Subject: KCS and other Bankrupt Counterparties
From: [email-masked]
To: [email-masked]
Cc: [email-masked], [email-masked], [email-masked]
Date: Tue, 28 Mar 2000 05:01:00 -0800 (PST)

Rod:
Fred has requested that we send him a draft ISDA with a zero threshold for an 
affiliate of KCS Energy.  He also requested that we amend the setoff language 
in the KCS ISDA Master to include this affiliate and KCS Resources.  As you 
know, Lisa has been working with KCS' counsel to come up with a pleading that 
would be approved by the bankruptcy judge in the KCS Energy bankruptcy matter 
that would give us the protection that we need to do short term trades with 
KCS while they are in bankruptcy.  KCS' counsel has been very slow to respond 
and it wasn't until late last week that we received from feedback from them 
which Lisa will be reviewing.  We are perplexed by Fred's latest request and 
want to know what we should be doing in response to his request.  As you 
know, amending the setoff language to include affiliates is not the same as 
entering into a "master netting agreement" with KCS or their affiliates.

We have also received a request from Susan Wood in risk management who was 
interested in finding out more about trading with "bankrupt" counterparties.  
She said that she was working with Fred on this.  Again, is this something 
that credit intends to pursue and if so, under what circumstances?

Both of the above matters will involve a considerable amount of time and 
effort on legals part and before we spent alot of time on it, we wanted some 
indication from credit that these matters were worth pursuing.

Carol