Mirant

[Joe Stocks]

Press Release Source: Mirant Shareholder Rights Group LLC


Expert Testimony Reveals Inaccuracies in Valuation Report Prepared for Mirant Corporation by Blackstone Group
Tuesday June 28, 4:00 pm ET
Expert Testifies that up to $1.74 Billion Available for Shareholder Recovery


FORT WORTH, Texas, June 28 /PRNewswire/ -- The Mirant Shareholder Rights Group LLC supports expert testimony presented by Anders Maxwell, Equity Committee's witness, during Mirant's valuation hearing, which concluded yesterday. The expert testified that inaccuracies in the Blackstone Group ("Blackstone") valuation report prepared for Mirant Corporation ("Mirant") (OTC: MIRKQ - News) masked at least $1.74 billion of value in its business plan forecasts and used improper methodologies to undervalue its domestic and foreign cash flows. Using Blackstone's own valuation method with accurate and current figures, Mr. Maxwell demonstrated to the Court that a valuation in the range of $12 billion to $13.7 billion was a more accurate calculation than that arrived at previously by Blackstone on behalf of Mirant. A valuation in this range would yield up to $1.74 billion in rightful shareholder recovery.
"This testimony provides quantifiable evidence that Mirant is understating the company's value in order to deny shareholders' their rightful recovery," said Mark Adams, a member of The Mirant Shareholder Rights Group. "It is interesting to note testimony that Blackstone designed the prepackaged plan which left shareholders intact, and stated during trial that the company was worth more today than when it filed for bankruptcy.

At present, the market value of the debt is trading at 30% above the estimated value of recovery in Mirant's plan. It seems utterly nonsensical that the creditors, who stand to recover 100% or more, are unwilling to simply afford the stockholders their rightful recovery, which would cause their debt securities to be valued at par or above."

Following are some of the major errors and omissions in Mirant's business plan, forecasts and valuation:


* $1.0 billion to $1.5 billion of enterprise value is hidden as a result
of an unnecessarily costly capital structure and unrecognized cash that
appears designed to artificially diminish liquidity and bloat the
balance sheet.

* $265 million of freed-up cash as a result of reduced collateral
requirements post emergence was not recognized by Mirant or its
advisors.

* $245 million in increased valuation as a result of Mirant's incorrect
comparison to comparable companies in the merchant energy sector.

* $179 million in increased valuation by removing stale energy prices
used by Mirant in its outdated business plan, and substituting actual
near-term market prices and a realistic market forecast for long-term
fuel prices.

* $100 million in payments made during bankruptcy that were not netted
against a Power Purchase Agreement rejection claim, which, if rejected
would be recouped.

* $75 million in increased valuation as a result of using a more
realistic tax rate on Mirant's future earnings.

* $60 million in increased valuation as a result of Mirant applying an
incorrect discount rate to the savings provided by net operating losses
created when Mirant wrote off a huge portion of its assessed asset
values.

In addition to aforementioned inaccuracies, there were numerous changes made to Blackstone's Weighted Average Cost of Capital assumptions (WACC) and other valuation model methodologies used by Mirant and its advisors. These errors reduced Mirant's projected discounted cash flows and resulting enterprise value by at least another $1 billion.

Simply taking these error corrections into account on a conservative basis, and using Blackstone's base valuation, PJSC has determined that the range of value available to shareholders should be $360 million to $1.74 billion. The values listed above do not include any of the potential $1.9 billion recovery against Southern Company, or any other potential estate claims that may exist. The corrected values also do not include the following additional PJSC findings contained in its expert valuation report:


* $524 million in enterprise value hidden as a result of Mirant's use of
different pricing from the installed capacity pricing that exists in
the three primary regional power markets in which Mirant operates.
Installed capacity markets have been developed to provide a source of
revenue to owners of generating units for maintaining capacity in
place, which ensures an adequate reserve margin for system reliability.

* $122 million in enterprise value hidden as a result of Mirant's
exclusion of Bowline, a 750 megawatt generating unit project that is
fully permitted and 39 percent complete, from its valuation.

* $100 million in enterprise value hidden as a result of the assumption
by Mirant that Lovett, a 441 megawatt generating unit, will be shut
down between 2007 and 2008. The assumption, as acknowledged by Mirant,
is unrealistic in light of local transmission constraints which require
Lovett's capacity for load balance.

* $84 million of enterprise value hidden as a result of Mirant's
assumption that its power marketing operation will continue to operate
at a loss of more than $30 million annually. PJSC believes the overhead
could be reduced to $25 million annually at a minimum.

The valuation hearing concluded on June 27, 2005, and a ruling by Judge Lynn is expected within the next several weeks.

Contact:

Michael Buckley/Ellen Gonda

212-333-3810