FYI. See you all when I am in town.

Yao
---------------------- Forwarded by Yao Apasu/ENRON_DEVELOPMENT on 07/12/99
03:12 AM ---------------------------


Andre Cangucu
07/11/99 11:04 PM

To:   Andrea Bertone/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
cc:   Gustavo Junqueira/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Marcelo 
Parodi/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Bruno 
Messer/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Yao 
Apasu/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Michael 
Guerriero/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Allison 
Venditti/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Scott 
Porter/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, David S 
Reinfeld/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Idel 
Metzger/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Corbin 
Barnes/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Maria Ines 
Granado/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Scott
Porter/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT
Subject:  Igaras Prepay - Next Steps

The structure for the financial prepay doesn't seem  to work under the 
Brazilian regulation therefore we need to come up with a different structure. 
David has put together a couple of different structures but basically all of 
them will run into the same problem and the Central Bank won't accept those.

We (Gustavo and I) had lunch last Thursday with a Mr. Jose Lavia owner of 
Fair Corretora (a brokerage house that I've worked with) basically he thinks 
that the financial prepay structure is not going to work because the Central 
Bank wants to see benefits for the country and impacts in the country's 
current balance.
He asked us to send him a draft of the structure and he will discuss with his 
partners to see if they came up with different ideas.

Below are the comments of the next steps and ideas from Antonio Felix 
(Tozzini Freire).


Central Bank:
As recommended by Antonio Felix from Tozzini Freire, we need to decide if 
this is a deal/structure we want to continue to pursue. If so we should 
schedule a meeting with the International Operations Director of the Central 
Bank in Brasilia and make a presentation covering the following points:

- The overall structure
- Market need
- Benefits to the companies involved (petrochemical, pulp and paper) - 
Benefits to Brazil ? (if any)

We should approach this not as a single transaction but as a new product, 
with specific characteristics, without any similar in the market, that Enron 
developed in the US and is trying to "sell" in Brazil.


Swaps:
A swap in Brazil can be arranged between two local parties and neither one 
needs to be a financial institution. If we want we can have a brokerage house 
or bank in the middle to register the contract with the BM&F (Mercantile 
Exchange).
The other possibility is to have a swap contract between a local and an 
offshore entity, in this case the offshore entity needs to be a financial 
institution.
Is one of the Enron companies in the US considered to be a financial 
institution ?

A specialist form Tozzini should be sending us some paper covering swap 
contracts. I hope to have a better understanding of the requirements for swap 
contracts after we receive that.

Yao Apasu: Andrea mentioned that you were involved with some swap contracts 
in Brazil. If you have anything about that (presentation, regulation) would 
you please forward  to us.



I think that we can structure the prepay mergin a simple loan and 
fix/floating swap, if the swap is something we are allowed to do under the 
Brazilian regulation.

Please add comments,

Andre