Every $440,000,000 above $11B is a buck for the common MIRKQ.
finance.messages.yahoo.com
UPDATE: Court Tells Mirant To Recalculate Ch 11 Value
DOW JONES NEWSWIRES
June 30, 2005 8:15 p.m.
(Adds first reactions, comment from shareholder rights group and background, beginning at seventh paragraph.)
WILMINGTON, Del. -- The court overseeing the Chapter 11 case of energy giant Mirant Corp. (MIRKQ) Thursday told the company to recalculate the value it assigned to itself in its Chapter 11 proposal.
Among other things, U.S. Bankruptcy Judge D. Michael Lynn instructed the company's financial advisors to add $450 million in one category of its report.
If the final valuation number comes in above $11 billion, Lynn said, he "will consider equity owners 'in the money' for all purposes."
That means, the judge wrote, that the Official Committee of Equity Security Holders that represents Mirant shareholders in the Chapter 11 case will be entitled to a seat at the Chapter 11 plan bargaining table with other creditors.
If the new valuation number comes in above $10.7 billion, but below $11 billion, the shareholder panel will be allowed to participate in the Chapter 11 plan confirmation process on the assumption they are entitled to some recovery, the judge said.
A valuation number under $10.7 billion means the court will limit the role of the committee that represents shareholders in the bankruptcy.
Lawyers huddled in an effort to sort through the judge's instructions, which require Mirant and its financial advisor to return to the drawing board to update many of the variables in the valuation analysis.
Edward Weisfelner, attorney for the official shareholders' panel, said he believed the ruling was a victory for shareholders in their effort to hold on to a stake in Mirant after it emerges from bankruptcy.
"Based on the various rules of thumb and a whole bunch of other changes that the judge has directed, we're very optimistic - albeit cautiously so - that we made the grade," Weisfelner said.
Although Lynn appeared to be pushing Mirant's shareholders and creditors to the bargaining table, Weisfelner said, there was no guarantee of peace.
Mirant's plan proposes to pay creditors with slices of equity in a reorganized company. If creditors have to share Mirant's equity with shareholders, Weisfelner said, "they could say, 'a pox on all your houses'" and demand notes and cash instead of equity.
That would send Mirant out of Chapter 11 burdened with additional debt, and depress the value of the shares in the reorganized company.
"I don't put it past the leadership of the committee (which represents bond and bank debt holders) to fight on" in the face of the judge's valuation determination, Weisfelner said.
Significantly, Lynn told Mirant to use new energy pricing, an alteration that shareholders had requested.
"We have been arguing all along that they used stale energy prices," said Jennifer Lowney, spokeswoman for the Mirant Shareholder Rights Group LLC.
Prices have gone up since the Atlanta company ran the numbers that it said made it impossible for shareholders to expect a recovery under the Chapter 11 plan.
Shareholders get nothing in bankruptcy unless creditors are paid in full. |
