Unknown
From:                  Glisan, Ben
Sent:                  Tuesday, August 07, 2001 12:24 PM
To:                    Walls Jr., Rob; Cline, Wade; Hughes, James A.; Lundstrom, Bruce
Cc:                    Glisan, Ben
Subject:               Draft Agenda - Skilling/Lay meeting


Looks like a novel.


     ~Th
 Dabhol Update
Agenda.doc (28 K...


Ben





		       Dabhol Update Agenda
			   August 8, 2001


*  Deal Team Objectives
      o Minimize additional capital exposure
	   * Termination of Construction Contracts
	   * Rescission of PPA
      o Recover existing Investment
	   * Pursue contractual/legal remedies
	   * Commercial Settlement
		 * Restructure
		 * Buyout
	   * Collect on Political Risk Policies
		 * OPIC coverage
		 * Commercial coverage

*  Deal Team Paths
      o Commercial Team
	   * Asset Preservation
	   * Cash Conservation
	   * GOT/WI Communication
	   * Project coordination
	   * Buyout/Restructure Discussions
      o Legal Team
	   * Pursuit of legal remedies
		 * Termination and Transfer
		 * Litigation and Arbitration
	   * Implementation of defense strategy
      o Finance Team
	   * Management of bank group
		 * Consents for Termination and Transfer
		 * Termination of construction contracts
		 * Termination of ship charter
	   * Utilization of bank group to apply pressure
		 * Participation in Supreme Court and High Court
		 * Discussions with MSEB and GOT
		 * JBIC threats to WI's
	     Utilization of bank group to back channel advice





*  Project Update (15 minutes)
      o Group Dynamics
	   * Offshore Lenders
	   * IFI's
	   * OPIC
	   .JBIC
	   * OND and USExim
	   * LNG suppliers
	   * LNG ship
      o Group Tasks
	   * Approval of Asset Preservation Plan (Cash conservation)
	   * Execution of standstill agreement
	   * GOI meetings
      o Next Areas of Focus
	   * Additional Preliminary Termination Notices
	   * Agreement on timing of the issuance of the Transfer Notice
	   * Acceptable buyout!restructure terms and conditions


*  Funding Requirements (5 minutes)
      o Mothball Costs
      o Legal Costs
      o Sharing Ratio and means of funding
      o Exposure to Contingent Equity





*  Buyout Discussion (20 minutes)
      o Expected timing (Week of 20th or 27th)
      o Expected proposal
	   *  25% discount to funded equity
	   *  Assume that offshore lenders will stay in the project
	   *  Assume that all contracts (construction, LNG and ship charter) will
	      be replaced
	   *  All in tariff of approximately 3 rupees
      o ENIE Exposure as of June 30 (total of $1,135)
	   *  Funded Equity of          $622 million
	   *  Retained Earnings of      $110 million
	   *  Deferred Costs of         $141 million
	   *  EE&CC receivable (net) of $ 16 million
	   *  EE&CC liability to subs of $164 million
	   *  Other costs of            $ 82 million
      o ENE P&L Exposure
	   *  Anticipated bid of 75% of funded equity implies a loss of $452
	      million (assumes recovery of construction costs and reduction of
	      tax liability)
	   *  If we recover 50% of construction costs and incur a portion of the
	      tax liability then the exposure would grow to approximately $560
	      million
      o Recommendation on counter-proposal strategy
	   *  Obtain a signed MOU as quickly as possible (while incomplete, it
	      will establish the basis for the ultimate deal)
	   *  Should focus on buyout price broken out into components
		*  Invested capital and retained earnings
		*  Earned but unpaid construction costs
	   *  Note that ultimate buyout will need to involve the offshore lenders,
	      but defer that negotiation (concerned about sticker shock)
	   *  Endeavor to renegotiate project agreements
	   *  Initial concession should not be to discount price but rather to
	      finance a portion of the buyout
		*  Defends against asset impairment
		*  Probably required as the offshore lenders will want to be
		   taken out and the IFI's probably do not have the liquidity of
		   orchestrate a total recap
		*  Lenders will not allow equity to take out cash unless they
		   receive a pro-rata share
	   *  Maintain legal pressure
      o Guidance on level of flexibility on terms of note or size of discount if
	opportunity arises
	   *  Recommend that we are willing to concede a discount to equity but
	      fight to preserve collection of construction fees
	   *  Probability of recovering any shortfall through PH





*  Highlights of Defense Strategy (15 minutes)
      o To be filled in this pm, should include recommended path and point out
	items that are aggressive as well as the points we deemed too aggressive
      o Discussion on Intellectual Property
      a Litigation Update (GOI, GOM, MSEB)





*  LNG Vessel (5 minutes)
      o  Lenders have asked equity to infuse additional capital
	   *  We have refused
	   *  Likely result will be either foreclosure or a Mitsui led recap
      o  Implications to Dabhol
	   *  Creates uncertainty
	   *  Probably an economic benefit
      o  Implications to Enron
	   *  Book loss on the investment in the ship
	   *  Project stakeholders will ultimately require a ship
	   *  ENE may utilize capacity of one of its vessels