As you are all aware, the syndication of KCS deal is underway. There are two parallel efforts underway to syndicate the deal in the bank market, one would be on an unwrapped basis (being pursued by Tim Proffit in Global Finance) and the other on a wrapped basis using the insurance product developed by Global Risk Markets. We are and have been working closely with Tim Proffit on this deal.

The insurance companies we are working with have notified us that they are at the stage of obtaining final approvals from their credit committees and the most likely scenario is that they will do the deal. The wrapped deal has better economics for Enron.

From an accounting perspective, my understanding is that same requirements apply with regards to unwinding 3% of the hedged volumes in both structures. I have been working with Gail on the wrapped deal and seems like Stan has been involved on the unwrapped side. We need to have a meeting Monday morning among us to provide clear guidance to Eric and his team so that the unwinding of the hedges gets done right. I'll propose a meeting at 9 am Monday morning in EB 2166. Let me know if it works for you.

Thanks,

Rafi
X 54004