05:47 PM --------------------------- Andrea Calo 04/25/2000 04:11 PM To: Sami Arap/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Randy Young/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Michael Guerriero/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Brent Hendry/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT Subject: Re: Enron-Azurix Energy Management Services Agreement Sami, In response to your query, Enron Tax has not been involved yet. Brent, Andrea and I tried to talk with Lynn Aven last week but unfortunately he was not available. Also, since the deal was only clearly outlined yesterday we didn't think it was necessary to pressure Lynn yet. Initially, we are thinking of using EAS, however we will have to run it through tax first to see whether there are any tax implications. If there are, we will look into either creating an SPC or using an existing company if the corporate purpose allows. Andrea B. and I tried to contact you earlier today on the outside counsel issue, but you were unreachable. We spoke with Alberto Navarro Castex, senior partner of Alfaro-Navarro, in Argentina which mainly works with the Exxel Group. Andrea B. met him some time ago at an event organized at Tozzini Freire in San Pablo (since he is associated with this firm) and thought his firm was of interest. I have also met Alberto in the past, and think his credentials are worth taking into account. In addition to this, the matter was discussed with Mike Guerriero and he believes that given the nature of the business being carried out by the Exxel Group in Argentina, Alfaro-Navarro would probably have the expertise to assist us in these transactions. I just received their brochure which was faxed to the San Pablo office for your review. Andrea and I would like to discuss this issue with Randy and you as soon as you get the chance to read the material. Please give me a call if you have any further questions or comments. Regards, Andrea C. Sami Arap 04/25/2000 01:29 PM To: Andrea Bertone/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Andrea Calo/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Michael Guerriero/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Brent Hendry/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT Subject: Enron-Azurix Energy Management Services Agreement To better understand this deal, I've got a few questions: - Has anyone from Enron's Tax Group been involved in these internal discussions ? - Which Enron entity will render such Energy Management Services to Azurix ? Will Enron Argentina form a special purpose company to pursue EES type of deals in Argentina (or have we already formed a SPC) ? If Andrea Calo will be in Houston for the next two weeks and Andrea Bertone will be coordinating the pre-feasibility legal studies of EnronOnLine in Brazil, we need to approach Argentine counsel asap. Please send me your thoughts with respect to local counsel as we need to discuss this issue shortly. Rgds, Sami
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