Mirant/Offering -3: Follows Moody's Downgrade >MIR
20 Dec 10:51
Earlier Thursday, Mirant unveiled plans to offer 40 million common shares,
reduce its 2002 budget by 40%, or $1.5 billion, and sell assets with expected
proceeds of $1.6 billion in an attempt to strengthen its balance sheet and
improve its debt-rating status.
On WEdnesday, Moody's Investors Service downgraded the company's debt to
speculative-grade, or junk status.
Mirant said it expects total sources of liquidity of $4.8 billion through the
end of 2002, excluding expected proceeds from the offering of common equity.
Moody's downgrading of Mirant's credit rating is the latest in a growing list
of energy companies to suffer from tightening credit standards following Enron
Corp.'s (ENE) collapse, The Wall Street Journal reported Thursday.
The Journal article reported the downgrade sends a clear signal to the
market that Mirant's debt-reduction program, previewed to credit-rating
agencies in recent days and expected to be made public Dec. 20, was judged
inadequate by Moody's.
Mirant wasn't even on Moody's credit watch list. But Enron's demise has
convinced credit-rating agencies that power trading is a riskier enterprise
than they realized, according to the Journal.
Moody's expects Mirant's cash flow to be restricted over the coming months,
during which time Mirant will continue to fund its power plant construction
expenditures as well as cover ongoing interest payments and preferred
dividends. Moody's said the company will require credit support for its
marketing and trading operations.
Adding to Mirant's woes, Moody's said it will keep Mirant's credit rating
under review for further downgrade pending the company's actions to improve its
capitalization and arrangements to obtain financing.
Earlier this week, fellow energy company Calpine Corp. (CPN), which recently
lost its short-lived investment-grade status with Moody'sInvestors Service,
sold an offering of $1 billion in five-year senior unsecured convertibles via
Deutsche Banc Alex Brown.
Mirant's double-shot of earnings warnings comes after projecting 2002
earnings of $2.55 to $2.65 a diluted share in September, including 20 cents for
new accounting rules pertaining to goodwill and intangibles.
Mirant then reiterated that guidance at the end of October.
Mirant earned 98 cents a share, on revenue of $13.3 billion for its year
ended Dec. 31, 2000.
Shares of Mirant recently changed hands at $13.75, down 14.4% on volume of 6
million compared with average daily volume is 3.1 million.
Company Web site: mirant.com
-Thomas Gryta; Dow Jones Newswires; 201-938-5400
(END) DOW JONES NEWS 12-20-01
10:51 AM |
