Subject: Claims Trading Update - Celanese due diligence
From: [email-masked]
To: [email-masked]
Cc: [email-masked]
Date: Wed, 14 Mar 2001 11:54:00 -0800 (PST)

As I mentioned this morning, we're proceeding ahead with a back to back deal, 
but are taking care to fully vet all possible issues with local council. If 
we end up with any risk in the transactions, we'll come back to you. 
Otherwise we're plowing ahead and currently hope to sign docs before 
month-end. Brad is looking into tax and accounting issues right now.  I've 
forwarded the email from Lehman separately coverting there interest in claims 
trading. I'm meeting with them on Friday to get more details.  Per

---------------------- Forwarded by Per Sekse/NY/ECT on 03/14/2001 07:48 PM 
---------------------------

Brad Blesie@ENRON
03/14/2001 09:27 AM
To: Per Sekse/NY/ECT@ECT
cc: Janet Wood/EU/Enron@Enron 
Subject: Celanese due diligence

Per,

As we discussed on the phone last night, the results of our due diligence 
this week indicate that the Celanese deal can be executed as a back-to-back 
transaction.  A summary of our due diilgence findings is below.  I'll update 
you after our discussions with Celanese this afternoon.

Brad

KWELM Management Services (KMS), the purchaser, has agreed in our presence to 
a to back-to-back execution, and to attempt to achieve back-to-back funding.  
If the latter cannot be achieved, we would bear KMS credit risk for 30-60 
days; I am confident that we can get our credit people comfortable with the 
risk, and that is is a prudent exposure.   
To be clear, there will not actually be back-to-back purchase and sale 
agreements, but rather an assignment from Celanese to ENE, and a commutation 
/ extinguishment of the rights obtained from that assignment by ENE in 
exchange for consideration from KWELM.  Documentation risk between the two 
contracts will be eliminated by annexing the form of assignment to the 
commutation contract.

KMS's conditions precedent are all reasonable, and we will be requiring the 
same conditions precedent in the documentation that we obtain from 
Celanese.    
If Celanese does not agree these, we do not execute.

We do not assume any existing or potential insurance liabilities by means of 
the purchase from Celanese because we are only having assigned to us the 
right to receive payment on the claims, and not the underlying obligations or 
the liabiilty that was the basis of the claim.  
This conclusion is supported both by the assignment document language, and by 
English law, which allows the assignment of rights, but not obligations.