risk a~e~~ment & control ENRON WHOLESALE SERVICES * ENRON AMERICAS ("EA") * ENRON GLOBAL MARKETS ("EGM") * ENRON INDUSTRIAL MARKETS ("ElM") PORTFOLIO WATCH LIST UPDATE AS OF 1/26/2001 Diatmibution: Buy, Rick Delaine,, Dave Frevert, Mark Haedicke, Mark (via cc:Mail) Lydcckcr, Richard (via cc: MaN) McConnell, Mike McMahan, Jeff Skilhing, Jeff Whalley, Greg PLEASE NOTIFY RICK CARSON AT X3-3905 WITH QUESTIONS OR COMMENTS CONFIDENTIAL 3 ~WBw3~il~L Cost & Carry Valucs as of 12-29-2000. Markct Valucs from Mcrchant Portfolio Rcport Datcd 112-2001.3 WIT: * DATL~ IO-2(~ O'~ ECvOO7003185 EXHO43-00055 ~i1 U RTSK ASSESSMENT & CONTROL PORTFOLIO WATCH LIST-UPDATE AS OF 1/26/2001 VALUES ARE GROSS / NET TO ENRON AS INDICATED TABLE OF CONTENTS WATCH ASSETS.....................................................................3-6 Bonne Terre Exploration Juniper Exploration Sacramento Basin Exploration C-Gas Jupiter Holdings (EGM) City Forest Corporation Linder Energy LLC Cypress Exploration Mariner Energy DPR Holding Company (EGM) Oconto Falls (ElM) Moved from "Performing" TROUBLED ASSETS..................................................................6- 10 Ecogas EnSerCo Offshore Heartland Steel Hughes Rawls LLC Ice Drilling Industrial Holdings Inland Resources LSI Electric Masada Queen Sand Resources, Inc. Basic Energy (Sierra Well Service) WB Oil Company LOSS ASSETS.........................................................19-11 Cn,wn Energy Kafus Industries Transcoastal Marine Services Nakornthai Strip Mill ASSET RESTRUCTURING I SALE ACTiViTY In Pnigress I Partially Completed Restructuring, I Sales Completed Bonnc Tcrrc E loration * Brigham Exploration City Forest Carrizo Oil & Gas Ecogas ' Costilla Energy Enserco Offshore Eugene Offshore Holdings, LLC Hughes Rawis LLC Forcenergy Industrial Holdin Gasco Distribution Kafus Industries / Canfibre Hogan Exploration LSI Electric * Ice Drilling Masada Inland Resources NSM - Thailand' Lyco Energy Oconw Falls Repap Resources Queen Sand Resources (DEVX Energy) * Basic Energy (Sierra Weil Service) Transcoastal Marine * TnPoint, Inc. WE Oil Company Qualitech Steel CONFIDENTIAL 2 ECvOO7003I 66 EXHO43-00056 R~S1( ASSESSMENT & CONTROL PORTFOLIO WATCH LIST-UPDATE AS OF 1/26/2001 VALUES ARE GROSS / NET TO ENRON AS INDICATED WATCH Assets displaying eaiiy warning signs of potential weakness that deserve close attention. Bonne Terre Erniorstios - EA (Luiiited Liability Company) JEDI II & Balance Sheet (Net #'s) The dissolution of the LLC continues to progress through a Windup Agreement, with formal closing expected to occur an Feb-2 001. New partners Mann Resources and Tn-C Resources have signed exploration agreements and haw been promoted in iv develop the Cameron Parish project area. Resource Solutions, the Denver-based Geological / Geophysical shop continues to provide technical assistance in prospect generation and marketing an the project area. Approximately IS viable prospects and numerous prospect leads, involving five different plays have been identified The LLC also sold Its Interest In the Black Bayou Dome Field to RIUCO, who is currently reacttvating the field. The l.LC retains rights to participate in exploration beneath the dome and maintains a royalty interest in the properly pursuant to its fee mineral ownership acquired from Amoco. EA has structured the Exploration Agreements with Manti & Tnt-C to reduce capital ns* exposure through carried interests and working interest buyback options at casing point. Exit will likely come through monetization of PDP reserves via a volumetric production payment or a sale to a larger E&P player, once drillin ros cts are better de med C-Gas - EA (Paivate Equity) JEDI I (Gross #'s) Operational results through the first 11 months of year 2000 continue to exceed plan. Actual EBITDA of 58.07S MM exceeded plan of $640 MM by 26%. Cash flow of 36.354 M7vt exceeded plan of 34.362 MA! by 37%, Production costs decreased by 3499K or 14%. through the Nov-2000 period, due to eO7ciencies realized fron, the plugging, sale and shut-in of deficit well& Average lease operating expense per equivalent MCI! was 30.77 through November. vs. $0.82 in the comparable '99 period. aflivonable 6% decline. The Company has paid down long-term debt from $22 MM at year-end '99, to its current level of 516 A04 Given the reasonably strong operationat results, no immediate sale of the Coin an is anned ~ilYi~E~C9rn~ - EA (ScmorfSubLoans, withWs)BalanccSbcct&ENACLOTrusI#I (Nct#'s) * The Enron Restructuring Group met with the Company in Wisconsin the week of Jan-22nd Based on current projections, the Company will not be able to meet its Mar-1-2001 principal and interest payments. Annual debt service is approximately $9 MM and current projected full year 2001 EBITDA is also 59 MM The Mar-lw' shortfall is related to the timing of EBJTDA. Other factors contributing to the shortfall include delayed start-up (which diminished any equity cushion - approximately $4.5 MM), reduced margins on tissue due to macro conditions in the industry and increased natural gas prices. The 2001 plan called for the expenditure of approximately 52.276MM for natural gas at 54.63 /M~dB7'U The Company's gas hedges (at 55.11 / .A.4MBTL2 expire at the end of Q-l-2001. City Forest management has provided detailed financial information, regarding the shortfall. The Restructuring group will be working with Company to provide a short4erm solution that will compensate Enrrm commensurate with our proposals and the incremental risk we are assuman (Transfer to EA CLO #1) S29.610 MM * $1 663 MM of Carry Value is hedged through "Raptor" CONFIDENTIAL ECvOO7003187 EXHO43-00057 RISK ASSESSMENT & CONTROL PORTFOLIO WATCH LIST-UPDATE AS OF I/26t2001 VALUES ARE GROSS / NET TO ENRON AS IIJDICATED ~4TATCH - (Continued) Cv.reu Exuloration - EA (Working interest) Balance Sheet (Net h's) * The rig has been moved to drill new wells in the Racevi lie prospect (Vermillion Pansh) area of south Louisiana. Tn-C, the operator currently is drilling one well at a depth of 13,462 feet with a lola! depth expected of 17,000 feeL No major operational problems have been encountered. E&P companies Andes and Preston have been promoted in on both wells. On the first well, E4 will pay 14% of expenses before casing point and 42% after casing point. PA continues to work with the prospect generation finn, Rozel &lergy (Lafayette, L4), to provide technical analyeis of existing data, recommend prospects and to assist in selling those prospects. The exit strategy is to dentify prospects under lease and then spend minimal exploration dollars that will define potential, create value and maximize sale raceeds. DPR Holdlnn Co~. LLC - EGM (Senior Debt & Pnvate Equity) JEDt II & Balance Sheet (Net #'s) * Through the first eleven months of year 2000, DPR reported tonnage of 3.5 MM, EDJ'TDA of SItS MM and negative net income before taxes of (32.5 M3~?. These results are less than originally budgeted primarily due to problems experienced at the Dakota mine with roof control and water problems and the development of a longwall at Panther. The sale of the Panther mine to Close dosed on Dec-22-2000. Under the transaction, EGM retains the rights to market the Panther langwall production, and EGM's rights to market both the Panther and Remington coal survive the put/call option. Cline paid 32.9 MM for EGM / JEDI Ii's Panther IPC s and EGM / JEDI il's interest in Dl')? s Membership Units of Panther. Cline also paid down the outstanding debt balance of 319.3 Mud to $18.2 MM at closing. Panther made a principal prepayment of $ 4.3 MM on Jan-22-2001 and will make regularly scheduled quarterly principal payments of 3900K, with the balance of$11 MM being paid on Dec-31-2001. EGM !JEDI 11 receivcd equity distributions of 3 4.13MM through the first eleven months of year 2000. Total equity distributions for year 2000 are expected to be 3 5.1 MM comparcd to S 8.2 MM of budgeted distributions. Marketing Fees received lTD totaled $ 1 0MM (Transfer to EA CLO #1) S23.054 MM Juniper Exploration - EA (Limited Pailnership) JEDI II & Balance Sheet (Net h's) * The Eugene Island 57 location is now on line and average daily production for Dec-2000 was 16 MMCF / day gross. Cash flow from the two wells (1114 & #15) is currently sufficient to cover overhea~L Recent drilling activity includes a successful well at West Cameron 310 (Juniper is a 50% WI. owner). The partnership is currently drilling Eugene Island 60 and High Island A-232. The results of these two wells, together with other approved AFE's for prospects to be drilled in Q-l and Q-2-2001, will signWcantly impact the decision whether to extend the partnership for an additional year in May-2001. Over it's 2-~4 ye ar history, the LP has drilled eighteen wells, with seven currently producing. Consideration is being given to marketing Juntper~ existing production at Ray Marchand, Eugene Island 28 and Eugene Island 57 using the Deal Bench marketing tool. The EA Commenical team has resented the idea to our General Partner or discussion. Asset has been hedged thiough "Rajnor". CONFIDENTIAL 4 ~ft,Afl7lV~i4** EXHO43-00058 RTSK ASSESSMENT & CONTROL PORTFOLIO WATCH LIST-UPDATE AS OF 1/26/2001 VALUES ARE GROSS / NET TO ENRON AS INDICATED WATCH - (Continued) Jupiter lIoldina. LLC - EGM (rerm Loan & IPC's / Options) JEDI II & Bajance Sheet (Net #'s) "FROM PERFORMINGTM A tenn loan with JPC ~e to a Chris Cline (also the principal of DPR Holdings) controlled entdv that owns the assets and operations of this coal mining project in West Virginia In late Dec.2000, it became apparent that a transaction Involving Jupiter, known as *'Sdtwn~ would not close by year-end The transaction was with A.T Massey Coal Company, who encountered Issues related to a coal sludge accident In the watersheds of eastern Kentucky. The governor a/Kentucky was required to declare a state of emergency in JO counties ax a result of the spill. As a resull EGM and Cline negotiated an amendment to the Jupiter Loan Agreement that 1) extended the termination of EGAd's / Jedi Ii's $16 3dM term loan commitment by three months from Dec-31-2000 to Mar-31-2001 and 2) delayed the commencement 0/loan amortization from Dec-31- 2000 to Mar-31-2001. During Dec-2000, Jupiter also drew an additional S4.9 MM against the $16 MM term loan commitment. This brought the outstanding balance on the Jupiter note to $6.1 MM. The EGM cvrnmercial team met with the Company on Jan-19-2001 to discuss Cling ~ proposal for ~rnduction xt Linder EmceE, LLC: - EA (66.7/. Membership Interest) JEDI II & Balance Sheet (Net #'s) * Distributions through the last half of tue previous year Irended up. averaging approximately $795K per month. Total distributions received by LA / JEDI II since the beginning of the LLC in Dec-98. equal IS. 229 MM. The PVI2 value of total peoved reserves increased to $39.6 MM as qf Jan-18- 2001, upfromn a l'J'J2 value o/$38 MM that was assigned at Oct-1-2000. The change was primarily related to increases in commodity price decks (natural gas @ $4.64 /MCF and oil @ $22.41 /BBL). The new reserve value aiso incorporated the effect of losing I A4MCF / day (gross / .IV interest = 20%) 0/production from an offshore well where a tubing replacement/ailed Distributions currently remain at 99% to LA ~'JEDI II. based on the "clawbock" mechanism incorporated In the agreement. The current sharing ratio will remain in effect through Mar-31-2001, the next adjustment period. While distributions have improved,EA Restructuring continues to examine methods to exit the Manner Enemy - BA (Private Equity & Debt) JEDI 1 & Balance Sheet (Gross #'s) * Through the first eleven months 0/year 2000, Mariner's actual EBITDA was 114.2% of plan. with 580.232 MM. recorded vs a budget of 370.274 M~J. Actual Net Income for the same period was $5. 228 MM vs. budgeted of 3(7.436) M3~f. Favorable year to date variances were primarily the result of $2.77 I barrel higher than expected realized oil prices and $0.44 / MCF higher than expected realized natural gas prices, partially offset by 390.7 MBOE lower year-to-date production. Major milestones for Mariner in 2001 indude: I) attaining l«=Bffl)A of $100 MAd: 2) achieve production of 60 AtMBOE: 3) drill six exploratory projects; 4) attain upper quartile drilling performance v.t peers; and 5) suhj~cr to market conditions and Board approval. rai'e $150 - S200 MM 0/new common equity. The commodity price assumptions used by Mariner/or 2001 are 525.00 / bbl for oil and U. 00 / MCF for natural gas. No additional findings in 2001 from Enron are contemplated, as projections are for capital expenditures of $147 MM with operating cash flow of $93 3dM. The 554 MM shortfall, would be financed through the Bank revolving credit facility - that CONFIDENTIAL -ps. ~A?AA'~dfl~ - EXHO43-00059 RISK ASSESSMENT & CONTROL PORTFOLIO WATCH LIST-UPDATE AS OF 1/2612001 VALUES ARE GROSS / NET TO ENRON AS INDICATED facility would have es.timat'ed borrowings outstanding at the end of Dec-2001 of 383 MM. with an estimated barr 101MM I~4TATCH - (Continued) Qs2nhL!aik - ElM (Sti-Dd~ I Equity & LPC's) Balance Sheet (Net #s) The Comptmy has provided tentative closing dates for the sale of Oconto Falls Tissue Inc., to a private international firm, with cash expected in Feb-2 001. Incremental payoff will he made with the bridge financing that will occur at dosing and then full take-out will coincide with the permanent financing that will be arranged shortly thereafter. The Enron commercial team has reviewed the MO. U and the sale price ims agreed to at $48 MM. The sale would result in a liquidity event for Enron and will retire the EA CLO Trust #1 note at par and provides for buy-back of the Enron income participation certificates for approximately 811 MM. A previous agreement has been entered into with Oconlo Falls on the buy-back of the Enron income participation certificates~ but no a ments had been received to date. (Trander to EA CLf) Trust #1) *Asset is hedged through "Raptor." - Assets for which the returns are considerably less than originally projected and I or is questionable. EcoQzS Coruoration - IA (Private Equity & Revolving Debt) Balance Sheet (Net #'s) * Oi~ Jan-8~". the Company closed on the sale of the remaining assets to a former shareholder, Inter Asia, now known as Pac~/ic Natural Energy, a private VCfund. The sale amount was approximately $4 MM and the assets included were Wesiside. Skyline, San Antonio. Rosenberg and Dallas. with the purchaser assuming all liabIlities. Unsecured creditors were paid off on Jan~11h, with those owed amounts over S10T( receiving approximately SO SO cents on the dollar and those owed amounts less than 310K. receiving payment uafulL One vendor (a former employee; current Indusby consultant) who was owed over SIOA has notified &ogas that he will not settle for the proposed amount. The Enron commercial group believes that this situation and any remaining issues have becn adequately reserved against. The landJill agreements previously entered into between Ecogas and the cities of Austin. 7% and Hunts-vifle.7X. have been terminated Enron has re-purchased the Section 29 tax credits from Fidelity for 34.89 AIM The exit strategy was predicated on Enron receiving minimal value from the asset sales in return for receiving indemnification from future legal liability and minimizing any potentiality of the corporate veil being penetrated The closing of the Austin office will take lace over the ne4 Ic o weeks. EnSerCo Offshore - [A (formerly NorArn) (Senior Term Loan) EnSeiCo (Net #'s) * A signed Memorandum of Understanding for an all cash offer ofS10MM~39.65MMnet of broker fees) has been received for the rig from privately held Enercon International. Other potential bidders who expressed interest in the rig included publicly traded Pride International and publicly CONFIDENTIAL 6 ~~OO7OO31 90 EXHO43-00060 RISK ASSESSMENT & CONTROL PORTFOLIO WATCH LIST-UPDATE AS OF 1/26/2001 VALUES ARE GROSS / NET TO ENRON AS INDICATED traded Parker Drilltng. The impediment to those offers was that each involved a combination of stock and cash vs. the Enercon offer of all cash. A demand letter to recoup costs has been sent to Kingdom Energy, a previous bidder who entered into a term sheet. Enron also continues to legally pursue the rsonol arantee that was ovided b the main rind ad of Noram. T ROU~LED-(Continued) Heartland Sted - RA (Senior Debt, Common Stock & Warrants) Balance Sheet (Net Ii's) The forbearance agreement in effect with the Company ~r senior bank group led by PNC Deutsche Bank expired on Jan-19-2001. Heartland remains in default on scheduled principal and interest payments to the bank group and to the EA CLO Trust. There were Iwo principal payments that were due to the Senior Bank Group on or about Jan-1-2001, for $5 MM and S6.6 MM re&pecttvely. Absent a sign~/icant third party cash infusion, it was doub(/ul those payments would be made. The Company had previously hired Rothsdu1la~ Inc.,of NY as restructuring advisor. Current project needs to complete ramp-up at the Terre Haute plant were estimated at £25 kL4d. As a result of the issues above Heartland led ormal (Transfer to Coudor) (Transfer to IA CLO #1) $ 15.000 MM * Asset has been hedged through "Raptor." Huehee Rawis LLC - EA (LLC Mcmbcrship) .JEDI I & Balanoc Shoot (Gross Ii's) FINAL REPORT The offer of £1.5 MM made by Energy Partners, Ltmited ("EPL') for the remaining Bay Marchand properties has officially closed. The offer was on the high end of a previously expected range that used Jun-2000 pricing. There will be a SO-SO split on the sale proceeds. Enron will net approximately $1.5 Mid from the wind-up of the LLC. There are certain audit exce tion against EPL. Carry value has been hedged through "Raptor." Ice Drillime - IA (Term Loan with Warrants) EnSerCo * RESTRUCTrJRJNG COMPLETEI) - No major updates .rince our last report A reconciliation of the amounts owed indicates C$1,057,836 (US$719,616) outstanding on the original US$11 MM (gross) loan after the sale of assets placed in receivership. A negotiated settlement on the deficiency with thquaran:ors jid and l¶al action is now underway. Industrial lioldanes - EA (Tcrm Loan) EnSorCo (Nct Ii's) * On Dec-19-2000, announced that recently hired CEO, Michael Marsh was resigning and also stepping down as a member of the Board of Directors. Robert Cone, who had served as President and CEO of Industrial Holdings for its first 11 years, was appointed to succeed The Company recently commented that in an attempt to focus on its energy related businesses, they are actively seeking a purchaser for their Engineered Products Group, which manufactures cold- formed fasteners and specialty metal components for sale primarily to OEA4's in the home furnishings, automotive, and electrical components industries. Their goal is to sell the division and be left with a company with $45 MM of debt and year 2001 estimated EBITDA of $18 MM. The Company wide refinancing that had been contemplated to close in mid Jan-2 001. and that would have taketi Enron 's CONFIDENTIAL 7 a flA Ad EXHO43-0006 1 RISK ASSESSMENT & CONTROL PORTFOLIO WATCH LIST-UPDATE AS OF 1/26/2001 VALUES ARE GROSS / NET TO ENRON AS INDICATED debt piece oui~ has been delayed pending the sale of the Engineered Products Group. The note has been been in default and has been accruing interest at the 18%. default rate. Recourse against ~ status a/the note. *Asset has been hedged through 'Raptor." TROUBLED - (Continued) Iflhi~iLB~i~ui~i - EA (Cumulative Convertible Preferred & Common Stock) JEDI II (Net #'s) RESTRUCTURING COMPLETED. Talks continue between Inland. TCW (the largest equity holder in the Company) and the E~iron Restructuring Group regarding a potential buy-out of the Enron position. While no specifics have been agreed to, the parties have agreed to keep discussions open. Through the first nine months of 2000, the Company borrowed 34.6 MM under its Senior Bank facility and generated 313.3 MM of EBITDA which it used to continue us development of the Monument Butte Field (310.4 MAO, service interest on borrowings ($6.2 MM) and reduce outstanding accounts payable ($1.3 MM). The derivative business that EA has with Inland will Jwvve any potential re-pw~hare of our interest. While Jnland'.r economic situation has Improved. the investment remains illiquid with the Company's common stock thinly traded The EA exit strategy is monetization that seeks a reasonable buy-out, given the deeply subordinated position of the investment. [SI Electric Specialty - LA (Sr. Temi Loan, Preferred Stk. & Warrailis) JEDI II & Bal Sheet (Net Ii's) * On Dec-29-2000, IS! completed a re-capitalization and the ENA CLO note was sold to Frost Bank In return for making no future daims on the original equity position that £4 iJEDJ II held in the Company, the following consideration was receivcd: 1) cash in the amount of S3.350 MM; 2) an assignment by LS! of certain accounts receivable with a face amount of 3)75K, with an accompanying obligation by [SI to repurchase uncollectible accounts receivable at par (while best efforts will be used to liquidate the assigned accounts receivable and collect the distributions, there are no assurances for any recovery) - on a positive note as of Jan-19"', 3123K had been received; and 3) an assignment by the principals of IS! of the first SI 75K to be distributed to them in their capacity as Ll'~s of Allied Integrated Materials. LL1~ ('AIM") a limited partnership that was spun out of 1Sf in connection with the refinancing. AiM' is a 50.130 JV arrangement with Wholesale Electric, formed to manage inventory for large construction projects such as new power plants, using inventory management software developed by Wholesale Electric. 1Sf had previously entered into a contract with Enron a sliate, NEPCO to use AIM on an Austin Power Plant develo ment. (Transfer to EllA CLO Tnast #1) *Calry value has been hedged through "Raptor." Masada - EA (Piivatc Equity - Membership Interests) Balance Sheet (Net Ii's) * The Company has obtained a site permit for its Middletown, New Jerseim garbagc-so-ethanol plant, but, no financing is currently in place and no EPC contractor has been hired. The plant's projected ethanol-generating capacity is so limited that it will need revenue contributions from other sources. including tipping fees~ to cover its debt service. That means potential investors who are familiar with self-sustaining ethanol plants will have to become more comfortable with the vagaries of the municipal solid-waste disposal sector. The bond underwriting effort remains on hold and Merrill Lynch has nor been successful in assisting the Company in raising private equity Th~ right offirst refusal that is incorporated in the Mo.sada Agreement, makes It difficult for EA to monetize its CONFIDENTIAL 8 g~,nniM,t4 O~ EXHO43-00062 RISK ASSESSMENT & CONTROL PORTFOLIO WATCH LIST-UPDATE AS OF 1/26/2001 VALUES ARE GROSS / NET TO ENRON AS INDICATED position. The £4 Restructuring Group has approached the Company about selling back our interest, however, no formal terms have been agreed to. - TROUBLED - (Continued) DEYX Enerery (Oneen Sand Buonrees. he.) - BA (Equity - Common) JEDI (Gross #'s) RESTRUCTURING PARTIALLY COMPLETED. JEt)! I / £4 recently sold 2)2,500 shares of common stock at an average price of approximately 37.00 / share. The position has now been reduced to roughly 20,000 sharex Those shares remain held due to p visions in ihe JEDI I revolving credit agreement that mandate total paybacic if all assets are liquidated from the JEDI I por(folio. A clearer picture of the timing of sale of the remaining shares will be better defined within ~ continues. 4A~t has been hedged through "Rapor" Sacramento Basin Binloration - BA (50% W.I. & a 40% N.R I.) TED! II & Balance Sheet (Net #'s) No cash calls have been made and are unlikely until April-2001, based on the prospect area being located In a wet delta re ion that Is onl drillin accessible dutin the A II - October period * Asset has been hedged through Raptor." Basic Enerev (Sierra Well Service.) - BA (Sr. Sec. Notes w' Warrants & Preferred Stk.) JEDI II (net #'s) On Dec-21-2000, the EA CLO Trust #1 received approximately 524.410MM in payment in full of principal on the senior secured facility and received approximately S9OK of accrued and unpaid interest. On the senior subordinated note £4 CLO Trust #1 received approximately 518.705 M~J in principal repayment and received approximately S8SOK in accrued and unpaid interest payment. The .rhortfall on the senior subordinated note, (approximately 318,705,334 ofprincipal and 3850.567 in interest) will be recovered through exercise of the £4 CLO Trust "CREDIT SUPPORT put option feature. The cash flow participation certificate sur,'ives the re-capitalization. The certificate is for a ear term an MM in total. (Transfer to BA CLO Trust #1) * A~ has been hedged through "Raptor." S 53.611 MM WB Oil Company - BA (Private Equity) Balance Sheet (Net #'s) * Dissolution documents are bern drawn u . The £4 exit strate is sale a the interest. Asset has been hedged through "Raptor." CONFIDENTIAL 9 ~f~ufiO7flO31 93 EXHO43-00063 RISK ASSESSMENT & CONTROL PORTFOLIO WATCH LIST-UPDATE AS OF l/26t2001 VALUES ARE GROSS / NET TO ENRON AS INDICATED No future cash flows projected and FMV of the asset has been wiinen off. Residual recox~ry possible. Crown Encrstv - LA (Private Equity) Balance Sheet No major news since the last report. £4 Senior Management has marked the carry value of the asset to zero. l?nron holds 500000 shares of Crown corn'ertihte preferred and 3) ?~ 069 &harex of common. Crown common has recent) been ucted in the SO. 065 / share ran e. LOSS - (Continued) Kafus Industries. LtdJ Canfibre - LA (Debt & IPC's) Balance Sheet (Net il's) The Company continues to operate its Riverside, California location as a debtor in possession. *following its hung of Chapter 11 bankruptcy. The Riverside medium density fiberboard ("MDF') plant, which had operated at about 55% of its production capacity prior to its bankruptcy filing, has recently been operating In tue 20-25% range. Enron has some concern regarding the Kafus Lackawanna, NY. MDF plant, wherein a possible draw-down of a 54.5MM letter of credit ("LC"} could apply if the project is completed and attains certain production standards. Enron had a $25 MM cammibnent at the plant, of which $20.5 MM has been drawn. The LC expires in June and the Enron Restructuring ream currently believes it is unlikely that the required production standards will be met by that time. On Jan-18-2001, the Ontario Securities Commission issued a cease-trade order side) (OtI~er Kafus) (Transfer to EA CLO Trust #1) S 60.00 MM Nakornthai Shin MID (NSM) -Thailand - LA (Subordinated r'totes w/Waxrants) Balance Sheet_ * RESTRUCTURING PARTIAlLY COMPLETED. Creditors of NSM recently rejected the company's proposed rehabilitation plan and will meet again on Jan~2Yh to consider a revised proposal. Chase Manhattan group, holder of NSAJ debentures~ objected to the period in which the restructuring agreement would be signed Enron continues negotiations regarding obtaining releases from the two remaining lawsuits that were originally filed against the underwriting group that included ECT ~ one lawsuit related to the underwriting. Transcoastal Manne Services - LA (Subordinated Debt with Warrants) JEDI II * RESTRUCTURING PARTIALLY COMPLETED. Under the terms of the JiNA CU) 7rust "CR WIT SUPPORT" put option feature, ENA CLO holding recently received $20.0 MM in respect of principal and $3.482 MM, in respect of due and unpaid interest on the Transcoast'al Joan. The Company continues to liquidate related to its Chapter 7 bankruptcy filing. The ENA Commercial group ha.s been advised by outside legal counsel that "some" value for £VA and the CLO Trust should ow om the bank-u Ii idation. (Transfer to LA CLO Trait #1) S 20.00MM CONFIDENTIAL i0 ECvOO7003194 EXHO43-00064