ATLANTA, July 15, 2003 — Mirant announced Tuesday that, to facilitate its financial restructuring, it has filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
Additionally, certain of the company’s Canadian subsidiaries will file an application for creditor protection under the Companies Creditors’ Arrangement Act (CCAA) in Canada.
Mirant Corp., Mirant Americas Generation, LLC, and substantially all of the companies’ wholly-owned subsidiaries in the United States are included in the Chapter 11 filings. Excluded from the filings are the company’s operations in the Philippines and the Caribbean.
Concurrently, Mirant announced that it has been granted permission by the U.S. Bankruptcy Court to implement a Counterparty Assurance Program. This program supports the company’s ability to continue its asset optimization and risk management operations without interruption.
The Court order authorizes immediate relief to honor any and all obligations under existing and future trading and marketing contracts (known as “safe harbor” contracts) that support Mirant’s extensive asset base. This protection, however, applies only to counterparties that do not terminate trading and marketing contracts because of Mirant’s Chapter 11 filing.
Marce Fuller, president and chief executive officer of Mirant, said “Mirant’s worldwide operations are continuing without interruption and our vendors will be paid in full for all goods furnished and services provided after the filing date.”
Mirant said that as of July 11, Mirant and its subsidiaries had approximately $1.17 billion in total cash. Approximately $348 million is legally restricted and $89 million is held for operating, working capital or other purposes at subsidiaries. Additionally, the company has secured a commitment, subject to Court approval, for $500 million in debtor-in-possession (DIP) financing to provide additional working capital.
As part of the company’s restructuring effort, it has been in negotiations for several months with its bank lenders and bondholders to restructure a significant portion of its debt and refinance its existing credit facilities.
“Although we received broad support from the company’s creditors on our restructuring plan, failure to obtain the timely support of our key lenders created substantial uncertainty in the marketplace about the outcome of these discussions,” Fuller said. “This, in turn, put a strain on our liquidity and threatened the feasibility of our business plan. Add to this, uncertainty about the timing of the recovery in power prices and a slow economic recovery in the U.S., and it became clear that a comprehensive financial reorganization was the best approach for our stakeholders.”
Fuller continued, “While the decision to file for Chapter 11 was very difficult, we believe this process will allow us to emerge from Chapter 11 as a stronger, more viable and more competitive company positioned for long-term success.
“Over the past 18 months, Mirant has successfully reduced costs, divested non-core assets and implemented operational efficiencies. We intend to continue these efforts to improve the operations of the business in the weeks and months ahead.”
Since the plan of reorganization has not yet been developed, the treatment of existing creditor and stockholder interests in the company is uncertain at this time.
The Chapter 11 petitions were filed in the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division. The CCAA application will be administered in the Court of Queen’s Bench of Alberta Judicial District of Calgary.
Along with its Chapter 11 filing, Mirant is terminating its offers to exchange its 2.5 percent convertible debentures due 2021 and its 7.4 percent senior notes due 2004. Mirant Americas Generation, LLC is also terminating its offer to exchange its 7.625 percent senior notes due 2006. In accordance with the terms of the offerings, Mirant will instruct the exchange agent to return the notes, which were tendered for exchange, to their respective tendering bondholders.
Mirant has established a toll-free information line for vendors, customers and other interested parties. The number is (888) 870-7626. Information is also available at www.mirant.com .
Mirant (NYSE: MIR) is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or controls more than 22,000 megawatts of electric generating capacity globally. We operate an integrated asset management and energy marketing organization from our headquarters in Atlanta.