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Here is the answer regarding the approvals in South Korea. You will see Mike
is concerned about shareholder agreements, which I have not raised with you before, as that seems beyond the scope of what you asked for, and I assume that we encounter this in many deals, but he has elaborated his concerns below, whcih are there for you to reach your own views on. Let me know if you need more. mcs ---------------------- Forwarded by Mark Schroeder/LON/ECT on 02/06/2000 17:09 --------------------------- Mike Dahlke@ENRON_DEVELOPMENT 02/06/2000 15:49 To: Mark Schroeder@ECT cc: Subject: Re: CONFIDENTIAL - MORE - back Mark You are correct that asset sales will bring into play considerable "approval" issues, e.g. transfer of the "franchise" or business license of 9 separate CGCs. A stock sale generally avoids these issues. If the Enron then plans to "sell" it's direct shares in the JV, then there is, I believe a "Fair Trading Commission" notification that is required. Your word, "proforma" probably describes the nature of FTC approval here. However, this may not be an insignificant matter if a "buyer" such as Tractable or Samchully were involved the FTC might be "active" in it review of the transaction because of concerns about the Seoul Metropolitan area. I still believe Enron's biggest challenge related to dealing the JV shares directly, is the "honeymoon" clause in the "Shareholders' Agreement" between ourselves and SK Corp. Darrell Kinder commented to me recently that he did not feel that the "monetization" process that was being developed would suffer as a result of this clause - he said he couldn't see on what basis SK would object. A transaction that involves another true "industry" buyer, however, may be a very hard sell to SK. Regardless of the nature of the buyer (financial institution or energy sector operator), SK is likely and legitimately bargain hard. Enron, considering they have always maintained that a partnership with Enron was one of their objectives for organizing the JV with us. It is said that our price was not the highest one but SK's Chairman Chey "broke the tie" based on his reception in Houston in October of 1988. Hence, SK might now oppose strongly to protect itself. If Enron should sell the shares of Enron, Korea LLC rather than the underlying shares in SKE, then it may be subject to some notices in the US (check) but may avoid the kOREAN issues. But it may avoid the "honeymoon" period approval by SK Corp. (Legal/Tax questions for the most part). The "change of control" issue that I briefly mentioned is relates to any language that triggers the "honeymoon" provisions based on the "ultimate" parent being some entity other than Enron. If such language is lurking somewhere in the document. then all roads would seem to lead back to having SK Corp's blessing. Hope this is clear as jet lag has grabbed my brain this evening. Mike D. ___________________________________________________________________ Author: Mark Schroeder, June 2, 2000 To: Mike Dahlke/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Subject: one more Still in confidence: Is there any required notification to competition authorities in South Korea, like the US version of Hart-Scott-Rodino, for changes in asset control ownership? thanks mcs _____________________________________________________________________ Mark Schroeder@ECT 06/02/2000 04:06 AM To: Mike Dahlke/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT cc: Subject: CONFIDENTIAL - MORE Mike - I think I am correct in inferring from your note on the subject of the financing we have been reviewing, that sale of our stock in the joint venture triggers no regulatory approval, and that this also implies that there would then be NO local approvals required. Your earlier e-mail noted the "pro forma" (my word choice, not your's) approval for transfer of assets, but I am assuming that this does not extend to changes in ownership at the parent/holding company level, i.e., there is no intnetion to reach what would be a de facto change in ownership/control of assets via a stock sale. Hopefully, I am being clear, if not let me know, and more importantly, let me know if I am correct. thanks mcs
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