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Enron Mail |
I think this has already been sent to you. Just wondering, though, why this
is being lumped together in one complex transaction instead of splitting it into two. ---------------------- Forwarded by Mark - ECT Legal Taylor/HOU/ECT on 10/30/98 04:01 PM --------------------------- Joyce Dorsey 10/30/98 09:04 AM To: Mark - ECT Legal Taylor/HOU/ECT@ECT cc: Janet Dobernecker/HOU/ECT@ECT Subject: Petrobras Swap Mark, I think this is the SWAP confirm that we were looking for yesterday. Do I need to send this to Julie Gilbert.? Anyone else? Please advise. Thanks. Joyce ---------------------- Forwarded by Joyce Dorsey/HOU/ECT on 10/30/98 09:02 AM --------------------------- From: Maria Ines Granado AT ENRON_DEVELOPMENT@CCMAIL on 10/30/98 08:44 AM To: Gareth Bahlmann@ECT, Charles Delacey@ECT, Gary Hickerson/HOU/ECT, "Julie Bopp Gilbert/ENRON_DEVELOPMENT" AT ENRON_DEVELOPMENT@CCMAIL, Cassandra Schultz AT ENRON_DEVELOPMENT@CCMAIL, "Jodi Marcussen Coulter/ENRON_DEVELOPMENT" AT ENRON_DEVELOPMENT@CCMAIL, "Cecilia Manzolillo/ENRON_DEVELOPMENT" AT ENRON_DEVELOPMENT@CCMAIL cc: Subject: Petrobras Swap Importance: High --------------------------------- The attached was prepared by Tres Cochran from V&E. Please give me your comments. Thanks a lot for all your help. Maria Ines ---------------------- Forwarded by Maria Ines Granado/ENRON_DEVELOPMENT on 10/30/98 08:38 AM --------------------------- "Cochran, Fielding (Tres)" <fcochran@velaw.com< on 10/30/98 07:07:30 AM To: Maria Ines Granado/ENRON_DEVELOPMENT cc: Subject: Petrobras Swap <<ECTOCT2.doc<< Maria, Please follow this message with the attached file to Gareth. For some reason I cannot get it to go to Gareth directly. Gareth, Attached is the current draft of the swap confirmation for the Petrobras transaction. The swap has two components -- the fixed/Libor rate swap and the "spread" swap. The fixed/Libor swap is composed of the amounts computed pursuant to clause (i) of the definition of fixed amount and clause (i) of the definition of floating amount. The amounts computed pursuant to clauses (iv) and (v) of the definition of fixed amount and clause (ii) of the definition of floating amount is the spread swap. This is going to be a very unusual and highly structured swap in many respects in order to tailor it to the risk sharing that exists in this transaction among Petrobras, the Lenders, and Enron as swap provider. Because the swap includes both the rate swap and the spread swap, the benefits and obligations under the swap will need to be allocated internally at Enron between EI and ECT. Randy and Scott recommend that a memorandum be generated that will reflect the manner in which this allocation will be made. Essentially as it is explained to me, ECT will be allocated the benefits and obligations related to the fixed/Libor swap and EI will be allocated the benefits and obligations related to the spread swap. One other feature that EI will be responsible for is the Deferral Amount mentioned in the confirmation. This arises if a Reserve Deficiency occurs and the Reserve Indemnity is no longer in effect. In this situation, if any amount is owed to ECT on the rate swap the Company will not have sufficient cash flow to pay the full amount due to ECT and the Lenders. The Lenders will be deferring a prorata part of their interest and principal, and ECT as swap provider will also have to defer a prorata part of the amount due to it. The amount to be deferred is called the Deferral Amount in the attached draft. EI will be responsible for any Deferral Amounts that may arise. If after a Deferral Amount is generated, the Company is able to recoup any of the Deferral Amount, the portion payable to the Swap Provider under the Participation Agreement would be a "Makeup Amount" and would be allocated to EI when received under the swap. A great deal of additional thought and fine tuning will continue to need to be applied to this portion of the transaction to make sure that it coordinates as appropriate with the Credit Agreement, Participation Agreement and Transaction Documents. Any suggestions that you or the ECT swap lawyers may have would be appreciated. One thing that would be useful would be a "breakage clause" that would describe in as much specificity as posible how the breakage would be computed whenever it is necessary to adjust the notional amounts under the fixed/libor swap. Tres Cochran - ECTOCT2.doc
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