Jeff:

FYI, this is a concept we are thinking about.  The following was written by Shawn to his staff, but the basic idea is to buy, or gain control of medium sized trucking companies $5-25mm/yr revenue.  We would either keep the current owner involved as described below, or work with an operating partner who would control all the truck leases, drivers and maintenance.  We would take back a contract for the capacity (mix of variable and fixed price) and would retain all existing sales contracts.  Under either structure, we get access to the existing customer relationships and channels.

Once we get a little further down the line, I'd like Shawn and Kellie to present it to you and Mike.

Regards,

Dan

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In my mind, the typical demographic of a good target would be someone:

who has built a solid and profitable trucking company of midsize
who has build a loyal book of business with financially sound shippers over a 10 to 20 year period
who is seeking some retirement liquidity (capitalise on the goodwill) and has no one to pass the business on to
who can stay around for a migration period of 1-3 years, so that the book gradually moves to EFM (on a spot, then firm basis)
possibly someone whose business could even be bigger if Enron were partnered with them because of added credibility with the inclusion of Enron
maybe who may have run into some unavoidable problems (such as hit by high insurance), but depends on whether they have preserved valuable relationships

One of the possible structures Kellie and I have been discussing is:

some Initial Payment is made to Truckco for signing the implementation plan agreement with EFM
at that time EFM is given a call option to buy out the equity of Truckco within 18-36 months from now (we could also give them a put to EFM at a lower price)
the implementation plan calls for Truckco management to do certain things over the ensuing periods, including migrating and routing their business through EFM
milestone payments for certain events such as (1) moving accounts to EFM or an EFM/Truckco JV and (2) transforming the contracts from spot to our M2M firm basis (different payments depending upon the value of the deal for us)
during the migration period, we will back-to-back the original customers with the Truckco; and compensation to Truckco for any spread could be contained in some combination of the Initial Payment and milestone payments
I assume that the JV between EFM/Truckco may be able to preserve the existing relationships and possibly increase the size because of the scale that Enron brings (ie grow the existing business)
at the exercise date of the equity options, we can decide whether to (1) exercise and own the Truckco; (2) sell the Truckco to a larger trucking company; (3) retire the trucks and sell the terminals and satisfy the customer volumes in other ways (from other carriers, from our portfolio, or just remain short and cover in the spot market)

I'm sure that Kellie is considering other possible structures as well.

We really need to get something like this launched as soon as possible, as we have a target of $6M of income for this 3Q.

Again, lets visit with Kellie and her team.  She is assembling a list of target companies.

Shawn