Mirant

[basserdan]

*** Corruption, Greed and Propaganda ***

G'morning Joe,
I thought you might find this to be of interest.
Have a great day!


Today's WrapUp by Mike Hartman 11.19.2003

Corruption, Greed and Propaganda



The financial markets are a big mess these days. Greed and corruption seem to be the standard on Wall Street. Mutual fund managers and prominent Wall Street brokerage houses have been blatantly ripping-off the investing public, and it’s been going on for quite a long time. Alan Greenspan and Treasury Secretary John Snow are calling for new legislation to regulate mutual funds and to punish the “criminals” who use mutual funds to steal from investors. If these rip-off artists were exposed when the Dow was trading at 7,600, investors would have been SCREAMING, but with the Dow closer to 10,000 the investment community seems indifferent. The scandals have been non-stop since Enron was exposed as a bunch of crooks.

The violations by the Wall Street brokers and funds have been blatant illegal acts, not just grey-area ethics issues. Now we have a new one that just surfaced today with the CBS MarketWatch headline that reads, “Currency Traders Nabbed in FBI Sweep. Federal prosecutors are charging dozens of currency traders with bilking retail investors out of millions of dollars in the latest scandal to rock the financial sector.” Currency traders at UBS and JP Morgan were arrested along with employees from 16 other trading houses.

On face value it appears that the markets are out of control from a regulatory perspective. Every sector of the markets has been involved in scandal. Who can you trust with your money? I strongly suggest that you keep a very tight rein on your broker. This is ugly stuff. Praying openly in public schools was removed from our society in 1962 and now we have an entire generation that believes the law matters only when one gets caught. These people should go to jail, but the Wall Street way is a simple hand slap and out of court settlements.

Housing Starts Remain Vibrant: Bad for Bonds, Good for Stocks

Homebuilders broke ground on 1.96 million homes at an annual rate last month, the highest level in nearly 18 years. The number came as a surprise since the median forecast of economists polled by Bloomberg News called for a decline in housing starts to a 1.85 million annual rate. The good news in housing today put a damper on bond prices pushing the yield on the 30-year bond to 5.08% and on the 10-year note to 4.24%. The stock market had a better day today with the good news from the homebuilders. The Dow Industrials gained 66 points to close at 9,690, the NASDAQ added 17 to 1,899 and the S&P 500 grew by 8 points to close at 1,042.

The housing starts clearly indicate there is still some strong momentum in the economy since the Federal Reserve has been working to re-liquefy the markets via low interest rates and monetary aggregates. Most recently, interest rates are still at artificially low levels, but aggregates have begun to contract. Economists are now forecasting 4% GDP growth for the fourth quarter following the third quarter GDP growth of 7.2%. Just remember that the 7.2% rate of growth last quarter was temporarily inflated with spending on the war in Iraq and the tax rebates that were spent immediately into the economy. Take away the military spending along with the tax rebate checks, and the actual GDP growth comes in around 3%.

Do as I Do, Not as I Say

Yesterday Bloomberg News televised a debate between currency strategists, Steven Saywell of Citigroup, the world’s largest financial company and Monica Fan from RBC Capital Markets. During the interview the Citigroup spokesman said that he expects the U.S. dollar to strengthen from 117 euros to 111 euros. On the flip side, Monica Fan projected the dollar to weaken until it reaches 125 euros to the dollar. Citigroup’s Saywell was quoted as saying, “We still think the market is underestimating the potential for the U.S. economy to rebound in the fourth quarter and next year. The growth differential relative to Europe will grow.”

Just a few hours later Mr. Saywell had to be thoroughly embarrassed when he learned that his company did exactly the opposite. Later in the day the Dow Jones Newswire released the headlines, “Citibank Closes All Long Dollar Positions As Unit Plunges.” The article goes on to say, “The move, on the day the dollar plunged to record lows against the euro, is significant in that the dollar’s slide has forced one of the most aggressive dollar bulls in the market to temper its optimism toward the currency. In a research note, Citibank currency analysts cite three specific reasons: the U.S. decision to impose temporary quotas on certain textile imports from China, the dollar’s failure to respond to positive U.S. economic data and the breakdown of key technical levels such as dollar index support at 90.56.” (See chart above)

Citibank’s spokesman was on national TV saying the dollar was sure to strengthen based on an improving economy, but the players at the trading desks were selling dollars as fast as they could. With all the dollar selling, who is buying? You guessed it, Japan.

Here’s another example of do what I do, not what I say. Just weeks ago Japanese Prime Minister Koizumi said that Japan would refrain from currency intervention to allow the dollar to weaken in the foreign exchange market. Then we read in Bloomberg News today that, “The yen had its biggest drop in eight months after the Bank of Japan sold its currency in a bid to slow its advance and protect an export-led recovery. The dollar rose a day after it fell to a record low versus the euro.” The Bank of Japan has sold over 16 trillion yen this year to support the dollar and weaken the yen. President Bush helped Mr. Koizumi get re-elected; now it’s back to business as usual for the BOJ.

This week I have been wondering how the bond market has remained at such lofty levels, especially the longer maturities of 10-year and 30-year. It would not surprise me one bit to learn that the BOJ sold yen for dollars then used the dollars to buy long-dated treasuries. The bond market is not pricing in the inflation that will be upon us next year. Mostly what we hear is that interest rates are rising due to a growing economy, but I rather believe rates are moving higher due to excessive money creation which is true inflation resulting in a falling dollar. If this whole scenario plays out like it did back in the Seventies, we will see interest rates double and more probably, triple over the coming years.

Pressure Building

The falling value of U.S. dollars is building pressure under commodity prices. Gold is at the verge of taking out the $400 level, silver is working to break through the $5.40 level on its way to $6.00, then to $7.00, then to the moon, and oil is still hovering in the $33 per barrel area ready to move toward $40. As I say that commodity prices are heading higher, today was a big down day in most of the commodity pits. Meats were down 1 to 4%, metals were down 0.5 to 2%, energies down 1 to 3%, and the grains were clobbered for 1 to 4% on average with wheat down a whopping 6.25% today and soybeans down almost 4%. The falling dollar is the primary contributor to rising commodity prices, but there are now some new developments emerging.

Currency Wars Lead to Trade Wars

The falling dollar has led to turmoil in the currency market and has created a real wrestling match with foreign exchange rates. China’s Renmibi is pegged to the dollar causing the Chinese to be more competitive in world markets. Mexico has lost tons of manufacturing business to China as has Japan. Japan continues to intervene weakening the yen, and Europe has maintained better fiscal discipline than the U.S. giving strength to the euro. The currency wars are now leading into heated trade wars as countries run for protectionist policies.



Since President Bush imposed import tariffs on foreign steel, the Japan, Europe and China have protested. In fact, they appealed to the World Trade Organization who deemed the steel tariffs to be illegal. The foreigners have given the Bush administration until mid-December to eliminate the steel duty or they will impose tariffs on U.S. imports to their respective countries. The trade wars are putting even more pressure on the dollar. Some analysts suggested the dollar decline was accelerated after the Bush administration said it intends to limit imports of some textiles and apparel from China to stem a record flow of goods from that nation and protect mills in states such as North Carolina. Many believe President Bush needs to take these drastic measures with an election year just around the corner. The Chinese Commerce Ministry said on its website, “The Chinese government expresses deep regret and firmly opposes this decision.”

The geopolitical developments are sure to affect our financial markets. Just look at what happened to the price of wheat and soybeans today. China was getting ready to send an entourage here to the U.S. to negotiate soybean contracts and arrange for wheat processing equipment until they learned of the newly proposed import duties. They canceled their trip today. According to St. Louis Federal Reserve President William Poole, "Protectionist measures, even short term, impose costs on an economy that outweigh any benefits."

It's a lot to think about but the falling dollar has a huge ripple effect, both domestically and globally. Protect yourself as best you can for the continuing decline of the U.S. dollar.

Have a great evening!
Michael Hartman
Technical Analyst & Market Commentator

http://www.financialsense.com/Market/wrapup.htm

[Joe Stocks]

SL- Slow in inaccurate info does smem to be MIR's way. I'm starting to get discouraged with this one. I recently added back some that I had sold at higher prices butnot so sure it was wise.

On another point- tax selling. This one is a candiadte for huge tax loss selling here at the end of the year. One may want to sell here soon if they intend to buy back right after the first of the year. I think we could see a little boost after Jan 1 when tax selling is over.

[south louisiana]

Joe - Do you have any thoughts other than amazement that MIR despite its multiple consultants, can't seem to post accurate timely information. TIA

[Joe Stocks]

DJ Mirant Posts $83.9 Mln Net Loss For Sep

WASHINGTON (Dow Jones)--This information is from Mirant Corp.'s (MIRKQ) monthly operating report for September, filed Monday with the U.S. Bankruptcy Court in Fort Worth, Texas. Monthly operating reports must be submitted to the bankruptcy court by companies under Chapter 11 bankruptcy protection, such as Mirant. (In an item that moved at 11:03 a.m. EST, Mirant's net loss was incorrectly reported as a net profit. Also, a typographical error in the line for net income from discontinued operations made it unclear whether that amount was income or a loss.) CONSOLIDATED INCOME STATEMENT =---------------------------- September ------------ REVENUE Generation $ 307,105,435 Net trading revenue 34,037,918 Distribution 45,789,020 Other 4,048,899 --------- Net revenue 390,981,272 OPERATING EXPENSES Energy cost 208,760,752 Operations & maintenance 47,771,147 Depreciation & amortization 30,544,173 Selling, general, & administrative 42,081,907 Gain on sale of property & investments 23,907,988 Impairment loss 1,277,741 Restructuring costs (2,353,010) --------- Total operating expenses 351,990,698 Income before nonoperating income & expense 38,990,574 OTHER INCOME & EXPENSES Interest income 1,496,839 Interest expense (10,809,519) Equity in income of affiliates 2,654,878 Other (1,251,674) Reorganization items (152,705,781) Minority interest (4,866,476) Net income from discontinued operations 1,334,697 --------- Total other income/(expense) $(164,147,036) Provision for income tax 41,257,977 ---------- Net Profit (Loss) $ (83,898,485) ========== CONSOLIDATED BALANCE SHEET =-------------------------- Sept. 30 -------------- ASSETS Cash and cash equivalents $ 1,581,903,925 Accounts receivable (net) 2,025,583,738 Assets from risk mgmt activities 76,061,143 Inventories 280,979,298 Other 352,853,286 ----------- Total current assets 4,317,381,390 Property, plant & equipment 6,275,154,462 Less: accumulated Depreciation / depletion 696,400,249 Leasehold interests (net) 1,594,471,405 Construction work in progress 278,530,027 Investment in suspended construction 712,475,406 ----------- Total net property, plant & equipment 8,164,231,051 ------------- Investments 204,667,266 L/T accounts receivable (net) (74,822,976) Notes receivable (net) (2,913,255) Assets from risk mgmt activities 131,158,600 Goodwill (net) 607,972,068 Other intangibles (net) 515,413,386 Restricted cash, noncurrent 49,133,023 Other long-term assets (87,389) Miscellaneous deferred charges 174,534,057 ----------- Total noncurrent assets 1,605,054,780 ------------- Total Assets 14,086,667,221 POSTPETITION LIABILITIES Debt 1,429,191,495 Accounts payable 1,405,059,516 Liabilities from risk mgmt activities 207,311,651 Obligations under energy delivery commitments 604,737,081 Derivative hedging instruments S/T 17,836,696 Other 106,307,503 Miscellaneous deferred credits 518,337,470 ----------- Total postpetition liabilities 4,288,781,412 PREPETITION LIABILITIES Total prepetition liabilities 8,444,455,118 ------------- Total Liabilities 12,733,236,530 EQUITY Minority interest in subsidiaries 270,766,268 Mandatorily redeemable securities 345,000,000 Common stock 4,056,621 Additional paid-in capital 4,917,963,428 Retained earnings (4,128,779,683) Treasury stock, at cost (2,260,000) Accumulated other comprehensive income (53,315,943) ---------- Total Equity 1,353,430,691 ------------- Total Liabilities & Owners' Equity $ 14,086,667,221 =============== Figures in parentheses are losses. (END) Dow Jones Newswires

November 19, 2003 11:57 ET (16:57 GMT)

[billy7]

any opinion on mirants common stock being worth anything after bankruptsy?????????????????

[Joe Stocks]

Unitil and Mirant Resolve Power Contract Issues
HAMPTON, N.H., Nov 12, 2003 (BUSINESS WIRE) -- Unitil Corporation (AMEX: UTL) (www.unitil.com) today announced that its New Hampshire based utility subsidiaries, Unitil Energy Systems, Inc. (UES) and Unitil Power Corp. (UPC), have entered into a settlement with Mirant Americas Energy Marketing, L.P. (Mirant Americas), a subsidiary of Mirant (MIRKQ), with respect to the Portfolio Sale and Assignment and Transition and Default Service Supply Agreement among UES, UPC and Mirant Americas, in the Mirant bankruptcy case.

Under the terms of the settlement, Mirant Americas has agreed to assume and continue to fulfill its power purchase and sale obligations under the Agreement, to cure all pre-petition obligations, and to settle certain other disputes. Unitil has agreed to accelerate the payment of amounts it has held back from Mirant Americas.

"This agreement resolves a major source of uncertainty for our customers while insuring that they continue to receive the economic benefits of the deal, and allows both parties to continue doing business together under a contract beneficial to both sides," said Robert G. Schoenberger, Unitil's Chairman and Chief Executive Officer.

The Settlement is subject to approval by the U.S. Bankruptcy Court in Mirant's ongoing bankruptcy proceeding.

Unitil is a public utility holding company with subsidiaries providing electric service in New Hampshire and electric and gas service in Massachusetts and energy services throughout the Northeast. Its subsidiaries include Unitil Energy Systems, Inc., Fitchburg Gas and Electric Light Company, Unitil Power Corp., Unitil Realty Corp., Unitil Service Corp. and its unregulated business segment Unitil Resources, Inc. Usource L.L.C. is a subsidiary of Unitil Resources, Inc.

This press release contains forward-looking statements, which are subject to the inherent uncertainties in predicting future results and conditions. All statements, other than statements of historical fact, are forward-looking statements. Certain factors that could cause the actual results to differ materially from those projected in these forward-looking statements include, but are not limited to the following: variations in weather; changes in the regulatory environment; customers' preferences on energy sources; general economic conditions; increased competition; fluctuations in supply, demand, transmission capacity and prices for energy commodities; and other uncertainties, all of which are difficult to predict, and many of which are beyond the control of Unitil Corporation.

SOURCE: Unitil Corporation

Unitil Corporation
Mark H. Collin, 603-773-6612
[e-mail]

[Joe Stocks]

SL, Sorry I'm slow getting back to you. I was out all day away from my desk and just got in. I haven't seen the story yet. It looks like the "street" thought is was ok. Looks like just "ok". I'll check it out. Thanks for letting me know. I got a bunch of catching up to do on the news.

[south louisiana]

Joe - Any comment on the PEPCO settlement announced today?

[Joe Stocks]

DJ Mirant Corp Posts $39.3 Million Net Income For August

WASHINGTON (Dow Jones)--This information is from Mirant Corp.'s (MIRKQ) monthly operating report for August, filed Oct. 17 with the U.S. Bankruptcy Court in Fort Worth, Texas. Monthly operating reports must be submitted to the bankruptcy court by companies under Chapter 11 bankruptcy protection, such as Mirant. CONSOLIDATED INCOME STATEMENT =----------------------------- August ------------ REVENUE Generation $ 801,850,610 Net trading revenue 23,312,809 Distribution 41,955,652 Other 2,986,856 --------- Gross margin 870,105,927 OPERATING EXPENSES Energy cost 669,799,850 Operations & maintenance 47,440,397 Depreciation & amortization 30,238,760 Selling, general, & administrative 33,836,336 Gain on sale of property & investments (12,194,979) Impairment loss 61,741 Restructuring costs 195,476 ------- Total operating expenses 769,377,581 Income before nonoperating income & expense 100,728,346 OTHER INCOME & EXPENSES Interest income 1,024,348 Interest expense (11,953,665) Equity in income of affiliates 2,408,162 Other (1,013,211) Reorganization items (9,583,721) Minority interest (4,655,168) Net income from discontinued operations (897,022) ------- Total other income (24,670,277) Provision for income tax (36,788,994) ---------- Net Profit $ 39,269,075 ========== CONSOLIDATED BALANCE SHEET =------------------------- August 31 -------------- ASSETS Cash and cash equivalents $ 1,386,878,857 Accounts receivable (net) 2,491,238,466 Assets from risk mgmt activities 202,660,922 Derivative hedging instruments (127,339) Inventories 273,178,452 Other 314,284,474 ----------- Total current assets 4,668,113,832 Property, plant & equipment 6,592,079,557 Less: accumulated Depreciation / depletion 697,814,314 Leasehold interests (net) 1,604,656,493 Construction work in progress 286,894,753 Investment in suspended construction 703,950,413 ----------- Total net property, plant & equipment 8,489,766,902 ------------- Investments 201,884,396 L/T accounts receivable (net) 15,877,609 Notes receivable (net) 95,715,923 Assets from risk mgmt activities 219,421,307 Goodwill (net) 2,677,988,851 Other intangibles (net) 517,113,557 Derivative hedging instruments (3,535,633) Restricted cash, noncurrent 50,625,880 Other long-term assets (87,389) Miscellaneous deferred charges 692,554,186 ----------- Total noncurrent assets 4,467,558,687 ------------- Total Assets 17,625,439,421 LIABILITIES & EQUITY POSTPETITION LIABILITIES Debt 1,926,515,340 Accounts payable 1,423,677,207 Liabilities from risk mgmt activities 1,231,687,930 Obligations under energy delivery commitments 638,781,187 Derivative hedging instruments S/T 6,567,239 Other 55,918,853 Miscellaneous deferred credits 1,346,537,576 ------------- Total postpetition liabilities 6,629,685,332 Total prepetition liabilities 7,442,787,618 ------------- Total Liabilities 14,072,472,950 EQUITY Minority interest in subsidiaries 267,696,667 Mandatorily redeemable securities 345,000,000 Common stock 4,056,621 Additional paid-in capital 4,917,963,428 Retained earnings (1,927,330,567) Treasury stock, at cost (2,260,000) Accumulated other comprehensive income (52,159,678) ---------- Total Equity 3,552,966,471 ------------- Total Liabilities & Owners' Equity $ 17,625,439,421 ===============

[south louisiana]

Does it occur that the now infamous Quattrone e-mail stating: "Having been a key witness in a securities litigation case in south Texas I strongly advise you to follow these procedures" might just remind Judge Lynn of the utter disdain with which NY investment bankers view the Texas judiciary?

[south louisiana]

Mirant Chapter 11 Judge: Wants Pepco Dispute in His Court
Tuesday September 30, 7:32 pm ET


Dow Jones Newswires
NEW YORK -- The judge overseeing Mirant Corp. (NYSE:MIR - News)'s bankruptcy proceeding recommended Monday that he retain jurisdiction offer the company's effort to reject an electricity contract with a utility unit of Pepco Holdings Inc. (NYSE:POM - News) , according to court documents.

ADVERTISEMENT


Judge Dennis Michael Lynn of the U.S. Bankruptcy Court for the Northern District of Texas also said that the federal district court in the same Texas district should decide whether to continue blocking federal energy regulators from intervening in Mirant's efforts to shed the Pepco agreement.

Judge Lynn's recommendation to the U.S. District Court of the Northern District of Texas in Fort Worth came almost a month after Pepco and the Federal Energy Regulatory Commission asked the district court to take up the electricity contract dispute.

Judge Lynn, earlier this month effectively extended a temporary restraining order he had issued in late August that prevented Pepco and FERC from fighting Mirant's contract rejection request.

Pepco filed an appeal Monday with the district court on that so-called injunctive relief.

The district court must now decide whether to follow Judge Lynn's recommendation or make its own decision.

The Mirant-Pepco dispute centers on agreements though which Mirant reimburses Pepco, at above-market rates, for electricity the utility purchases from third parties.

Mirant, which filed for Chapter 11 protection in July, has said the contracts are causing it to lose money and hurting its efforts to restructure.

Bankruptcy courts typically allow companies a great deal of latitude in rejecting contracts that hinder their restructuring efforts. FERC and others have argued, however, that the Federal Power Act gives the commission authority to rule on matters involving wholesale power contracts. The law isn't clear on who has ultimate authority.

-By Kristen McNamara, Dow Jones Newswires; 201-938-2061; [e-mail]

[Joe Stocks]

DJ Mirant Lays Off More Employees; Further Cuts To Come

(This article was originally published Monday)

By Mark Golden Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Mirant Corp. (MIRKQ) is in the midst of laying off more employees, with numerous traders let go Friday and more layoffs to come, the company said.

The bankrupt independent power producer declined to say how many marketing and trade personnel were dismissed, but one former employee said that most all forward electricity traders were let go. Since declaring bankruptcy in July, Mirant hasn't been able to execute many forward trades, though it has been active in the spot market.

"We're looking at workforce reduction throughout our entire business, not just one place, like trading and marketing," said Mirant spokesman James Peters.

The company employees about 1,000 staff at its headquarters near Atlanta and another 6,000 at power plants and other offices worldwide. Staff reduction won't affect Mirant's ability to operate its plants and other energy facilities, Peters said.

In a bankruptcy filing earlier this month, Mirant sought permission to offer severance packages to as many as 1,000 union employees and 100 highly compensated employees making at least $200,000 annually. Layoffs in those two groups of employees could take place only if the judge approves the motion, which is scheduled for a decision Oct. 8. The 1,000 and 100 figures are the maximum number of employees that would be laid off in those two groups, Peters said.

But many Mirant employee aren't members of those two groups, like the marketing and trade department staff that was let go last week. The company cut 700 jobs last year in its effort to cut costs and avoid bankruptcy.

-By Mark Golden, Dow Jones Newswires;

[Joe Stocks]

DJ Mirant, FERC Reach $332,411 Deal In Mkt Manipulation Case

LOS ANGELES (Dow Jones)--Mirant Corp. (MIR) has reached a $332,411 settlement with staff of the Federal Energy Regulatory Commission over charges the company manipulated U.S. power markets during the Western energy crisis of 2000-2001, Mirant said in a statement Tuesday.

"The facts of our settlement support what we have said all along - that we don't believe we've done anything wrong," said Doug Miller, Mirant senior vice president and general counsel, in a statement. "We firmly believe that we have not violated any tariff provisions, rules or regulations."

The settlement relates to a June FERC order that required 43 energy firms to present evidence they didn't violate California's market rules for electricity trading during that state's energy crisis. Those firms unable to prove their innocence could lose their ability to trade at market prices and/or be made to disgorge profits.

FERC's board and a bankruptcy court must approve the Mirant settlement for it to become effective. Mirant filed for Chapter 11 bankruptcy protection on July 14.

Mirant agreed to settle to avoid further legal costs, Miller said.

"We have already incurred litigation costs that far exceed the amount of the settlement. We settled to avoid incurring additional litigation costs that would also have exceeded the settlement," Miller said.

About 10 other firms have settlements pending at FERC related to the June order, and FERC staff have filed motions to dismiss charges for 16 other firms.

(MORE) Dow Jones Newswires

September 30, 2003 17:05 ET (21:05 GMT)

[south louisiana]

Mirant exempt from contracts, judge rules
By Dan Piller
Star-Telegram Staff Writer

FORT WORTH - U.S. Bankruptcy Judge Michael Lynn of Fort Worth denied federal regulators the power to force bankrupt Mirant Corp. to honor discounted contracts to deliver wholesale electricity to Washington, D.C., and its suburbs.

[south louisiana]

Intro to article in today's LA Times with interesting implications for MIR long term:

WASHINGTON — For nearly 70 years, a Depression-era law has sharply limited big, multi-state utility companies from expanding or diversifying. But chances that the arcane law will remain on the books may have vanished with the lights that went out Aug. 14, the day of the Northeast blackout.

The Bush administration and industry officials contend that repealing the law would spur investment in power plants and modernize the electric grid. The law's repeal is expected to be a key part of the first overhaul of energy policy in a decade.

[south louisiana]

Joe - Have you seen this:

SANTA MONICA, Calif./EWORLDWIRE/Sep. 11, 2003 --- Dallas, TX -- It was announced today that a group of Mirant Corporation (Pink Sheets MIRKQ) shareholders will gather by conference call this week with Saybrook Capital LLC, an investment banking firm who has been closely following Mirant for two years, including meetings with senior management. The discussion will focus on the United States Trustee's decision to form an Official Equity Committee, with Saybrook presenting key issues pertaining to the bankruptcy, as well as an analysis of the Company's legal and financial challenges.

All interested equity holders of Mirant Corporation are invited to take part in the conference call which will take place on Friday, September 12, at 3:00PM EST. Holders who wish to participate may contact Saybrook Capital's Nitasha Bhambree at 310.656.4296 or email [e-mail] to obtain call-in information.

About Saybrook:
Saybrook is an investment bank specializing in capital management and financial advisory services. To our advisory practice, Saybrook brings an atypical blend of knowledge and experience in areas that include corporate restructurings, public and private real estate finance and municipal finance. Saybrook has led more than forty high profile reorganization assignments, including five of the largest bankruptcies in history. These include United Airlines, Pacific Gas & Electric, Adelphia, Kmart, and Orange County.

Saybrook Capital LLC was founded in 1990 and is headquartered in Santa Monica, California. For more information on Saybrook Capital, please visit our website, www.Saybrook.net.

[south louisiana]

Joe - following is excerpt from article and a link:

The Omnibus Budget Reconciliation Act of 1993 (OBRA '93; RRA '93) repealed the provision under IRC Sec. 108 (e) that allowed a debtor not to recognize any gain, nor to reduce tax attributes, when stock was exchanged for debt in a Title 11 case, or to the extent that the debtor was insolvent.

With the repeal of this stock-for-debt exception, financially troubled companies, their creditors, and their consultants have lost a valuable restructuring tool. Now, troubled companies must recognize as income the amount by which the debt forgiven exceeds the fair market value of the stock issued. The only exceptions to this are Title 11 bankruptcy cases filed prior to January 1, 1994.

http://www.nysscpa.org/cpajournal/1995/AUG95/FT0995.htm

[Joe Stocks]

SL- If the poster is correct, it would be significant. Are you familiar with the tax law change? I'm not. I missed it if there was other discussion on this somewhere. If you know of a link that discusses this, and the benefits to MIR, I would appreciate you passing it on.

BTW, I thought the goodwill write down comments were interesting and somewhat concerning. RRI is now selling for about 30% of book - about 50% of tangible book. If MIR's new book value is $1.5 bil, then we could look at post BK share prices between $1.25 and $1.90 based on that comparison and how much of MIR's book value is in tangibles.

Not a bad return, but it sure makes the risk/ reward ratio not as attractive. For me to invest in a BK stock, I want my potential rewards to be higher for the risk I'm taking.

Just a thought.

[south louisiana]

From today's Deal article on Wcom -

A group of dissenting MCI bondholders has also objected to the plan, which gives MCI's subordinated noteholders nothing for their $750 million in claims. They state that the MCI debts should be repaid before holding company creditors receive anything, and argue that there is enough value to do so.

Seems the absolute priority rule is far from absolute.

[south louisiana]

Joe - it would seem that the tax law change is highly significant. Your opinion on this?

[Joe Stocks]

My take FWIW (from Yahoo)
by: superanalyst2000 09/08/03 11:32 am
Msg: 279391 of 279421

Some comments:

- DIP financing was very important. Why? because it is critical for Mirant to continue trading as much as possible. Safe-harbor provisions entitle counterparties to terminate trading contracts half way after bk; the problem is that termination value is determined by the counterparty and it is usually much lower than value on the books. The DIP will allow the company to post bk letters of credit to support trading and lower termination costs. On the plus side Mirant disclosed that none of its contracts is subject to "low discovery rules", meaning the haircuts from termination will be somewhat limited.

- No need to keep guessing goodwill charges, long term asset valuations, or trading termination costs. The 10Q last week was squeaky clear: expect losses and write-offs of around 1.5 billion in the near future. All told the company has/will writte off some 5 billion since jan 02. As bad as it sounds, there will still be 1.5 billion left in shareholder equity (no wonder the shareholders committee is not facing any real challenges).

- Again, closing the loophole relating to sec. 108 was the best news for shareholders since this whole thing blew up. Any debt for equity will have to be recorded as income (with its nasty tax consequences). Selling assets at/or above book value is by far the cheapest way to deleverage this company.

- There is quite a bit of pressure for PEPCO to buy its generation assets back from Mirant (read commentary on Wash Post). PEPCO is in a really bad spot right now, hopefully Mirant can capitalize on it.

- Talk of strenghtening Asian currencies (check out Snow's trip to China last week) just keep making the Philippines assets more valuable. Another opportunity to deleverage the company.

I am still not sure how the share price will react to the upcoming charges: 1.5 billion sounds pretty bad, but the certainty of positive equity is the best possible news... we will see

[south louisiana]

Per you request http://messages.yahoo.com/bbs?action=topics&board=1601151261&sid=1601151261&type=r

[aktony]

sl, thanks for your response. I would appreciate a link to the Yahoo board; needless it say, it is well hidden. TIA.

[south louisiana]

The essential reason there is little posting on this board - as opposed to Yahoo - is there is little to report on acccount of scant information. The FERC matters now seem of less importance. There is the PEPCO issue on which the parties are both posturing in the bk and before FERC. My gut says this will be settled favorably to MIR almost by definition. The real issue is the long-term viability of IPP's. If there is a future - MIR can come out well situated. Perhaps even with s/h equity, which would recoup some of the unconsciouable losses s/h's have suffered in the recent debacle. All fwiw.

[aktony]

Any reason for lack of messages on this board? MIRKQ has taken a
20% dip in the last several days. Is there any news other than the pending FERC trading case? Also, would appreciate a link to the elusive Yahoo board. TIA.

[south louisiana]

Re: Pepco, Following quote from Wash. Post today:

Courts have generally allowed bankrupt companies wide latitude to cancel contracts they consider not to be in their interest, said Roger Stark, who heads the energy group at law firm Coudert Brothers LLP and is not involved in the Mirant case.

[south louisiana]

With MIR, if it weren't for bad luck, I wouldn't have any luck at all. I chose this AM to sell common for a tax loss and buy preferred. How am I doing?

[Joe Stocks]

SL- Of course the better return would be on the common if the shareholders come out with anything in the BK. On the other hand the preferred appears to be somewhat secured by what I read. Currently I'm with the common. The risk/reward looks better for me. However, I'm still treating it as a speculative play and not putting more into than what I can lose. Fortunately HLSH has allowed me to be able to lose (risk) a little bit more here. <VBG>

[south louisiana]

Joe - Rather expensive costs for dip financing that is not needed. What are your thoughts on common vs. preferred?

Mirant has already paid GE Capital a $5 million commitment fee and $500,000 expense deposit. But because negotiations on a final DIP financing agreement have run through two commitment letter extensions, GE Capital's costs exceeded the expense deposit, requiring additional funding from Mirant.

[Joe Stocks]

Re: What is the reason?
by: photovue From YAHOO board
Long-Term Sentiment: Hold 08/21/03 11:06 am
Msg: 273919 of 273991

I came out with a handsome return with KCS energy after they emerged from Ch. 11 last year. The stock traded as low as 50 cents several times. It is trading near $7.00 today. The commons didn't lose anything and the bondholders came out while.

As on this board, there were many naysayers who said people like me were crazy, you'll lose everything, blah-blah-blah, but you have to watch three things:

1) The spirit of the parties (judge, creditors and the company). If with scant news, you can get a good feel for this.

2) Market conditions for the company in which the industry involved,

3) The assets of the company, and potential to restructure and satisfy its debt under.

I've invested in MIR because it appers to be even a better scenario than KCS. It's not perfect, but I believe, a good risk/return proposition.

Might help to go back and read the KCS message boards at http://messages.yahoo.com/?action=q&board=KCS.

Good luck to all and do your own DD!

[Joe Stocks]

SL- Thanks for posting the Yahoo find. What would we do without them. LOL! Some real Mirant die-hards over there. Please feel free post more of the "good stuff" as you see it and i will do the same.

[south louisiana]

Joe - also from Yahoo board:

Highly interesting excerpt from
article in yesterday's Manila Bulletin regarding proposed exceptions to capital requirement:

He said the PSE will have to amend its listing rules to provide an exception for large capital issues under its minimum public float rule if the bourse decides to accommodate Shell and Caltex.

The move will also benefit power firm Mirant Philippines which also wants to go public. Mirant has an authorized capital stock of P13 billion of which P12 billion is already paid up and outstanding.


The problem with Mirant lies with its parent company which has filed for bankruptcy in the United States. While Mirant Philippines is an entirely different firm, Leung said its parent's creditors will consider the local unit as an asset that could be used to pay the parent's debts.


But he expressed optimism that even the creditors will not stand in the way of the local unit's IPO as this will increase the subsidiary's value and thus benefit the parent company and its shareholders.

[Joe Stocks]

from the MIR yahoo board
Equity Committee (part 1)
by: michaelsammons
Long-Term Sentiment: Strong Buy 08/15/03 11:49 am
Msg: 272287 of 272414

First, I do not really follow message boards so please do not be offended if I do not respond to questions. I just wanted to provide a short summary of what is going on. (In the future I will leave this thankless burden to hammr6 - sorry hammr6.)
(1) An equity committee will be appointed in the near future by the US Trustee. I have no time table but going behind street names to find the 100 largest shareholders is time consuming. The SEC has suggested in such cases that the equity committee should have a mix of institutional and individual shareholders willing to serve - so we individual shareholders will be represented in the final committee.
(2) We have the support of probably the most experienced law firm and financial advisor available in this country, both already very familiar with MIR and all the participants, and with numerous successful efforts on behalf of shareholders in Chapter 11 proceedings.
(3) I have no idea of Mirant's plans - all my (numerous) inquiries have been met by "not talking, call our lawyers." Lets just say that nothing I have heard from management over the past 2 years gives me much confidence in them ... but they are immensely talented ... after all it is no small feat to drive a new $15 billion power company into bankruptcy in only 3 1/2 years ... (it would have taken most of us 5-6 years to do it) ...
(4) Equity Goals (as I see them):
(a) Force a major asset sale. One thing, and one thing only, will guarantee MIR stock recovers: a major asset sale at book+. I believe the Shareholders Committee and Creditors Committee will join to force MIR to sell either the Philippines (weak dollar and strong asian market both favorable) or PEPCO (high NG prices extremely favorable to PEPCO evaluation). Either sale could net around $2+ billion - more than enough to guarantee that the POR retains the existing equity structure. (It will involve a contingent tender by the buyer for some discounted MIR bank debt and pre-2006 unsecured bonds, although this procedure will require court approval.)
So far, as far as I can tell, MIR management is still opposed to any such plan. Without such a sale MIR will probably be a $20 stock in 5 years ... but with the creditors as the new stock owners (our current shares cancelled). With such a sale MIR would be a $5 stock in 2 years, but we would still be the owners of MIR.
Whether MIR management is dedicated to preserving the "MIR empire" or to current shareholders is a huge question mark ...
(b) Inform all corporate clients of Citicorp, as well as their MIR bank group, as to the real reasons they irresponsibly decided to bankrupt MIR ... several conflict of interest issues are involved. Citicorp should be pressured until the moron at Citicorp responsible for causing the MIR bank group to lose $1.5 billion in the value of their outstanding bank paper overnight is put in a suitable institution for the criminally inept ...
(c) Organize sufficient shareholder votes to swiftly change management if it becomes apparent that current management feels no alligance to current shareholders. (The bk court has the power to order a shareholders meeting to vote at any time.)
(d) Prepare a plan of reorganization (after a major asset) which retains the exact same equity ownership (no warrants should be necessary).
(e) Qualify MIRKQ for OTC trading ASAP.
from the MIR yahoo board
Equity Committee (part 1)
by: michaelsammons
Long-Term Sentiment: Strong Buy 08/15/03 11:49 am
Msg: 272287 of 272414

First, I do not really follow message boards so please do not be offended if I do not respond to questions. I just wanted to provide a short summary of what is going on. (In the future I will leave this thankless burden to hammr6 - sorry hammr6.)
(1) An equity committee will be appointed in the near future by the US Trustee. I have no time table but going behind street names to find the 100 largest shareholders is time consuming. The SEC has suggested in such cases that the equity committee should have a mix of institutional and individual shareholders willing to serve - so we individual shareholders will be represented in the final committee.
(2) We have the support of probably the most experienced law firm and financial advisor available in this country, both already very familiar with MIR and all the participants, and with numerous successful efforts on behalf of shareholders in Chapter 11 proceedings.
(3) I have no idea of Mirant's plans - all my (numerous) inquiries have been met by "not talking, call our lawyers." Lets just say that nothing I have heard from management over the past 2 years gives me much confidence in them ... but they are immensely talented ... after all it is no small feat to drive a new $15 billion power company into bankruptcy in only 3 1/2 years ... (it would have taken most of us 5-6 years to do it) ...
(4) Equity Goals (as I see them):
(a) Force a major asset sale. One thing, and one thing only, will guarantee MIR stock recovers: a major asset sale at book+. I believe the Shareholders Committee and Creditors Committee will join to force MIR to sell either the Philippines (weak dollar and strong asian market both favorable) or PEPCO (high NG prices extremely favorable to PEPCO evaluation). Either sale could net around $2+ billion - more than enough to guarantee that the POR retains the existing equity structure. (It will involve a contingent tender by the buyer for some discounted MIR bank debt and pre-2006 unsecured bonds, although this procedure will require court approval.)
So far, as far as I can tell, MIR management is still opposed to any such plan. Without such a sale MIR will probably be a $20 stock in 5 years ... but with the creditors as the new stock owners (our current shares cancelled). With such a sale MIR would be a $5 stock in 2 years, but we would still be the owners of MIR.
Whether MIR management is dedicated to preserving the "MIR empire" or to current shareholders is a huge question mark ...
(b) Inform all corporate clients of Citicorp, as well as their MIR bank group, as to the real reasons they irresponsibly decided to bankrupt MIR ... several conflict of interest issues are involved. Citicorp should be pressured until the moron at Citicorp responsible for causing the MIR bank group to lose $1.5 billion in the value of their outstanding bank paper overnight is put in a suitable institution for the criminally inept ...
(c) Organize sufficient shareholder votes to swiftly change management if it becomes apparent that current management feels no alligance to current shareholders. (The bk court has the power to order a shareholders meeting to vote at any time.)
(d) Prepare a plan of reorganization (after a major asset) which retains the exact same equity ownership (no warrants should be necessary).
(e) Qualify MIRKQ for OTC trading ASAP.

from the MIR yahoo board
Equity Committee (part 1)
by: michaelsammons
Long-Term Sentiment: Strong Buy 08/15/03 11:49 am
Msg: 272287 of 272414

First, I do not really follow message boards so please do not be offended if I do not respond to questions. I just wanted to provide a short summary of what is going on. (In the future I will leave this thankless burden to hammr6 - sorry hammr6.)
(1) An equity committee will be appointed in the near future by the US Trustee. I have no time table but going behind street names to find the 100 largest shareholders is time consuming. The SEC has suggested in such cases that the equity committee should have a mix of institutional and individual shareholders willing to serve - so we individual shareholders will be represented in the final committee.
(2) We have the support of probably the most experienced law firm and financial advisor available in this country, both already very familiar with MIR and all the participants, and with numerous successful efforts on behalf of shareholders in Chapter 11 proceedings.
(3) I have no idea of Mirant's plans - all my (numerous) inquiries have been met by "not talking, call our lawyers." Lets just say that nothing I have heard from management over the past 2 years gives me much confidence in them ... but they are immensely talented ... after all it is no small feat to drive a new $15 billion power company into bankruptcy in only 3 1/2 years ... (it would have taken most of us 5-6 years to do it) ...
(4) Equity Goals (as I see them):
(a) Force a major asset sale. One thing, and one thing only, will guarantee MIR stock recovers: a major asset sale at book+. I believe the Shareholders Committee and Creditors Committee will join to force MIR to sell either the Philippines (weak dollar and strong asian market both favorable) or PEPCO (high NG prices extremely favorable to PEPCO evaluation). Either sale could net around $2+ billion - more than enough to guarantee that the POR retains the existing equity structure. (It will involve a contingent tender by the buyer for some discounted MIR bank debt and pre-2006 unsecured bonds, although this procedure will require court approval.)
So far, as far as I can tell, MIR management is still opposed to any such plan. Without such a sale MIR will probably be a $20 stock in 5 years ... but with the creditors as the new stock owners (our current shares cancelled). With such a sale MIR would be a $5 stock in 2 years, but we would still be the owners of MIR.
Whether MIR management is dedicated to preserving the "MIR empire" or to current shareholders is a huge question mark ...
(b) Inform all corporate clients of Citicorp, as well as their MIR bank group, as to the real reasons they irresponsibly decided to bankrupt MIR ... several conflict of interest issues are involved. Citicorp should be pressured until the moron at Citicorp responsible for causing the MIR bank group to lose $1.5 billion in the value of their outstanding bank paper overnight is put in a suitable institution for the criminally inept ...
(c) Organize sufficient shareholder votes to swiftly change management if it becomes apparent that current management feels no alligance to current shareholders. (The bk court has the power to order a shareholders meeting to vote at any time.)
(d) Prepare a plan of reorganization (after a major asset) which retains the exact same equity ownership (no warrants should be necessary).
(e) Qualify MIRKQ for OTC trading ASAP.


(5) This bankruptcy WILL last at least 2 years, and probably 3 years. Since we are there, for better or worse, we might as well take FULL advantage. In particular all legal suits and other legal issues will be finally resolved by the POR. Any remaining short term debt (and any damages for cancelling any contracts/leases) will be placed on a 5 year payout schedule.
CONCLUSION: Barring a collapse in power prices over the next 3 years I cannot imagine any scenario in which current shares are wiped out.
Shareholder Committee nuisance power alone virtually guarantees a small residual equity value for current shareholders, probably in the $1/share range, even in the worst case scenario.
"If" we achieve a major asset sale MIRKQ will immediately trade in the $3 range, gradually trending up to $6-7 by the POR in 3 years.
Whether I am ultimately on the Shareholders Committee or not, I will sleep MUCH better knowing that we have a dedicated and very experienced committee, attorneys, and financial advisor working SOLELY in our interests.
Again, please do not be offended if I do not respond to questions - there are several knowledgable posters who are more than willing and just as capable (if not more so).

[Joe Stocks]

Yeah, I've caught some of that on the Yahoo board. Boy did I screw up there. Posted that they should be careful about the shareholder representative thing and watch what info they turn over. Gosh, you would have thought I dissed the Pope. Now they got some kind of secret society thing going on. I'll stay away.

[south louisiana]

Joe - There is a rumor that the trustee has consented to a shareholders committee but I have not been able to get confirmation.

[Joe Stocks]

SL- My theory is that MIR just humng out at 20 cents too long and had to move someway. Once it broke out it, mo-mo kept it going. I didn't see any news. Maybe a delayed reaction to last week's?

[south louisiana]

Joe - Nice move today - what's your theory - CNL - RRI?

[Joe Stocks]

>>I remain cautiously hopeful.<<<

Me too. I cautiously added a bit more Friday. I like the way it is hugging 20 cents. Still my total investment is relatively low.

[south louisiana]

Joe - The article was from the LATimes. Peregrine is a software maker unrelated to the ipp industry. The point in my view was the preservation of s/h interest in a bk where debt was reduced. Not a large point, but there does seem to be a trend of preserving s/h equity to some degree, and given the favorable possibilities with PEPCO and income producing assets held by MIR, I remain cautiously hopeful.

[Joe Stocks]

SL< No, I haven't seen that. Where did you find it posted. Who is "Peregrine"?

[south louisiana]

Joe - Have you seen Peregrine's recovery plan. Even there some s/h equity was preserved:

Peregrine's recovery plan, which took effect Thursday, gives holders of $270 million in Peregrine's 5.5% notes 30% of their claims in cash and 20% in new notes. They also will receive about 63% of the reorganized company's stock.

Unsecured creditors may choose to receive immediate payment of 60% of their claims in cash this year plus 10% a year over four years or full repayment over four years. Shareholders and securities claimants will get about 33% of the reorganized firm's stock. The remaining 4% of the stock may be split between note holders and shareholders.

[Joe Stocks]

SL- I'm surprised too. I added a bit more on the news and about have as much invested in this as I dare risk. I don't feel nearly as good about MIR as I do HLSH. But, I still think there is a good chance the share are worth more than 21 cents.

[south louisiana]

Joe - This can't help but benefit MIR at least renegotiate the PEPCO contracts. I am surprised that the price has stayed this low all things considered.

[Joe Stocks]

Could this help MIR with sme of their unprofitable contracts?
Bankruptcy Crt Allows NRG To Reject Edison Power Contract

NEW YORK (Dow Jones)--The federal bankruptcy judge overseeing NRG Energy Inc.'s Chapter 11 proceeding ruled Wednesday that the company could reject a money-losing power supply contract with a unit of Edison International's (EIX) Edison Mission subsidiary, according to representatives from both companies.

Judge Prudence Carter Beatty of the U.S. Bankruptcy Court for the Southern District of New York also denied a motion by Edison Mission Marketing & Trading, or EMMT, to lift an automatic stay that would have allowed Edison to take the contract dispute to the Federal Energy Regulatory Commission, the companies said Thursday.

NRG Power Marketing Inc. provides EMMT with power that EMMT then sells to a company called CL Power Sales Eight LLC, which in turn supplies Energy East Corp. (EAS) unit Central Maine Power. The deal is scheduled to run through mid-January 2017.

NRG, a unit of Xcel Energy Inc. (XEL), said in a court filing this week that the agreement is causing it to lose about $465,000 each month because it must purchase power for Edison at a higher price than it can collect from the company.

[Joe Stocks]

Interesting, indeed. I do think there is something there for the common. This is not like a retailer that has to sell their wares for 10 cents on the dollar in a bk sale. Not like an Airline that has a competitor waiting at the gate to take those slots. The barrier to entry is high in this industry. MIR "stuff" should retain top dollar. Unlike a many other companies, MIR's assets can be broken out and sold, returning near full book value in satisfying their debts.

[south louisiana]

Joe - I have not joined either. This thing is complex, but I think also that there is a shot at the common retaining some value. The latest is an article suggesting Ichan is interested - which of course would wipe out the common. The contrarian view would be that mgt must retain the common to prevent such a takeover which would surely be the demise of this mgt. Interesting.

[Joe Stocks]

SL, No, I am not. Do you really feel that your interest won't be represented unless you sign up with this clown. I don't see the point in doing it. All us shareholders will be represented the same way. Obviously there are some very large institutional shareholders that will be very interested in the outcome of this BK. I'm sure they are well represented. I will just tag along with them by just being a fellow shareholder.

This Hammr group?? looks like just a way that an lawyer is trying to get his foot in the door, by getting himself a seat at the table in representing some shareholders in a eventual shareholder lawsuit. Of course he will want some eventual fees for that. I think it could possible be a borderline scam in the making. I see no need for anyone to provide this legalized parasite with one's name and address.

[south louisiana]

Joe - Are you participating in the Hammr group?

[Joe Stocks]

Bought some shares right after the BK filing for a longer term hold. I became uncomfortable with what i was seeing so i sold them all for about a nickle profit. Now, I'm buying some again. Not much dollar wise relative to my portfolio but I do like the risk reward potential here at 20-21 cents. I will sell at any move below 16 cents for about a 25% stop loss. My target is a 50+% gain at 30 cents.

[south louisiana]

I would say we are demoralized and without new information.