Subject: project inga recap / follow up
recap :
the california project ' s ( " ace " ) fundamental position , coal generation in gas - on - margin market , is attractive on the fundamentals . ace ' s economics through a range of scenarios ( forward srac rates ) also appears attractive . however , due to the uncertainty in the california market , the deal team needs to resolve issues 1 . and 2 . ( at minimum ) before returning for final approval :
timing risk : price and execute a 30 - 40 day call on " deal purchase " to keep competition at bay and buy time to work through market and partner risks .
market risk : approach so cal edison and cdwr to structure and close a deal that enables ace to sell directly to cdwr ( or other credit worthy counter party for term , or at least until so cal edison starts honouring its qf contract with ace on a current pay basis .
partner risk : approach constellation , co - managing partner in ace , to price / structure buyout of their interest in ace or a swap of pennsylvania for california project positions .
follow up :
the following actions have been taken :
timing risk : greg blair initiated discussions last night with the seller ' s advisor , chase , to purchase an option to close in late april . we expect to hear back from ahlstrom ( seller ) today or friday . deal team will notify office of chairman when we discover ahlstrom ' s bottom line on option premium , expiration date and strike price .
market risk & partner risk : greg blair and terry donovan put messages into millenium ( ace manager ) and constellation to get things moving on cdwr / edison deal and to see if we can structure a deal to get control of ace . substantive progress on either front will be reported .
regards ,
mike j miller