MHI 501F's Sale Process

FYI on the latest status on the MHIs. If we don't see some progress tomorrow from Fred, we are going to need to make a decision on whether to move forward with Genassis. He had put a deadline of tomorrow for his offer which is approximately $3 million less than Fred Lange. However, he seems to be willing to move quicker. I will let you know if we hear anything from Fred.

Brett
---------------------- Forwarded by Brett R Wiggs/SA/Enron on 08/27/2001 11:02 PM ---------------------------

Guillermo Atenor
08/27/2001 05:32 PM
To: Brett R Wiggs/SA/Enron@Enron
cc: Diego Hollweck/SA/Enron@Enron
Subject: MHI 501F's Sale Process - Status

Brett,

The following is a status summary on where we are regarding the sale of the first 2 MHI 501F turbines:

Our two most firm candidates right now are:

(i) Fred Lange, from Rescue 2000, for a project in California of a company called Intercom: His offer for the turbines, the already directed change orders and spare parts was US$90,230,000. He agreed to make a US$200,000 payment for a three-week exclusivity upon execution of the relevant PPA, which is expected for today. The PPA execution was postponed for a week (from last Monday until today) due to regulatory changes in California. Therefore, there is no certainty about the PPA being executed today. We will talk to Fred Lange tomorrow to check where the process is.

(ii) Rick Davis, from Genassis, for a project in Mexico, of a company called Empresa Industrial Rio Colorado: His offer for the turbines, the already directed change orders and spare parts was US$87,000,000. He made his offer willing to make a US$2 million exclusivity payment, to be refundable "if Enron does not obtain the assignment of the MHI contract". We will call him tomorrow to inform him it is really up to them to qualify as a Permitted Assignee (they have a copy of the contract with the Permitted Assignee conditions), and will check his position about making the US$2 million payment absolutely non-refundable.

As a back up, we are also talking to a couple of other brokers (Mike Edwards -Belyea Power - and Tom Young - TRY Ventures -), who are running behind the two above mentioned.

The following table shows (i) the book value of the different turbines components and (ii) the profit Enron would make based on the two offers received so far:

Base Price 67,817,800
Change Orders 6,752,560
Spare Parts 4,900,000
Approximate Financing Costs 2,800,000
Total Book Value 82,270,360

Fred Lange Rick Davis
Price Offered 90,230,000 87,000,000
(includes Base Price, Change Orders and Spare parts)
Book Value 82,270,360 82,270,360
Enron Profit 7,959,640 4,729,640

Let me know any doubts or comments you may have.

Thanks, Guille.