JUDGE GRANTS MIRANT EXTENSION

The Atlanta Journal-Constitution ^ | 29 April 2004 | Margaret Newkirk

[MeneMeneTekelUpharsin]

FORT WORTH, Texas — Bankrupt Atlanta-based energy company Mirant Corp. can have an additional eight months before filing its reorganization plan with the bankruptcy court, a judge here ruled Wednesday. In the course of arguing over the extension, though, a Mirant consultant delivered some bad news for stockholders: There will be no money left for them unless something changes before the case is done. When Mirant entered Chapter 11 last year, it looked as if there would be something left for shareholders once creditors got paid.

The blow to shareholders came during questioning by U.S. Bankruptcy Court Judge Michael Lynn of consultant Doug Werking, of Alix & Partners, Mirant's restructuring firm. "Is it the company's view that equity is out of the money?" Lynn asked Werking, who quietly concurred. Creditors leaped to drive the point home. Lawyer Paul Silverstein took the podium to ask Werking to repeat his answer. He did, reluctantly: "I would say that it's difficult to see that there will be value for equity in this case," Werking said. A lawyer for stockholders succeeded only partly in softening the assessment, getting Werking to say, in effect, that things could change. The extension granted Wednesday was just a month shy of the nine months the company had asked for — a request creditors' lawyers called both unprecedented and "outrageous."

Mirant has been in Chapter 11 for 9 1/2 months and has already had one extension. The latest extension means the company has until Dec. 31 to file its reorganization plan, and that creditors have until February 2005 to sign off on the plan or present their own. In a case that has become increasingly ferocious, Wednesday's hearing was relatively subdued; particularly given creditors' strong opposition to Mirant's latest extension request. Still, creditors' lawyers made their pique known, largely by blasting Mirant's "bad faith" in coming up with a business plan.

[MeneMeneTekelUpharsin]

Little by little. The case has an excellent judge. His honor Judge Michael Lynn is a bankruptcy expert who also teaches college classes on the subject. This case also has an advocate for the common shareholders who along with the help of others appears to be trying to help the common stock survive, a very unusual situation. This is posted for educational and research purposes only.

Several things are fascinating:

1. That an extension was even granted and that one was granted for eight more months into 2005.

2. Some lower-priced contracts with the major supplier of electricty for the Washington, D.C. area, PEPCO, expire in July and the price appears to rising substantially.

3. Taxes on a power plant property in New York are being argued in court at this time. Resolution will also be a major factor.

4. Monthly Operating Reports so far show the company being profitable this year and if it continues, the EBITDA might be enough to negotiate a settlement.

5. Mirant owns unencumbered assets in the Philippines worth a substantial some of money. Those assets are NOT in bankruptcy and could potentially be sold to pay off part of the creditors here.

6. California owes Mirant a large sum of money (in the neighborhood of $300 million) and that situation might be resolved before the extension expires. FERC is involved and that situation is still in limbo.

7. A very talented shareholder committee/lawyer staff which appear to be capable of defending shareholders interest should any interest exist.

[MeneMeneTekelUpharsin]

More information that might interest you. Or, it might not. But, just in case...here it is.

[MeneMeneTekelUpharsin]

Again, FYI. This is very important news and now a significant period in which to let some gating issues become settled and the summer months to prove Mirant's earning ability. Let us continue the dialogue at some time in the future.

[MeneMeneTekelUpharsin]

Thought you might be interested. It's not as bad as it looks. Comment?

[MeneMeneTekelUpharsin]

The saga continues. Thought you might want to see this.

[Dog Gone]

I'm interested and appreciate the ping, but I haven't been following the proceedings very closely. Obviously Mirant still owns some significant assets and should be able to emerge from bankruptcy as a functional company.

That doesn't necessarily mean that shareholders will ever see a dime since we all know they're the last to be paid. Based on this story, I can't say that I'm tempted to buy any shares even though they only cost 30 cents today.

[MeneMeneTekelUpharsin]

Fully understand and wouldn't recommend it. It is just a fascinating case. The bankruptcy judge, the Honorable Michael Lynn, is writing a chapter in a text he is authoring about bankruptcy as the case proceeds. The judge is a preeminent bankruptcy judge and very well known. This IS an historic case due to all of the factors involved. And, I try to post as many news release stories about it here as I can. It should help those who wish to go back and review the case information to some degree.

[Dog Gone]

I'm not sure why it's taking Mirant so long to submit its plan of reorganization. Perhaps it depends on some of the factors you listed earlier. But until they do it, it's very hard to judge whether Mirant management intends to throw the shareholders over the cliff or whether they intend to help preserve and increase shareholder value. Please ping me on future stories you post.

[MeneMeneTekelUpharsin]

No problem. It is looking rough right now. The preferred shares closed at around $5.50 today. So, common and preferred are probably going to trade a bit lower for the next few weeks. Some very intelligent/knowledgeable posters post on the message board with some good points. We have coopted the Southern (SO) board and are using it to disseminate information. If it were not for the SO board being used by the MIRKQ gang, it would be pointless to own any shares at all as almost no information would be available. If it were not for that board being available, share prices would drop to around .05 - .10 a share in my opinion on the common.

Also, if you (or anyone for that matter) find anything of interest relating to Mirant, please post the stories here on Free Republic. I would be most grateful to have some help researching anything that happens with the company.

[MeneMeneTekelUpharsin]

Oh, I forgot. Here's the link to the SO message board being used by holders of MIRKQ at the present:

Click here for Mirant message board.