Eric,

	Below is an e-mail from one of our contacts at Harvard Management Company (HMC). They manage the Harvard University endowment and Jason works in their commodities group. 

	We are talking to him about the possibility of buying equity in the KCS deal. Specifically, they will buy Trust  certificates that CIBC currently owns. The reason why this is important is that CIBC negotiated certain equity rights which effectively gives them veto rights over debt. CIBC is unwilling to give up their rights, so we are looking into the possibility of having HMC buy them out. HMC will not insist on having these rights.

	With this background in mind, I need your help to answer some of the following question with regards to KCS. Can you or Charlie go through the following questions and we can discuss them afterwards. I know the answer to some of the questions, but not all. 

	Thanks and best regards,

	Rafi 	



-----Original Message-----
From: Hotra, Jason [mailto:hotraj@hmc.harvard.edu]
Sent: Thursday, July 19, 2001 7:05 AM
To: Saubier, Sebastien; Jones, Doug; Khan, Rafi
Subject: RE: Information


Thanks...  I haven't spoken to stu yet, but a couple questions:

is there a floating price offtaker lined up for the gas?  does production
occur daily over the course of the month?  how would physical sales be
priced, considering the fact that the basis is already secured?  The
offtaker must either pay NYMEX prices for the gas, or else the packaged
basis swap must settle on the same terms that the offtaker calculates the
prevailing basis...  would the offtaker pay bidweek prices or daily nymex
settles...?

What is the "excess cash allocated to equity"?  some sort of fixed payment?
when is that made?  the "total" line would imply that the "excess cash" is
paid immediately, or else that the value is already a PV number, since it is
not being discounted...  what is the certainty of that payment?

Based on current NYM pricing, I get the NPV of unhedged volumes worth about
3.4m, making the total including excess cash payment 5.45m...  What is the
upfront equity required?

-----Original Message-----
From: Saubier, Sebastien [mailto:Sebastien.Saubier@enron.com]
Sent: Wednesday, July 18, 2001 8:48 PM
To: hotraj@hmc.harvard.edu; Jones, Doug
Cc: Khan, Rafi
Subject: Information


Jason,

Rafi asked me to send you the attached information regarding the
proposed project he and Doug discussed with you this afternoon.  It is a
template that calculates the value of the equity based on a NYMEX strip.
Please input the NYMEX values in the indicated column to obtain the
equity valuation as of 7/31/01.

Please call if you have any questions. 

Regards,

Sebastien	713 345 4387
Rafi		713 345 4004
Doug 		713 853 7494

 <<KCS-Harvard71801.xls>>