TDC Energy

FYI

---------------------- Forwarded by John J Lavorato/Corp/Enron on 12/20/2000
06:50 AM ---------------------------

From: Colleen Sullivan @ ECT 12/19/2000 11:27 AM

To: John J Lavorato/Corp/Enron@Enron
cc:

Subject: TDC Energy

I need to make you aware of a potential lawsuit we may be filing jointly with
Columbia Energy Services/Nisource against TDC Energy regarding a CES
transaction. I don't have every detail yet, but I wanted to fill you in
because this is moving quite quickly.

TDC Energy is a small privately owned producer that had several deals with
CES that ENA acquired in last year's transaction. Four of those transactions
were costless collars that are deep in the money for us. TDC is disputing
the existence of these collars because CES never sent confirmations for
them. We have taken the position with CES that if TDC defaults it is CES'
exposure, not ENA's. The total value of these collars as of today is
approximately $4,800,000. I have been working with Jeff Hodge on this issue
and we believe that, because of several different reasons, ENA should file
the lawsuit with TDC jointly. I'll be happy to meet with you if you're
interested and explain the reasons for this.

In addition, ENA has other deep in the money fixed priced transactions with
TDC worth an estimated $5,000,000 (unofficially from R. Diamond in Credit)
TDC has not disputed these transactions and so far all is fine with these;
however, we fear that TDC may be facing financial difficulties--if they go
bankrupt, we have exposure on the $5,000,000 of fixed price transactions,
plus potentially all or part of the other $4,800,000 of financial collars.
Jeff Hodge is meeting today with CES' outside attorneys to discuss where we
should file the lawsuit and I get the impression that it is already drafted
and will be filed very soon. Please let me know if you want to talk through
this.