Below are the proposed discounts we discussed with Ken Lay this afternoon:

USD millions:       
                          Cash from 85       P+L with 85 cent 
             Discount   cent sale of claim    sale of claim

Enron      $ 85.0 (17%)       $361.8             +$129.1      
PG&E       $237.0 (46%)       $232.6             -$  0.1 
Midpoint   $161.0 (32%)       $297.2             +$ 64.5



If the midpoint (value between PG&E and Enron settlement offers) is acceptable from a liquidity and P+L standpoint, propose countering at a discount of $123 million (move half way to midpoint) to provoke a counter offer.   Intent is to settle at midpoint discount of $161 million.  The Excel file is attached.