Message-ID: <32135738.1075852660118.JavaMail.evans@thyme> Date: Fri, 11 May 2001 18:14:00 -0700 (PDT) From: gene.humphrey@enron.com To: jeff.skilling@enron.com Subject: Datacentric Broadband Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: quoted-printable X-From: Gene Humphrey X-To: Jeff Skilling X-cc: X-bcc: X-Folder: \JSKILLIN (Non-Privileged)\Deleted Items X-Origin: Skilling-J X-FileName: JSKILLIN (Non-Privileged).pst =09 =09=09 Jeff, After your call I thought I should give you some background on Datacentric = Broadband (DCB).=20 1.=09The company was founded by Leslie Anderson a woman entrepreneur in Con= roe Texas. Leslie continues to be the largest non institutional shareholde= r and is Chairman of the Board. The president is Gary Remy, a Hispanic, wh= om you met recently at the YPO gathering.=20 2.=09DCB is in the broadband wireless access market focusing on smaller cit= ies in Texas. They have deployed in nine different locations and have a st= rategy to grow from a regional player to a national player. The market the= y are in requires no license fees and is one where being first to locate in= a city is critical to success. 3.=09We have invested $2 million in DCB to date and brought in Redstone Inv= estors who also invested $2 million. Redstone should continue to participat= e with us in any future investments we make in DCB. 4.=09We have talked to Kevin Garland to solicit interest from him, however= he made it clear that DCB was not in his target market and he was not inte= rested in the investment. 5.=09DCB has engaged Arthur Andersen to help raise additional funds for con= tinued growth. We along with AA have been talking to other potential inves= tors and have found a receptive yet cautious reception. 6.=09About two weeks ago we were approached by representatives of Union Pac= ific Railroad and Norfolk Southern Railroad with a proposal to invest up to= $75 million in DCB over the next five years beginning with an initial inve= stment of $15 million. U P asked if Enron would be willing to invest a sim= ilar amount alongside them to help DCB grow into a national broadband wirel= ess access provider to smaller cities. After this request I asked Ken Rice = if EBS would be interested in an investment in DCB either in conjunction wi= th U P or on a stand alone basis. My hope was that EBS would view DCB as a= strategic fit to their business model and would be interested in a much cl= oser relationship with DCB perhaps leading to a buyout. ( Although EBS and = DCB are in different businesses I know that the trading group of EBS has u= sed DCB to provide liquidity and last mile access for many of their trades.= ) Ken's response was that EBS was not interested in an investment in DCB a= nd he didn't see a strategic fit between the two companies. =20 7.=09We have also talked to Lou's group, the Xcelerator, and to LJM about i= nvestments in DCB and it appears that LJM is very interested in committing = funds however I don't think they will be ready in time to match U P's commi= tment. 8. =09At a subsequent meeting with U P we told them not to expect any addit= ional funds from Enron other that a possible $2 to $3 million from ourselve= s since that is all of the capacity that we have left for this investment. = They are very disappointed that Enron does not see the strategic potential= of this business the way they do, but nevertheless are still moving forwar= d in their efforts to invest in DCB in the $75 million range. We are curre= ntly in the due diligence process with U P and hope to wrap up a deal struc= ture by the end of May. =09 We have solicited the support of other Enron groups all along the way w= hile making our investment decision. I truly believe that DCB is in a spac= e that could be very integral to the success of EBS and had hoped that we c= ould work together more closely, however EBS does not see a strategic fit w= ith DCB. We will continue to develop relationships with other strategic an= d financial partners in order to enhance and grow the value of our investme= nt in DCB. =09I will be happy to talk to you further about DCB and our investment. We= will of course seek your approval for any additional investments that we m= ake in DCB. Please call me if you have any additional questions. Gene =09