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To: StormRider who wrote (47400)	3/31/2003 2:27:11 PM
From: aniela	Respond to of 53068

Mirant CEO "optimistic" for debt deal March 31, 2003 1:58pm ET (Reuters) NEW ORLEANS, March 31 (Reuters) - The head of merchant power company Mirant said she was "optimistic" it would be able to restructure its debt, and that banks with heavy exposure to the distressed sector are showing flexibility. "I think the banks are very well aware that we're in the bottom of a commodity cycle that will turn around," Marce Fuller, president and chief executive officer told Reuters. Mirant, a spin-off from Southern Co. in 2001, has seen its stock price crumble since the collapse of Enron and has had its credit rating slashed as rating agencies soured on the unregulated energy businesses in the past 18 months amid trading scandals and fallout from the California crisis. Atlanta-based Mirant said in January it had about $1.4 billion in cash on its balance sheet but is burdened by about $8.6 billion in debt. An estimated $25-$30 billion in merchant energy sector debt is scheduled to come due during in the course of 2003, a hangover from the spending spree companies undertook in recent years to build new power plants. Fuller said the industry's debt payment schedules needed to be lengthened, and should move more in line with the life of its assets. Those assets, typically power plants, can last as long as 40 years. The company was in "preliminary" discussions with its lenders on restructuring its debt, Fuller said, but she declined to discuss specific proposals on the table. Sources have said the company was considering several options, including an exchange offer to swap shorter-term debt for longer-term debt at a higher interest rate. During a presentation to the Platts Global Power Markets Conference here, Fuller said regulators must encourage power companies to sign long-term supply contracts with customers, which would reduce the impact of the volatile forwards markets. "The real-time or spot market is important, but it should be a small part of the market," she said. State regulators "should not allow (merchant energy companies) to have large net-short positions. It's not in the interest of consumers," she added. The Federal Energy Regulatory Commission should also create a capacity market for power plant owners, which would pay companies to keep plants running during periods of low prices. That would help compensate for price caps that limit spikes that occur during periods of high usage and curtailed supply. Many of the plants operated by the merchant sector are peaking plants, which operate during heavy usage periods and often run only a few hundred hours per year when prices reach high levels. "I personally believe this is the biggest issue for FERC's standard market design that it doesn't have any certainty with," Fuller said. FERC is expected to issue rules, called the standard market design, this summer that would create a national electricity market with regional variations.