Great news on the $ - cash is king.

Our toll on the other hand has been painful.  As of this morning, the remaining business issues were limited to the following:

Gross Negligence:  We have been unwilling to say that if the plant operator is grossly negligent, we will compensate them for their market damages.  In general, legal says that the law is vague and Haedicke does not want to set a precedent on these types of deals.  Basically, we have said if the plant is not available Allegheny reduces the capacity payment pro-rata.   The example used is:  The operator has a pick-up baseball game in the plant yard - foul ball is hit into the generator - plant goes down for a month - we say sorry, dont pay us this month - Allegheny says pay ld's.  We both agree that it is not gross negligence if the operator drops a wrench and the plant goes down for a month - Allegheny wants a bigger penalty so we proposed a larger discount in the capacity payment.      

L/C - In the event we portfolio finance, they want a $25MM L/C to cover willful breach, gross negligence, etc.  They want it from a AA Bank with $2Billion of Net Worth, we want flexibility with A and smaller net worth - not a dealbreaker.

Qualified Entity: We want the right to assign the equity without their consent to certain qualified entities (large power companies).  We want to be able to sell to a company with min net worth of $200MM, 500MW of operations and at least one 150MW+ sized plant.  Allegheny wants a tougher standard - not a dealbeaker

Loan agreements:  They want copies of the loan agreements that would finance this asset - no.

All of this is very manageable and should be executable tonight.  However, each day this week we have been in this position and they have re-introduced new issues/comments which have resulted in negotiations till 4:00 - 5:00 AM.

One additional delay is that we just received very detailed comments from Finance.  We are going through them right now with Brian Kerrigan.

Overall, I think we will get there, but it may not be until next week.  

Chris










Louise Kitchen
05/03/2001 12:06 PM
To:	Christopher F Calger/PDX/ECT@ECT
cc:	 
Subject:	How is our Allegheny deal?

We have our money!