The CalPERS board voted on Monday, June 18th to appoint a delegation, to be headed by San Francisco Mayor Willie Brown, to meet with chief executive officers of various energy companies (including Enron) to discuss with them CalPERS' concerns.  This action is a direct result of the continuing power crisis in California and the threat of a backlash which could lead to re-regulation of the energy industry in California, which could in turn hurt the long-term value of CalPERS' energy holdings.  CalPERS owns 2.6 million shares of Enron - less that 1/10th of 1% of the total value of CalPERS' assets and 6.2% of their total energy holdings. 

As a result of these actions, Enron and CalPERS halted their negotiations of the amendments to the JEDI II Partnership Agreement which would have expanded the investment opportunities available to JEDI II and thus funds available to various Enron business units (i.e. EBS).  Instead the partners agreed to a one year extension of the commitment period for Capital Contributions (limited to $100 million) under current Partnership Agreement terms and concurrently called a Suspension Event effective June 29, 2001.

What does this mean?  A Suspension Event prohibits any new investments being made by the JEDI II Partnership until the Suspension Event period is lifted.  We are uncertain at this point when that might be.  

I have attached below some press releases related to the issue.

If you have any questions or concerns please give me a call.

Shirley Hudler
Senior Director
Enron Global Finance
713-853-4859