Subject: Re: Explicación estructura fiscal ampliada
From: "Michael Huerta" <[email-masked]>
To: "Pio Mortera Nales" <[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: Wed, 29 Jun 2011 16:07:18 +0000

Hi Pio - Yes, this does answer the question and is specific enough for now.  

I appreciate it.

Michael Huerta
410 905 7984

-----Original Message-----
From: Pio Mortera Nales <[email-masked]>
Date: Wed, 29 Jun 2011 04:00:09 
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]>
Subject: RE: Explicación estructura fiscal ampliada

Hello Michael,

Sorry for the delay answering to this email. Each foreign investor will review the tax treaties between the US and his country, which will usually exempt them of paying in both countries. In any case this should be addressed by our tax advisors. Did I answer to your question or do you need more information?

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]>

________________________________
De: Michael Huerta [mailto:[email-masked]]
Enviado el: jueves, 23 de junio de 2011 0:53
Para: Pio Mortera Nales
CC: 'Hunter Biden'; Lorenzo Roccia; 'Devon Archer'; Abel Navarro Homet; 'Eric Schwerin'; Alessandro Zanelli
Asunto: RE: Explicación estructura fiscal ampliada

Hello Pio, quick question:

-         How you arrive at the effective tax rate at the US Blocker Company entity-level makes good sense.

-         However, will the offshore investor also get hit with taxes (income, interest, dividend or whatever form the distributions from the Blocker Co.) in their jurisdiction? (i.e., a German investor will get hit with German taxes as they would any other income stream specific to German tax rates, rules, etc)

o       I assume they must and that they would be the usual jurisdictional taxes.

Let me know if this makes sense.

All the best,
Michael

From: Pio Mortera Nales [mailto:[email-masked]]
Sent: Monday, June 20, 2011 2:10 PM
To: Michael Huerta
Cc: Hunter Biden; Lorenzo Roccia; Devon Archer; Abel Navarro Homet; Eric Schwerin; Alessandro Zanelli
Subject: RV: Explicación estructura fiscal ampliada

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]>