EMAIL DETAILS

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:pio@transatlanticeg.com]
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%):


Organization Chart


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: <mailto:pio@transatlanticeg.com> pio@transatlanticeg.com