Mirant cash flow analysis
Here is my back of the envelope guess of Mirant cash flow for 2003 and 2004 as posted on the Yahoo MIR board, which has some pretty sharp posters in contrast to most Yahoo boards (but you have to put some people on ignore to get through it without wasting too much time.)
messages.yahoo.com
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xazp,
My main worry is not the cash flow, but rather the known and unknown accounting issues primarily and legal issues secondarily. Once these two are resolved or appear close to being resolved, the cash flow will become a non-issue, because the capital and credit markets will open up to Mirant.
My cash flow projections are of course wild guesstimates. Nobody can claim anything more accurate than this, given the uncertainties in the markets.
Operating cash flow for 2003 at $800 million, a bit less than 2002. For those not familiar with accounting, operating cash flow is cash before capex but after all other expenses such as interest payments etc. I conservatively assume that power prices continue to be poor in 2003, but I am taking into account that the trading operation will be shrunk, my guess by about half, and the bulk of the $280 million in cash profits extracted from closing half of the trading book will be realized in 2003 -- taking MF at her word here.
Operating cash flow for 2004 at $800 million. My guess here is as good as anybody's.
Capital expenditures for 2003 at $600 and for 2004 at $300 million. MF said they will cut $200 to $300 "or more" million from the current $840 million 2003 budget. I am assuming the 2004 capex will be close to maintenance levels.
I have $350 mil. of trading collateral reclaimed in 2003, under the assumption that the trading operations will be cut in half.
I have $500 mil. of additional asset sales. My guess is that the Chinese plant will bring around $170 mil. and another $330 million will come from selling NG assets and/or a plant or two.
2003
Cash at start of the year ............. 1,700
Operating cash flow ..................... 800
Asset sales ............................. 500
Reclaimed trading collateral ............ 350
Capital expenditures ................... (600)
Debt payments ........................ (1,600)
Cash at end of the year ............... 1,150
2004
Cash at start of the year ............. 1,150
Operating cash flow ..................... 800
Capital expenditures ................... (300)
Debt payments ........................ (2,650)
Cash at end of the year .............. (1,000)
So, Mirant will be short one billion by end of 2004, if I am right. It's not that hard to get a revolver and/or some capital financing to cover that and more, if there is nothing wrong with the accounting and legal problems are resolved. Unless we are heading into Great Depression II, in which case Mirant will be the least of our problems.
Kyros |
