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Mirant blames poor market for debt plan delay

By the OGJ Online Staff

HOUSTON, Nov. 2, 2001 — Independent power producer Mirant Corp. late Friday postponed its planned convertible debt offering, citing poor market conditions.

Earlier in the week, chief financial officer Raymond D. Hill said the company hoped to raise $1-$1.5 billion to help fund the Atlanta company’s aggressive construction and acquisition strategy. “Current capital market conditions do not support an offering at this time,” Hill said Friday in a statement after the market closed. “We will continue to evaluate market conditions and other capital-raising options.”

A Mirant spokesman said the company is investigating a “wide range of options” to keep the company’s “very aggressive growth strategy” on track. Mirant has set a target of owning or controlling 35,000 Mw of electric power generation in North America by 2005.

Hill previously said the company could raise money through sale of nonstrategic assets or more nonrecourse financing. Shares of Mirant stock closed down 4.7% to $23.30 in Friday trading on the New York Stock Exchange.

Earlier in the week, Mirant reported third quarter profits nearly doubled over the year earlier period and said 2002 earnings could exceed analysts expectations. The company has set a earnings growth target of 20%/year. Mirant CEO Marce Fuller in an Oct. 29 conference call with Wall Street analysts emphasized the need to be able to access the capital markets at reasonable rates.

“We need adequate access to capital over time to maintain that growth,” she said. She noted significant capital will be required to build gas and power facilities. If the capital isn’t available to build new power plants, Fuller warned, net shortages could occur in parts of the US

At the time, Fuller said the company hadn’t changed its ambitious power project development plan. She said executives were working closely with credit ratings agencies to insure money-raising plans wouldn’t result in degradation of the company’s investment grade credit rating.

Mirant was spun off earlier this year from Southern Co. to divide the unregulated businesses and regulated businesses. The goal was to create two companies, one for investors seeking growth and the other for investors seeking the stability of traditional utilities.