Spreadsheet: rick_buy__32804__Final LR DD Report
Sheet: Summary

Counterparty Infrastructure Assessment
Due Diligence Summary |  |  |  |  |  |  | Review Performed By: [NAME], [NAME],  [NAME]
Counterparty: Project Southwood |  |  |  |  |  |  | Date of Site Visit: 8/30 - 8/31/01    Current Date: 9/25/01
Recommendation: |  |  |  |  |  |  |  |  | Overall Composite Rating
 | No improvements needed before proceeding |  |  |  |  |  |  |  |  | Poor/Low |  | Average |  | Excellent/High
 | Minor improvements needed before proceeding |  |  |  | x |  |  |  |  | 1 | 2 | 3 | 4 | 5
 | Significant improvements needed before proceeding |  |  |  |  |  |  |  |  |  |  | x
 | DO NOT PROCEED until major issues are resolved
Issues Noted:    1.  Contract language providing post closing adjustments for uncollectible receivables and validation of all inventory balances at closing.    2.  [NAME] solid waste disposal agreements, turpentine and tall oil agreements, liquor and soap swapping agreements.  Include in liquor swapping agreement the pre-purchase recommendations of the Industra Engineers and Consultants Due Diligence Report.     3.  [NAME] increase in property taxes related to loss of Industrial Revenue Bonds or inability to acquire additional bonds.      4.  Resolve status of [NAME] as a QF facility and finalize agreements with GP lumber mill.    5.  Obtain pulp beater evaluation tests by an independent laboratory for verification of pulp quality.    6.  Establish Accounting and Logistic infrastructure to transition GP corporate functions to Enron.    7.  Legal due diligence is not complete.  Preliminary issues relate to exclusive territorial representation, incomplete real estate survey and prior written consent for assuming equipment lease.
 |  |  |  |  |  |  |  |  |  | Poor/Low |  | Average |  | Excellent/High
Management and Staff |  |  |  |  |  |  |  |  | N/A | 1 | 2 | 3 | 4 | 5
 | Integrity based on background investigation |  |  |  |  |  |  |  | x
 | Management competence and experience:
 |  | CEO - Overall leadership and vision |  |  |  |  |  |  | x
 |  | Technical, engineering & operating |  |  |  |  |  |  |  |  |  |  | x
 |  | Financial/Accounting |  |  |  |  |  |  |  |  |  | x
 |  | Marketing |  |  |  |  |  |  |  |  |  | x
 |  | New business start-up experience |  |  |  |  |  |  | x
 | Management’s incentive to succeed |  |  |  |  |  |  |  |  |  |  |  | x
 | Employee staffing level/competence |  |  |  |  |  |  |  |  |  |  | x
 |  | Management/Staff composite rating |  |  |  |  |  |  |  |  |  |  |  |  | 3
Planning and Budgeting
 | Business/strategic plan |  |  |  |  |  |  |  |  | x
 | Capital expenditures/cash flow budget |  |  |  |  |  |  |  |  | x
 | Technical – Engineering and operating plans (including start-up) |  |  |  |  |  |  |  |  |  |  | x
 | Product marketing plan |  |  |  |  |  |  |  | x
 |  | Planning/Budgeting composite rating |  |  |  |  |  |  |  |  |  |  |  |  | 2
Financial Reporting
 | Accuracy of information |  |  |  |  |  |  |  |  |  |  | x
 | Timeliness |  |  |  |  |  |  |  |  |  |  | x
 | Level of automation |  |  |  |  |  |  |  |  |  |  | x
 | External audit opinion |  |  |  |  |  |  |  | x
 | Quality of external auditor |  |  |  |  |  |  |  |  |  |  | x
 |  | Financial Reporting composite rating |  |  |  |  |  |  |  |  |  |  |  |  | 3
Systems and Procedures
 | Quality and capacity of DP systems |  |  |  |  |  |  |  |  |  |  | x
 | Separation of duties/internal controls |  |  |  |  |  |  |  |  |  |  | x
 | Procedure documentation and records maintenance |  |  |  |  |  |  |  |  |  |  | x
 | Back-up and disaster recovery |  |  |  |  |  |  |  |  |  |  | x
 |  | Systems/Procedures Composite rating |  |  |  |  |  |  |  |  |  |  |  |  | 3
Working Capital and Liquidity
 | Adequacy of working capital prior to Enron funding |  |  |  |  |  |  |  |  |  |  | x
 | Adequacy of working capital after Enron funding |  |  |  |  |  |  |  |  |  |  | x
 | Ability to secure additional “rainy day” liquidity |  |  |  |  |  |  |  |  |  |  | x
 | Accounts receivable mgt  – credit review, collection procedures |  |  |  |  |  |  |  |  |  |  |  | x
 | Accounts payable mgt. and controls |  |  |  |  |  |  |  |  |  |  | x
 | Relationship with banks, vendors and customers |  |  |  |  |  |  |  |  |  |  | x
 |  | Working Capital/Liquidity composite rating |  |  |  |  |  |  |  |  |  |  |  |  | 3
Risk Management and Contingent Liabilities
 | Use of derivative instruments to hedge revenue, expenses, interest rates or FX |  |  |  |  |  |  |  | x
 | Adequacy of liability and property insurance coverage |  |  |  |  |  |  |  |  |  |  | x
 | Adequacy of key man life insurance |  |  |  |  |  |  |  | x
 | Environmental exposure |  |  |  |  |  |  |  |  |  |  | x
 | Litigation/liability exposure |  |  |  |  |  |  |  |  |  |  | x
 |  | Risk Management/Contingent Liabilities composite rating |  |  |  |  |  |  |  |  |  |  |  |  | 3