el paso status on cornhusker sale joe henry and i met with andrew kidd and david field of el paso today to discuss the timeline and status for the sale of cornhusker . additional topics included the incremental land / option agreement between the project comapny and tenaska ( a potential $ 7 . 5 mm deduct from our sales proceeds ) and the requirement of el paso to purchase the " black box " equity to finish their due diligence on the equity and the prior " facilitation process . "
schedule
el paso will be meeting with ralph eads tomorrow afternoon to present a final valuation and risk summary . after this they will forward over their marked psa and would like to meet thursday / friday to finish the agreement . after finishing the agreement , the deal will go to el paso for capital review board and bod meeting . we will then have only the " black box " purchase / put timing and hsr to go for closing / funding .
value
david and andrew pointed out their aggressive discount rate a number of times and point to increasing insurance costs on power facilities as the " 90 % " driver of a likely decrease in purchase price ( our insurance folks can attest to the increase ) . el paso estimates an 8 to 9 mm dollar price reduction from these increased costs . the latest increase from our insurance was substantial too , but not this high . we are doing a quick variance on our numbers vs the " sent " model and will match insurance parties at el paso and enron today / tomorrow .
el paso doesn ' t have any interest in the incremental land / option ( nor do we ) , so ponderosa is going to sell the project company with the option to tenaska intact . this outcome is the lowest legal risk for enron and almost a " no - cost " alternative which maximises our net cash received from the purchase .
el paso will assume the siemens westinghouse long term service agreement risk and has not asked for an indemnification on the matter . hopefully the psa will match .
future updates
i will send an update to this same distribution list as frequency demands . if any of the recipients believe i should include additional people , please email the names back to me .
thanks , chuck ward
el paso status on cornhusker sale
joe henry and i met with andrew kidd and david field of el paso today to discuss the timeline and status for the sale of cornhusker . additional topics included the incremental land / option agreement between the project comapny and tenaska ( a potential $ 7 . 5 mm deduct from our sales proceeds ) and the requirement of el paso to purchase the " black box " equity to finish their due diligence on the equity and the prior " facilitation process . "
schedule
el paso will be meeting with ralph eads tomorrow afternoon to present a final valuation and risk summary . after this they will forward over their marked psa and would like to meet thursday / friday to finish the agreement . after finishing the agreement , the deal will go to el paso for capital review board and bod meeting . we will then have only the " black box " purchase / put timing and hsr to go for closing / funding .
value
david and andrew pointed out their aggressive discount rate a number of times and point to increasing insurance costs on power facilities as the " 90 % " driver of a likely decrease in purchase price ( our insurance folks can attest to the increase ) . el paso estimates an 8 to 9 mm dollar price reduction from these increased costs . the latest increase from our insurance was substantial too , but not this high . we are doing a quick variance on our numbers vs the " sent " model and will match insurance parties at el paso and enron today / tomorrow .
el paso doesn ' t have any interest in the incremental land / option ( nor do we ) , so ponderosa is going to sell the project company with the option to tenaska intact . this outcome is the lowest legal risk for enron and almost a " no - cost " alternative which maximises our net cash received from the purchase .
el paso will assume the siemens westinghouse long term service agreement risk and has not asked for an indemnification on the matter . hopefully the psa will match .
future updates
i will send an update to this same distribution list as frequency demands . if any of the recipients believe i should include additional people , please email the names back to me .
thanks , chuck ward