Brenda,

I think all the correct actions are underway. Roy Lipsett will be in Chicago
on Friday morning to oversee the movement of the product to another
facility. I am not sure of the legal expertise within Enron on Illinois
Bankruptcy Law. If required the following Law firm has expertise in this
area, and did a good job of helping me in a similar situation in the past so
that I continued to have access to products. Please let me know if I can be
of assistance.

 Barack Ferrazzano Kirschbaum Perlman & Nagelberg
 Wendi E. Sloane
 333 West Wacker Drive
 Suite 2700
 Chicago, IL  60606
 (312) 984-3166

Thank You,
Dan Hamilton
713-516-4365 (cell)
713-345-7653



-----Original Message-----
From: Brenda.F.Herod@enron.com [mailto:Brenda.F.Herod@enron.com]
Sent: Wednesday, January 24, 2001 9:55 PM
To: Raymond.Bowen@enron.com; Jeffrey.McMahon@enron.com
Cc: Sally.Beck@enron.com; Kent.Castleman@enron.com;
Robert.Scheuer@enron.com; Michael.E.Moscoso@enron.com;
Romney.Ruder@enron.com; Delmar.Davis@enron.com;
Dan.Hamilton@SAPPI-NA.com
Subject: Lumber Reload Facility - Premier


Yesterday I was informed that there was a concern about the financial
stability of one of the reload facilities we currently use in the Chicago
area, Premier Reload Inc.  I met with Romney Ruder, Lumber trader, Roy
Lipsett, Logistics, and Mike Moscoso, Lumber business controller, this
morning to gather information and develop a plan.  This is summarized
below.

General Information:

Premier is a facility we have been using for a few months, located in
Franklin Park within Chicago.  We deliver to the facility via railcar, and
ship out via truck.  We currently have about 3.8 million board feet, valued
at about $1 million, in the facility.  During the holidays, we began
experiencing problems with our railcars not being unloaded timely.  We have
been pressing for information, and are hearing rumors that have raised
significant concerns.  Although Enron has not received written
notification, we learned today that Premier notified customers that they
would not be taking in any more products.  Additionally, we have heard that
the owner, Jeff Leske, is closing the facility, and will be going to work
for another reload facility in Chicago, Reserve Marine Terminal (RMT).  We
have been in negotiations with RMT for a long term arrangement, and much of
the information we have obtained is through our contact there.  In fact, we
have diverted recent shipments to RMT.  There is a rumor that Premier and
/or Leske may declare bankruptcy.  There is a rumor that Premier has been
incurring "switching" fees with the railroad (IHB) and has not been paying
them.  There is a rumor that Premier has not been paying employment taxes
and there are problems with the IRS.  All in all, there are many rumors but
very few known facts.

Plan:

   Met with Legal today to get advice.  They recommended moving the product
   ASAP, but until moved, we needed to confirm the product was marked as
   "Enron" product, and that it is stored separately from other product.
   They are drafting a contract to specify the arrangement with Premier.
   It will be ready tomorrow.
   Met with Credit.  They are not a included in the reload selection
   process, so the financial stability of the company has not been
   reviewed.  A D&B was pulled today, and it confirms a lien filed by the
   IRS on 6/22/00 for $86,128.  There is one suit pending by a trucking
   company in a nominal amount, filed 1/13/00.  The company is owned 100%
   by Leske, and was started in 1995.  Very little other information is
   available, and D&B did not assign a PAYDEX score.
   Mike Moscoso and Romney Ruder are going to the premises tomorrow to:
   gather financial information, intentions of the owner and the associated
   timeline, substantiate the inventory, and get the contract signed that
   Legal is drafting.  On Friday morning, Roy Lipsett will join them to
   meet with RMT, discuss movement of the product and complete the
   negotiations.
   Depending on the information gathered tomorrow, we will determine next
   steps.  If we start moving the product to RMT, the estimated timeline is
   about 13 to 14 days, moving 10 trucks per day (total truckloads = 135).
   Estimated cost for the movement is about is $25,000.  Another $25,000
   would be incurred for unload fees at RMT if we can't get them to wave
   them.  About half of the product has already been sold, and will be
   delivered over the next 5 weeks.  Romney is working with customers to
   determine if they can take the product earlier.

I will keep you informed as to the next events.  However, we need to take
immediate steps to put a policy and process in place for warehousing
facilities.  I have initiated weekly cross-functional staff meetings (Tax,
Legal, Credit, IT, Logistics, Fundemental Analysis, Accounting, etc.), and
our first meeting is scheduled for tomorrow.  I will have this on the
agenda, and will lead the effort to develop the process.

Please let me know if you have any questions.

Brenda
x35778
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