Sorry, I should have included you on copy list.

Regards,  Bruce
---------------------- Forwarded by Bruce Harris/NA/Enron on 12/13/2000 09:23 
AM ---------------------------


Bruce Harris
12/13/2000 09:29 AM
To: Sheila Glover/HOU/ECT@ECT, Theresa T Brogan/HOU/ECT@ECT, Robert H 
George/NA/Enron@Enron, Donna Lowry/HOU/ECT@ECT
cc: Bruce Harris/NA/Enron@Enron 

Subject: Re: Next steps with Copel shares  



Ok. 

FYI--we are still having discussions as to what exactly we are going to do 
with the shares now that they are directly held in the Corp. vault by Enron 
Brazil Power Holding XII.  I suspect that what we will do will be to just 
keep all the shares in XII and put them into the brokerage account, with some 
sales occurring over time going forward.  If this plan is agreed to, then 
early next week we can call BONY together with Morgan Stanley (our prime 
broker?) and work out a streamlined settlement procedure so that MS is 
assured that shares will be delivered.

Regards,  Bruce


To: Bruce Harris/NA/Enron@Enron
cc:  

Subject: Re: Next steps with Copel shares

Bruce, 
Please add theresa brogan to the distribution list.  Theresa manages the 
Equity Trading Group. 
Thanks, Sheila
---------------------- Forwarded by Sheila Glover/HOU/ECT on 12/13/2000 09:13 
AM ---------------------------


Lynn Aven@ENRON
12/12/2000 10:04 AM
To: Bruce Harris/NA/Enron@Enron
cc: Robert H George/NA/Enron@Enron, Kay Young/HOU/ECT@ECT, Dan 
Boyle/Corp/Enron@Enron, Joe Kishkill/SA/Enron@Enron, Kent 
Castleman/NA/Enron@Enron, Bruce Harris/NA/Enron@Enron, Sheila 
Glover/HOU/ECT@ECT, Edward E Graham/SA/Enron@Enron, Rick 
Hopkinson/NA/Enron@Enron, Jeffrey E 
Sommers/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 
Subject: Re: Next steps with Copel shares  

Bruce Harris:

We do not need to set up a new Cayman entity to transfer the two certificates 
for 1.25M  to.  We achieve no US tax benefit for transferring or holding the 
shares in a Cayman entity.

I propose that EBPH XII obtain the two certificates and then distribute those 
certificates to Enron South America LLC, the sole shareholder of EBPH XII.  
The value of the certificates at the date of transfer will determine the US 
tax treatment.   Given the liquidity discount surrounding the stock, using 
the screen price on the date of the transaction is probably not a good 
indicator of the fair market value.  For tax purposes, we will assume the 
value to be the historical cost basis since recent trades have been in a 
narrow band on either side of that value.    If the first 1.25M certificate 
is sold shortly after the transfer to Enron South America LLC, we will need 
to adjust the transfer price since the sales price to a third party will be a 
valid indicator of what the fair market value was on the date of the 
distribution..

If the ultimate transfer price is higher than the tax basis, EBPHXII will 
recognize taxable income and pay US tax on the gain in the year the 
distribution was made to Enron South America LLC. This would result in 
reporting a tax expense in 2000 and perhaps book income in 2001 if that sale 
takes place after the end of the year.   

If the value on the date of the transfer is ultimately determined to be less 
than the historical tax basis, the distribution to Enron South America LLC 
will result in there being unrecovered basis in EBPH XII.

If the shares are sold by EBPH XII to affiliated Cayman companies, the same 
valuation issues exist with the same potential for recognition of US gain on 
the sale from EBPH XII to an affiliated.  Distributing the shares to Enron 
South America LLC will be much easier.

Lynn



Bruce Harris
12/08/2000 11:31 AM
To: Robert H George/NA/Enron@Enron, Kay Young/HOU/ECT@ECT
cc: Dan Boyle/Corp/Enron@Enron, Lynn Aven/NA/Enron@Enron, Joe 
Kishkill/SA/Enron@Enron, Kent Castleman/NA/Enron@Enron, Bruce 
Harris/NA/Enron@Enron, Sheila Glover/HOU/ECT@ECT, Edward E 
Graham/SA/Enron@Enron, Rick Hopkinson/NA/Enron@Enron, Jeffrey E 
Sommers/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT 

Subject: Next steps with Copel shares


Robert and Kay, thanks for all your work on getting the shares moved out of 
Brazil and into the parent CayCos.  I understand that by sometime early next 
week the physical ADR certificates will be returned by BONY to the Enron 
vault.  

Here is what we now need to do:

1. We are going to need to send one certificate back to BONY and split it 
into three new certificates.  Two certificates will be for approximately 
1.25M shares each, the balance for about 5M shares.

2. We need to form a new CayCo and sell or otherwise transfer (capital 
split?) the two 1.25M tranches to this NewCo.  This needs to happen next week.

3.  Pending Dan Boyle's structuring efforts and an affirmative Corp. decision 
(supervised by Joe Kishkill), the two existing CayCos which now own the Copel 
shares will be sold into Whitewing Fund.  That means about 12.5M shares will 
go to Whitewing and the certificates will remain in the vault.  This would 
happen last week of the year--if it happens (there are actually about 
15,443,000 total ADRs--I am approximating in this email).

4. The NewCo shares will remain outside this structure entirely. We will need 
to put one tranche of 1.25M into a brokerage account--Sheila at this point we 
will bring you in for assistance (again, hopefully next week).

5. Robert--we need to work out soon with Sheila, Skadden,and BONY to 
establish an efficient mechanism to convert the full 1.25M share certificate 
to unrestricted ADRs absent and prior an immediate buyer(s)--or we need to 
figure out foolproof mechanics for constantly reissuing new certificates for 
every small sale.  We will then be looking for effective points to sell these 
1.25M shares--and again, Joe Kishkill will provide price/volume targets 
(execution via Gary Hickerson's group who has not yet been informed).  In 3 
months time, we will repeat the process for the other 1.25M tranche.  

Robert--please call me so we can determine: (a) how to set up NewCo/transfer 
shares, and (b) how to work the 1.25M "unrestriction" with BONY and Skadden. 


Regards,  Bruce
713-853-0950