Mike/Jeff,

An indication of real cooperation between EJ and Enron Coal.  We received the signed engagement letter from NIC yesterday to proceed with this transaction.  Also good for our coal guys to see that NIC is delivering us deals and value.  Enron Coal to take offtake, EJ arranging financing, structuring and insurance.

Joe

 -----Original Message-----
From: 	Matsubara, Takuya  
Sent:	Wednesday, October 31, 2001 7:59 PM
To:	Miyai, Tark; Thirsk, Jeremy
Cc:	Hirl, Joseph; Sachdeva, Aman; Sasaki, Tsuyoshi
Subject:	Wallarah - update

Just a quick update on the captioned.

Furusho-san (deputy of NIC-Coal) met with Excel today in Australia and found the below.
(1) Excel likes the transaction structure and wants to proceed further.
(2) Excel wants to have A$15 million financing from NIC on limited-recourse basis.
(3) Excel can undertake the availability of back-up coal supply from Wambo in case of Wallarah's low performance.
(4) Excel finds 360,000 ton too much in light of Wallarah and Wambo's excess capacity and required financing amount. Indication was 100,000ton (if the size is larger, back-up arrangement from Wambo involves additional cost; and Delta may want to buy up to 1 million ton).
(5) Excel, however, can entertain option contracts with Enron (cal + put) for say, 200,000 ton.

I met NEXI today with Sasaki-san.
NEXI was positive on the transaction including NIC's credit, although there are some reservations such as having a SPC as a beneficiary, and use of pre-paid proceeds.

Actions to follow.
(1) Find realistic coal purchase conditions (Tark, will 100,000 too small ? Shall we include some Wambo coal in addition to 100,000 Wallarah's ?)
(2) Prepare a dirty cash flow (Aman, let's talk tomorrow. half-done cashflow is attached below.)
(3) Speak to NEXI (Sasaki-san, we need to re-educate Fujiwara, again on the structure)

 
Furusho will meet Excel tomorrow again at 5:00pm. Furusho will visit Tark at 1:30pm to have a discussion on this (I will join thru. phone. Sasaki-san, do you have time at 2:30?)