Mirant Investors Panel to Be Named in Bankruptcy Case (Update1)
(Adds more comments by U.S. trustee starting in the sixth
paragraph.)
Aug. 28 (Bloomberg) -- Mirant Corp.'s shareholders will gain
a powerful voice in the energy producer's bankruptcy
reorganization through an official panel, said a Justice
Department lawyer charged with overseeing the case.
The Mirant shareholder committee will be appointed on Sept.
17, immediately after a meeting of the Mirant creditors'
committees, said Assistant U.S. Trustee George McElreath in
Dallas. McElreath last month named panels to represent creditors
of Mirant and its Mirant Americas Generation unit. The Atlanta-
based company produces enough electricity to power 17.6 million
typical U.S. homes and owes creditors $11.4 billion.
The equity committee will have a strong voice in Mirant's
bid to reorganize and repay stakeholders. A federal judge must
approve Mirant's recovery plan before the company can come out of
bankruptcy. The additional panel will negotiate for a higher
return through in-court wrangling, possibly complicating the
case, adding costs and reducing creditors' returns.
``Everyone is very optimistic that there's going to be
equity value left'' after the bankruptcy, said Michael Sammons, a
retired lawyer who holds 90,000 Mirant shares. ``They just need
one major asset sale, maybe their Philippines operations, and
they'll be on the road to recovery.''
While shareholders tend to get nothing in most bankruptcies,
equity holders are entitled to recoveries in certain cases. A
company doesn't have to be insolvent to declare bankruptcy and in
so-called solvent debtor cases, where creditors are fully paid,
there is typically something left over for distribution to
shareholders.
`Squeaky Wheel'
``It appears there is equity in this company,'' McElreath
said. ``The squeaky wheel gets the grease and shareholders have
clearly indicated an interest in organizing.''
Mirant's board met yesterday to prepare a list of its 100
largest shareholders for the U.S. Trustee's office, an arm of the
Justice Department that oversees bankruptcy cases, McElreath
said. More than 15 investors have volunteered to serve on the
panel, such as investment fund Morgans Waterfall Vintiadis, which
holds 2 million shares, he said.
Mirant Americas Generating owns or controls 22 power plants
in the U.S. and accounts for 54 percent of Mirant's global
capacity of 22,000 megawatts, the company has said in regulatory
filings. The unit has plants in New York, California,
Massachusetts, Texas, Maryland and Virginia.
Mirant Americas 8.3 percent notes maturing in may 2011
traded at about 73 cents on the dollar, making the yield 13.86
percent, according to a Bloomberg market average price. At the
holding company level, Mirant's 7.9 percent coupon notes maturing
in 2009 sell for about 45 cents on the dollar.
Mirant shares, which traded at 19 cents on Aug. 6, rose 1.4
cents to 44.4 cents in over-the-counter trading at 11 a.m. New
York time.
``I think the stock should easily go back to the $3 to $4
range with the sale of the Philippine operations,'' Sammons said.
``If that's done I'd be comfortable in saying there's not going
to be any dilution. I think that's going to be the number one
priority of the shareholder committee.''
Mirant listed $20.6 billion of assets and $11.4 billion of
debt in its Chapter 11 filing in U.S. Bankruptcy Court in Fort
Worth, Texas. It owes lenders and bondholders more than $7.8
billion.
AI
