FYR
 -----Original Message-----
From: 	Bouillion, James L.  
Sent:	Friday, November 09, 2001 3:25 PM
To:	McMahon, Jeffrey; Derrick Jr., James
Cc:	Sekse, Per; Deffner, Joseph; Armogida, Jim
Subject:	FW: Mahonia X Advance Payment Guarantee Bond/Hartford Bond	#61BSAP3909

I will send a copy of the letter when it arrives.

 -----Original Message-----
From: 	"Phil Bair" <pbair@jwortham.com <mailto:pbair@jwortham.com>>@ENRON  
Sent:	Friday, November 09, 2001 2:56 PM
To:	Bouillion, James L.
Subject:	Mahonia X Advance Payment Guarantee Bond/Hartford Bond	#61BSAP3909

Jim-On the last advance payment bond we executed in December 2000, Hartford participated at a limit of $52.8 million.  A separate and specific indemnity agreement was executed by Enron in favor of Hartford which contains a trigger collateral call event for 100% security in the form of a letter of credit if the credit rating of Enron falls below BBB or Baa2.  (There is an option to have the bond terminated in lieu of posting a LOC, but I doubt if that is a viable alternative).  Hartford called today and indicated with the downgrade this morning by Moody's, we are now at the edge of the trigger event.  They are sending a letter to the attention of your general counsel confirming this condition  in the indemnity agreement.  I've asked them to send me a telefax of the letter, which I will forward to you.  This is not a call for collateral at this point; Hartford simply wants to reinforce the potential requirement.  I'm sending a copy of this to Joe Deffner so he will know what is transpiring if he gets a call.

Call if you have any questions.  Thanks.

Philip N. Bair
713-346-1378 (Telephone)
713-520-1260 (Telefax)
pbair@jwortham.com <mailto:pbair@jwortham.com>