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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%):

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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,

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