Moody's Basis for Placing Enron Securities on "Review for

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In order to ensure that our communications with the investment community are consistent, Stephen Moore of Moody's and I have agreed to publicly state the following as it pertains to the Moody's rating action taken today:

Full Review To Occur - The action is intended to be the catalyst for a full review of our business operations to occur in the coming months. The company's appropriate rating will be determined during this time frame;

Primary Areas of Concern - Moody's will be focusing on the following items during the review:

Potential Future Equity Write downs:
Dhabol
California
Broadband Fiber Network
Wessex/Azurix

Slow Progress in Asset Sales - we have been discussing sales for the past 18 months with limited closings

Material Working Capital/Margin Expansion - has resulting in negative cash flow from operations

The Equity Adjustment - Moody's was unaware of the potential of an equity adjustment of this magnitude

Please let me know if you would like to discuss any of the points in detail.

Regards:
Tim DeSpain
x31770