Mirant

[Joe Stocks]

Equity Committee (part 1) (from yahoo)
by: michaelsammons 02/20/04 03:46 pm
Msg: 9618 of 9674

For those who asked, I was also booted off the committee - around December 1st. Like Matt Wilson, I was vocal about the need to explore all options other than dilution.

My problem was with the Brown Rudnick law firm and Tejas Securities (SHC co-chair). Even before our selection I had argued with Tejas about what they believed to be "inevitable dilution." And this was before a committee was even formed (the informal committee days). While I cannot divulge their positions post-SHC formation, I would say that Tejas and Brown Rudnick arranged my expulsion (as they did Matt's).

I was told on several occasions by supporters on the SHC that through local counsel Brown Rudnick pretty much controlled the US Trustee, and if I continued to argue for a more investigative/proactive approach that they would get me thrown off the committee. That happened to me; it then happened to Matt. And if hammr6 had said much, well he would be gone too.

Bottom line, IMO we have very weak lawyers who lack the ability or perhaps just the desire to consider innovative alternatives to simplistic dilution. And, with the obvious exception of hammr6, the SHC is nothing more than a rubber stamp now for Brown Rudnick.

However, I will say we do at least have a strong financial advisor in Peter J. Solomon Co. (ex-GE finance guys) out of New York. While also pretty much muzzled by Brown Rudnick to date, they have a personal stake in MIR stock price appreciation, and I hope they are undertaking alternative analysis "in secret" at least. When it comes POR time, I think they will surprise Brown Rudnick and present an innovative alternative POR to the committee (and hammr6 alone might have to present that to the judge).

I would also note that we have an exceptionally strong bankruptcy judge, who has a remarkable record of flexible thinking and innovation in bankruptcy cases. Judge Lynn is the shareholders single greatest hope.

As someone pointed out, I did more than double my position in MIRKQ a few days after my expulsion. With the price at .30 it looked very appealing and I suppose convinced me not to appeal my expulsion to Judge Lynn (which was done without notice or an opportunity to be heard - due process is apparently not the US Trustee's long suit).

The concern that was expressed to me by a poster on this board was that the institutions who control the SHC, in at 20-30 cents post-bk, believed that if they simply "played ball" with management, sat in the corner and simply nodded agreement during everything, that they would be thrown a $1/share bone at the end of this thing - a 300-400% gain for simply "playing along." A justified concern? ... who knows ... In any event, I believed I represented the thousands of smaller MIR investors in at $5+ and since IMO MIRKQ is actually worth $5+/share (based on peer multiples), I was not going to go along with anything less than full value for shareholders.


It was amazing to me that I learned absolutely nothing non-public while on the committee. To say that management intended to keep the SHC in the dark is an understatement. Frankly I learned more relevant info on this bk from this message board (well the old MIR board anyway).

I would admit that I have no idea what management intends towards shareholders. They could easily reinstate all long debt and just as easily refi the short debt with secured paper, all with no dilution. But do they choose to decimate shareholders to preserve Marcie's dreams of being a major energy trader (and her "investment grade objective?" - no one really knows.

Finally I'll say this. Based on peer comparisons, if MIR was out of bk right now MIR stock would be trading at the $6 level or so. That means wall street would assign a $2.4 bil real value to MIR equity. I agree.

If MIR comes out with a POR which needlessly dilutes equity, and this SHC remains inert, I will join Matt and probably a couple of other past/present SHC members and personally present a reasonable alternative POR to court. And you can count on one thing ... Judge Lynn will seriously consider any POR which preserves shareholders equity, whether it comes from Brown Rudnick's stream lined muzzled SHC, or from we ex-SHC members.

In conclusion, I am still hopeful that management intends to present a POR with minimal dilution. However, I believe in hoping for the best and preparing for the worst. And yes, a career in investment banking would qualify me before Judge Lynn to present and argue an alternative POR - and one quite innovative POR idea is already being worked on as we speak.

One more thing, hammr6 might have much more power in this bk than most credit to him. While the number of shares also counts, I seem to recall that it also takes at least 50% "by number" of shareholders who vote on any POR to approve it. That means that many of you with even a few shares have the same single vote as an institution with 20 mil shares. Frankly I haven't verified that, but "if true" hammr6's legion of shareholder proxies could single handedly determine whether shareholders accept or reject a proposed POR.

In conclusion, I still believe that management might very well present a POR with minimal dilution. If not, I am confident Judge Lynn will seriously consider an alternative POR with minimal dilution, whether presented by the current SHC members or the exiled SHC members. We could not hope to be before any fairer or more open minded judge than Judge Lynn - and that is why I more than doubled my position in MIR.