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Enron Mail |
Just to follow up from our meeting yesterday morning, the total present val=
ue benefit from Project Slapshot is approximately $100 million (we do not a= t this point know the exact benefit because it is dependent on the yet unde= termined interest rate to be charged in connection with the EIM financing).= The benefit will be realized by EIM Canada and Enron Canada Corp. through= a reduction in the amount of taxes paid by each company. The risk related= to the transaction is that the interest deductions from the transaction ar= e denied in part and, as to the part denied, EIM Canada and Enron Canada Co= rp. are required to pay interest to Revenue Canada on the amount of income = offset by such denied interest deduction. I will forward to you a calculat= ion of the potential interest charge to Enron Canada Corp. in this circumst= ance as soon as I confirm with our Canadian counsel the method by which suc= h interest charge is calculated, and the likely rate at which it would be i= mposed. A more remote risk (due to actions we are taking in the financing = documents) stemming from the transaction is that Revenue Canada could asser= t a withholding tax on interest payments made by EIM Canada to the lender i= n the transaction. This risk would fall on EIM Canada. I believe that it = is highly unlikely that either risk will ever be realized and have obtained= the highest level of comfort on this point possible from our Canadian coun= sel absent their telling us that there is no risk (specifically, Blake, Cas= sels believes that there is a 70 to 80 percent likelihood that our position= will be sustained if challenged). I am attending the Enron Tax Conference= on Thursday and Friday of this week but can be reached at 713.817.5052 sho= uld you have questions regarding this transaction. Best regards. SHD.
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