The minutes

Published : Jan 06, 2001 00:00 IST

Following is the text of the minutes of a meeting that Attorney-General Soli Sorabjee had with solicitors and financiers of the Hindujas' power project in Andhra Pradesh:


To: See attached distribution list From: Russell Wells

Vizag - Meeting with the Attorney-General

As you are all aware, a meeting was held with the Attorney General of India at these offices today. Present at that meeting were myself, Richard Drummond from ECGD and David Nanson from Wilde Sapre.

Set out below is a brief summary of the issues discussed during that meeting.

1. Recitals Issue

The AG basically agreed with the lenders that if they had any doubt, that doubt should be removed. He confirmed that, in his opinion, no such doubts should exist but that he understood and sympathised with the lenders' desire to remove the doubt that the y currently had.

He disclosed to the lenders that he had already opined that the method of absolving these doubts was through the consent and acknowledgement and that, if it was done in this manner, this would not constitute an amendment in the guarantee and would not af fect the GOI's rights or obligations under the guarantee. He could not therefore see any reason why the GOI could not do this.

He therefore suggested that the Ministry of Power (and the Ministry of Finance) seek a consultation with him where he will provide this opinion to them and convince them to provide the necessary clarification. He appeared confident that he could convince , in particular, Mr. Kumaramangalam of this.

The AG has therefore suggested that a conference is set up with the MOP and the MOF (and probably also the MOL) for either the 14th or 15th June (when he is next in India). Protocol demands that, as the AG would be providing an opinion to the GOI, this c onference should be requested by the GOI.

2. Conditions Precedent

We discussed with the AG the form of acknowledgement that the MOP intended to issue pursuant to paragraph 9(1) of the Counter Guarantee.

The AG confirmed that this certificate satisfied the requirements of paragraph 900 but admitted that it was not perhaps clear that it could be relied upon to represent confirmation that all of the conditions precedent in paragraph 9 of the Counter Guaran tee had been met. ECGD confirmed that this was their concern and that they were also not convinced that the wording of the acknowledgement was sufficiently clear for their purposes.

The AG therefore asked ECGD what changes they would suggest. Richard Drummond said that, in an ideal world, the certificate would refer to the fact that the conditions precedent had all been fulfilled and that the Guarantee was now in full force and effe ct. The AG responded that, unfortunately, we do not live in an ideal world and that it would probably be difficult for the MOP to issue such an "ideal" certificate. He then went on to explain that one of the problems the GOI is having is that they are co ncerned that the various attempts at clarifying this issue would result in them having to carry out detailed due diligence on the underlying project. It was confirmed to him that this was not the intention and indeed from the Sponsors' perspective, was a lso undesirable.

He therefore suggested that the lenders provide an explanation as to why the current certificate was not sufficient together with a number of alternative versions of the certificate. He said that he would then consider these and form an opinion as to whe ther any of these certificates could be provided by the MOP without placing themselves in a position of needing to carry out due diligence. He would then advise the MOP accordingly and he would hope that they would then follow this advice and issue the c ertificate he approved.

Subsequent to the meeting, the lenders have been asked to provide the note and the various alternative versions of the MOP certificate. It is understood that we will be receiving some revised wording shortly but that they have not currently prepared alte rnative versions. NetWest are apparently trying to facilitate the production of these alternative versions.

Once again, the suggestion is that this issue can be taken up with the conference on the 14th/15th of June (if arranged).

3. AG's Legal Opinion

ECGD revealed that the lenders would be seeking an opinion from the Attorney General on a number of issues. These issues are:

* the capacity and authority of the GOI to enter into the Counter Guarantee (and the person who has signed that guarantee on behalf of the GOI being duly authorised to do so);

* confirmation that the Cabinet had approved the GOI Counter Guarantee forming part of the Consolidated Debt Fund; and

* that the consent and agreement would not represent an amendment to the Counter Guarantee requiring Cabinet approval.

The AG said that he could not provide any opinion on the lenders (or any one else) unless the GOI expressly authorised him to do so.

Assuming, however, that the GOI were to authorise this opinion, he said that he could not form a view on the opinion relating to the consent and agreement unless he knew that what was being sought in that agreement. Whilst he had previously been supplied with a copy of the MOF's draft of 22nd April, 1999, it was however indicated to him that the lenders had various additional changes they wished to make to that draft. He therefore requested the lenders to provide him with a mark up in order that he coul d assess whether the additional changes they were seeking would represent an amendment to the Counter Guarantee.

4. Conclusion

As far as the recitals issue is concerned, there is now no longer any option other than for the MOF to resolve the lenders' doubt through the consent and agreement. The Project is now dependent on the AG being able to convince the MOF, in particular, to provide the clarification requested.

As far as the conditions precedent issue is concerned, this depends largely on the response by the lenders to the request for providing alternative versions of this certificate. Hopefully they will (or at least ECGD will) take on board the AG's advice th at they should not pursue the ideal option but should seek to deal with their issue with the minimum amendments.

As far as the legal opinion issue is concerned, this is probably best left slightly to one side for the time being whilst the recital and condition precedent issue is resolved. However, it will be important to raise with the GOI, at the appropriate time, whether they are willing to authorise the AG providing the lenders with a legal opinion covering the areas requested.

5. Next Steps

The following are the steps which now need to be taken (as soon as possible):

* Facilitate the request by the MOP and the MOF for a consultation with the AG. The AG's advice was that this was probably best done through the Ministry of Law who he had observed to have been particularly helpful in trying to find ways of resolving the current difficulties.

* Obtain from the lenders a note summarising their current difficulties with the MOP certificate and providing a number of alternative versions (3 is the number suggested).

* Obtain from the lenders a mark up of the consent and agreement dated 23rd April, 1999.

Ideally, the first two steps should have been taken by next Monday (i.e. when the AG is next in London) in order that this can be communicated to the AG then. As indicated above, the third step is not necessarily on the critical path but if this could be dealt with at the 14th/15th June meeting, then we probably should seek to do so.

Best regards,Sd/-Russell WellsDISTRIBUTION LISTBob Middleton 00 91 11 464 6127National PowerDheeraj Hinduja 020 7839 5992Hinduja GroupTony Moore 01793 892 881National PowerSuresh Chandra 00 91 11 373 9231Ashok Leyland LimitedChris Deacon/M S Varadan 020 7615 3461VDGEric Lyons/Karl Christensen 020 7777 1522ChaseAshlesha Gowariker 00 91 22 265 8245Desai & Diwanjit
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