BUSINESS HIGHLIGHTS

Enron Industrial Markets
On Friday, June 22, Enron Industrial Markets closed Project Slapshot.  Project Slapshot emerged as Enron's solution to efficiently fund the Stadacona newsprint mill acquisition outside of the highly priced and restrictive pulp and paper capital and bank markets.  The primary goals were to 1) obtain low cost financing, 2) retain flexibility of the assets, and 3) minimize credit impact.  

Through the use of a derivatives package consisting of a warrant, a put, and a total return swap, EIM was able to redirect lenders exposure from operating, asset and commodity price risk to Enron credit risk. Consequently, our debt financing costs fell by over 400 bps.  Unlike other pulp and paper producers constrained by debt and operating covenants, EIM now has a significantly lower cost of capital plus the flexibility with its physical assets so that it may continue to revolutionize the pulp and paper industry without being burdened by restrictions typical in the industry. 

To alleviate the credit impact of purchasing a cyclical operating asset, we utilized our partnership with Citigroup, "Sundance," to spread some of the asset risk so that the acquisition would have minimal credit impact.  The credit derivatives package, together with the Sundance partnership, effectively enabled EIM to acquire its physical newsprint supply without bearing the heavy capital costs typically associated with this industry.  


Enron Freight Markets
On June 20, Enron Freight Markets (EFM) closed its first two major origination transactions; one with Werner Enterprises of Omaha, NE and the other with Covenant Transport, Inc of Chattanooga, TN.  Each deal was for the purchase of firm, over the road truckload capacity for a one-year term in the following lanes:

Los Angeles, CA to Oakland, CA
Los Angeles, CA to Chicago, IL
Los Angeles, CA to Columbus, OH
Los Angeles, CA to Newark, NJ
Oakland, CA to Chicago, IL
Chicago, IL to Atlanta, GA
Chicago, IL to Newark, NJ
Atlanta, GA to Newark, NJ

Shipments will commence Monday, July 2 with one truck leaving from each city each weekday.   After a three-week ramp up period, the volume will increase to as many as 3 trucks per city, per day.  

Each of the contracts also contains two options.  The first is Enron's right to extend the term for up to an additional twelve months.  The other is Enron's right to double the aggregate capacity for a period of 30 days up to 1 year.  EFM's Long Term Capacity Agreement represents a new approach to purchasing freight capacity in the transportation industry.  The firmness of the contract is a significant step in moving the industry from typical relationship -based contracts to more commodity-like contracts that allow buyers and sellers to explicitly value risk. 

Cuiaba & the Boliva Brasil Pipeline - Enron wins Award!
The first week in June, the Wildlife Conservation Society (WCS) presented Enron and Ken Lay an award for the seminal work the company has done with the WCS in Bolivia on conservation activities.  This included work on the Bolivia Brasil Pipeline, the Cuiaba lateral and the efforts concerning the Chiquitano Conservation program.  Congratulations to everyone involved!

IN THE NEWS

A Hand In Everything Enron Gets Rich In California.  But Has It Gouged Consumers?
"Enron has reinvented the energy business, fashioning itself into something closer to a brokerage than a power provider.  Formed in 1985 out of the junk bond merger of two old-line natural gas pipeline companies, Enron pushed relentlessly for deregulation, first in the natural gas business and later in electricity.  From the trading floors of its towering Houston office building, it rivals any Wall Street firm in sophisticated deal making." -- U.S. News and World Report, June 18  


WELCOME
New Hires
EGM  - Keri Allred, Andrew Hill, Steven Zukis 
EIM  - Neville Ravji, Jeff Wells
ENA  - Chris Weekley

Transfers (to or within)
EIM - Daniel Kang


NUGGETS & NOTES

Congratulations to Mimi and Michael S. Keyser, manager in Enron Freight Markets. They are the proud parents of a son, Maxwell Jay Keyser, born June 23, 2001 weighing 8 lbs. 8-1/2 oz. 

Travel tip of the week:
More Preferred Hotels with special Enron rates.
	Chicago
	    Drake			$ 175
	    Hyatt Regency	   	   196
	Houston
	    Hyatt Regency Downtown	   147	
	    DoubleTree Allen Center	   159
	London
	     May Fair Intercontinental	   187 GBP
	     Hotel Intercontinental	  	   190 GBP
	     Thistle Hotel Victoria		   120 GBP

Please refer to travel.enron.com for the entire list of preferred rates.


EnronOnline Statistics
	
Below are the latest figures for EnronOnline as of June 25, 2001

		*Total Life to Date Transactions  > 1,125,000
		*Life to Date Notional Value of Transactions  > $673 billion


LEGAL STUFF
The information contained in this newsletter is confidential and proprietary to Enron Corp. and its subsidiaries.  It is intended for internal use only and should not be disclosed.



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