Mirant tries to get leverage over lenders in game of chicken...
Saw almost the same press reelase from Reliant RRI about 2 weeks before their re-fi on pretty good terms. Reliant needed some new money and longer terms, but was dealing only with banks.. MIR doesn't need new money, but has soem public bond issues in addtion to banks.
RRI price was in the $3.00 range at the time of the press release, now over $5.00 and climbing.
Reliant will report earnings tommorrow, if good, they could lift whole power sector.
By the way, one of the MIR directors is Carlos Ghosn.
Here's the article -
UPDATE - Mirant seeks $5.3 bln refinancing, stock slides
Wednesday May 7, 4:39 pm ET
By Nichola Groom
(Adds closing share price)
NEW YORK, May 7 (Reuters) - Power producer Mirant Corp. (NYSE:MIR - News) on Wednesday said it is in talks with banks and bondholders to refinance $5.3 billion of debt as it struggles to avert a bankruptcy filing.
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The Atlanta-based company, saddled with $8.6 billion in debt and "junk" credit ratings, said it is asking creditors to extend payment maturities. In exchange it will pledge nearly all of its assets as collateral.
The company's goal is to keep lenders at bay until power and energy markets rebound. However, if banks and creditors refuse new terms, Mirant in a regulatory filing last week said it could be forced to seek bankruptcy protection.
The company's stock, down more than 70 percent from year-ago levels, slid as much as 5.3 percent after Mirant executives on a conference call said they did not expect market conditions to improve until at least 2005.
"It's pretty clear from their guidance there won't be sizable profits this year," said Argus Research analyst Jeff Gildersleeve, who has a "hold" rating on the stock and owns some shares. "The company is still left with many issues to deal with."
Mirant, which was spun off from Southern Co. (NYSE:SO - News) in 2001, has been grappling with waning investor confidence since the collapse of Enron (Other OTC:ENRNQ.PK - News) and the energy trading market.
The company recently obtained waivers from its banks in the event of a default on certain terms of its bank loans. The waivers expire at the end of May but may be extended until mid-July, when it has $1.125 billion in debt due.
Mirant and its generation subsidiary's bank debt makes up about $3 billion of the total amount to be refinanced, while about $450 million comes from its turbine facility and gas prepay business, Chief Executive Marce Fuller said on a conference call with analysts and investors.
Corporate bonds make up the rest and are likely to be the company's biggest challenge, according to one analyst.
"It's harder to do the public portion -- they may have to make some concessions," said Dot Matthews, an analyst with fixed income research firm CreditSights.
Jittery bondholders, for example, may demand higher returns in exchange for longer maturities.
"The public debt of distressed companies is now in the hands of distressed players," Matthews said.
Mirant, which last week restated certain financial results going back to 2000, said it expects to provide quarterly results for 2002 and 2001 and for the first quarter 2003 "as soon as possible."
The company this year expects to generate $800 million in EBITDA, a measure of cash flow, of which nearly two-thirds will come from businesses in the Caribbean and the Philippines.
Mirant's North American businesses, which Fuller said it intends to refocus primarily on the Northeast, Mid-Atlantic, and Western markets, will account for the remaining portion.
Also as of April 25, Mirant has been forced to post $869 million of collateral for its energy trading and marketing business. Mirant expects collateral levels to fall by about $500 million at the end of this year as contracts expire and the company divests businesses.
Mirant forecast capital spending, including maintenance and expansion projects, of $325 million this year. It will fall to $175 million next year.
Mirant shares fell 16 cents, or 5.1 percent, to close at $3.01 on Wednesday. The stock was among the 25 most actively traded on the New York Stock Exchange (News - Websites). (Additional reporting by Joseph Giannone) |
