Subject: RV: Explicación estructura fiscal ampliada
From: "Pio Mortera Nales" <[email-masked]>
To: "Michael Huerta" <[email-masked]>
Cc: "Hunter Biden" <[email-masked]>, "Lorenzo Roccia" <[email-masked]>, "Devon Archer" <[email-masked]>, "Abel Navarro Homet" <[email-masked]>, "Eric Schwerin" <[email-masked]>, "Alessandro Zanelli" <[email-masked]>
Date: Mon, 20 Jun 2011 14:09:35 -0400

Hi Michael,

Per Abel's request, I send you a brief explanation of the tax structure. For foreign investors without any special tax efficient structure, the taxes they will be paying would amount to the high 50% (35% Federal taxes, state and local taxes of between 0 and 7% and US Branch profits of 30%). Setting the following structure, you will be only paying the Federal 35% taxes plus the state and local taxes (usually would amount to 38 or 39%):

As the chart shows, the foreign investors will participate in a blocker entity that will be receiving cash from the Copper Crossing energy sales. There is a possibility to reduce the taxes to be paid, and that is leveraging the blocker company (maximum of 1.5:1), which will reduce the effective tax rate to between 15 and 20%.

            In our model we have considered paying 30% taxes, and with this tax rate reduction we would increase the IRR between 75 and 100 bps.

            If you have any questions please let us know.

            Best regards,

Pío Mortera Nales
Ingeniero Industrial

c/ Juan de Mena 19, 1º D
28014, Madrid, Spain
T. ES: +34 91 781 31 60  -  T. US: +1 917 463 4643
M. ES: +34 600 574 212  -  F. ES: +34 91 429 56 20
e-mail: [email-masked]<mailto:[email-masked]>