I ran two scenarios below to illustrate Enterprise Value in a sale 
scenario.   If a company is upside down (more debt than enterprise value), 
the losses to creditors are only reduced if someone overpays for the assets. 
Otherwise it just shrinks the enterprise value and debt $1:$1. The proceeds 
would first go to the secured mortgage bonds then to the unsecureds (they 
funded a good deal of the undercollection).



Scenario 1 (at FMV)	 Current 		Sale		Proforma
					
					
Enterprise value	        800 		-200		        600 
					
Debt	      1,000 		-200		        800 
					
Loss $	       (200)				       (200)
Loss %	       -20%				        -25%
					
					
					
					
					
					
					
Scenario 1 (at $100 over FMV)	 Current 		Sale		Proforma
					
					
Enterprise value	        800 		-200		        600 
					
Debt	      1,000 		-300		        700 
					
Loss $	       (200)				       (100)
Loss %	       -20%				       -14%













 -----Original Message-----
From:  Comnes, Alan  
Sent: Tuesday, February 20, 2001 5:14 PM
To: Kingerski, Harry; Tribolet, Michael
Cc: Dasovich, Jeff
Subject: Re: Transmission Data/PG&E and SCE

Harry,

Thanks.  Let me know what else I can do.

Harry or Michael T:

If you see anything that gives more details to the securitization proposal, I 
would like to see it.

Once question I have is the assets are currently supported by corporate 
debt:  probably to the tune of 50-60%.  If the state buys that portion, it 
will reduce the debt coverage ratio of the corporate debt that now must be 
supported by only distribution operations.   Thus, it would seem to me that 
some of the state purchase proceeds would need to go to retiring corporate 
debt before it could be used to pay down the undercollection.

Alan Comnes