David, you may be getting to the nub here.  Ultimately, this is a lot more 
art than science.  It will be difficult to come up with a mathematic decision 
rule to manage this process.  I am looking to the opinions of yourself, Ray, 
Dick and Jeff, given the facts in each case, does this appear to be a good 
trade given the market, the specifics of the company, the carrying costs of 
the asset and perhaps our desire to increase capital flow to higher return 
assets (ROCE >25%).

This is clearly not a fire sale and I trust the opinion or consensus that 
comes from this group.  As a result, I need to have a positve consensus from 
this group in each case.

Regards
Delainey
---------------------- Forwarded by David W Delainey/HOU/ECT on 09/29/2000 
09:55 AM ---------------------------


David Gorte
09/29/2000 09:48 AM
To: David W Delainey/HOU/ECT@ECT
cc: Rick Buy/HOU/ECT@ECT, Jeff Donahue/HOU/ECT@ECT, Richard 
Lydecker/Corp/Enron@Enron, Raymond Bowen/HOU/ECT@ECT 
Subject: Re: Basic  

Dave,

Your comments on the Basic DASH are well-taken.  We will clarify what RAC 
views as the current valuation of Basic as well as RAC's recommendation with 
respect to this divestiture and modify the DASH as quickly as possible.

Your comments prompted a question with regard to ENA's divestiture strategy.  
Is it correct to assume that if we use a typical market liquidity premium of 
30% (i.e., future divestiture proceeds are 70% of the expected terminal value 
at the divestiture date to account for potential changes in future market 
conditions) in a sale deferral scenario and this deferral results in a higher 
NPV at the RAC capital price than the proposed sale proceeds, ENA would elect 
to retain the asset?  Or should a higher than "market" capital price be 
assigned by RAC to these assets earmarked for divestiture?

Regards,

Dave