Mirant files amended plan of reorganization

By Ellen Chang

Houston, March 28 - Mirant Corp. filed an amended disclosure statement and plan of reorganization on March 25 giving almost all its stock to holders of unsecured claims against the parent company, according to a filing with the U.S. Bankruptcy Court for the Northern District of Texas.

Noteholders of Mirant Americas Generation will have their securities reinstated and overdue interest paid in cash.

A hearing on the disclosure statement is currently scheduled for April 20.

Mirant expects to emerge from Chapter 11 by mid-year 2005.

Treatment of major groups of claims against Mirant Corp. is as follows:

* In class 2, there are $154 million of secured claims, which will see 100% recovery;

* In class 3, there are estimated claims of $283-$320 million of "California Party Secured Claims" for settlement of claims relating to the state's energy crisis in 2000 and 2001. They will see 100% recovery;

* In class 4, there are $6.4 billion of unsecured claims. They will receive 60% recovery through issuance of shares of the reorganized company's Mirant common stock. Mirant estimates they will receive 96% of the equity of the company, subject to dilution by employee stock programs and warrants;

* In class 6, the amount of equity interests has not been determined. Holders will receive junior interests in a litigation trust and any stock left over after class 4 has been paid in full. Those who vote in favor will also receive warrants. The recovery rate is undetermined.

Under the plan, holders of claims against Mirant Americas Generation - which will not be included in the substantive consolidation of the rest of the company - will receive:

* The $42.4 million of secured claims in class 2 will receive 100% recovery;

* If the Mirant Mid-Atlantic, LLC owner/lessor secured claims are classified as financings by the bankruptcy court then they will be allowed up to the value of their collateral and will be paid in new secured notes. If treated as leases they will be subject to assumption or rejection.

* In class 5, there are $148 million of PG&E/RMR (Reliability Must Run) claims, which will receive 100% recovery under the deal to settle claims from the California energy crisis;

* In class 6, there are $1.2 billion of general unsecured claims who will receive 100% recovery through issuance of cash or new notes for 90% of the claim and stock for the remaining 10%;

* In class 7, there are $2 billion of Mirant Americas Generation long-term senior note claims, who will receive 100% recovery and be unimpaired. The notes will be reinstated and interest owing paid in cash;

The consolidated business will have $4.33 billion of debt, including $1.14 billion of debt associated with international subsidiaries not included in the Chapter 11 case, $169 million of domestic debt, $1.7 billion of reinstated debt at Mirant Americas Generating and $1.32 billion of new debt to be issued at the holding company level to satisfy existing Mirant Americas Generating debt.

To help ensure the feasibility of the plan, Mirant will contribute its energy trading business to Mirant Americas Generation, LLC, the Peaker, Potomac and Zeeland generating plants, commitments to contribute $150 million for refinancing and possibly $265 million for sulfur dioxide capital expenditures.

Mirant Americas Generation will obtain a new credit facility of at least $750 million for working capital.

The company said it believes the official committee of unsecured creditors of Mirant will formally support confirmation of the plan and that there is a "reasonable prospect" of obtaining support of the official committee of unsecured creditors of Mirant Americas Generating LLC.

The company said its plan does not include input from the official committee of equity security holders of Mirant because it does not believe there is sufficient value for shareholders to receive recovery.

However the committee has said it believes equity holders are entitled to a full recovery. A hearing on April 11 will determine the value of the company.

One of the main disputes remaining between the two creditors' committees is the amount of financial support that Mirant Americas Generating will require from its corporate parent to meet its obligations, the company said. The company said that the proposed up-front contribution of the energy trading business, the three plants and commitments for capital contributions represents "adequate and appropriate financial support to satisfy feasibility."

Under its plan in January, holders of general unsecured claims against the Atlanta-based power company would get nearly all of the reorganized company's common stock. There are an estimated $6.7 billion of these claims. The company did not provide an estimated recovery for this class.

The only other class to get any stock would be holders of Mirant Americas Generation LLC's general unsecured claims. These claims include holders of Mirant Americas' senior notes due 2006 and 2008. Holders of these claims would get 90% of their claim in new notes and the remaining 10% of their claim in the reorganized company's common stock for an estimated recovery of 100%. Mirant estimates there are $1.3 billion of these claims. The company will issue $500 million of 8% senior notes due 2015 and an amount to be determined of 8¼% senior notes due 2017.

Holders of Mirant Americas' senior notes due 2011, 2021 and 2031 would have their notes reinstated for an estimated recovery of 100%. There are an estimated $2 billion of these claims.

Existing shareholders would get a share of junior trust interests and any shares remaining after the general unsecured creditors have received their shares. Shareholders who vote for the plan will get five-year warrants to buy common stock for up to a 5% stake.

Mirant, an Atlanta-based power company, filed for bankruptcy on July 14, 2003. Its Chapter 11 case number is 03-46590.

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