Mirant passthrough trustee, generating station owners object to amended disclosure statement, plan

By Ellen Chang

Houston, March 30 - Mirant Corp.'s revised plan of reorganization and disclosure statement drew an objection from the trustee for passthrough certificates related to two generating stations and the owner lessors of those plants.

They protested that the company's revised disclosure statement should not be approved because it does not provide adequate information on how the leases will be treated and the plan should not be confirmed because it provides less than the full repayment that these creditors believe they would receive in a liquidation.

The owner lessors own electric generating stations in Dickerson, Md., and Morgantown, W.Va., and have $1.5 billion lease agreements with Mirant Mid-Atlantic, LLC. The passthrough certificates were used to finance the lease. The trustee is U.S. Bank NA and the owner lessors are several Morgantown LLC entities, Dickerson LLC entities, Sema LLC entities, Steamed Crab Partners LP, Steam Heat LLC, First Chicago Leasing Corp. and Bankers Commercial Corp.

The trustee represents senior, first-priority economic interests totaling $1.2 billon out of the $1.5 billion invested by third parties for the plants. The remaining second-priority $300 million was invested by the owner lessors.

The groups said in their filing Monday with the U.S. Bankruptcy Court for the Northern District of Texas that the statement discloses little about Mirant Mid-Atlantic (Mirma), which they believe has valuable assets.

The two groups said the disclosure statement does not describe, "much less make clear, the effect that pending events will have on the debtors' financial health and ability to perform whatever obligations Mirma eventually undertakes to its creditors."

They also stated that the reorganization plan is "so entirely lacking regarding the proposed treatment that the lessor defendants will receive that it cannot be considered a 'plan' for Mirma," according to the filing. The plan's treatment for the rest of the creditors is "so gratuitously worse than what solvent Mirma can provide and what the law requires that one must conclude that the debtors have no intention of seeking confirmation of the plan as to Mirma."

Specifically the plan does not say whether the leases will be assumed, rejected or recharacterized - and "holds out the possibility of any of the three."

Because there is so little information, the plan does not meet bankruptcy code requirements and therefore cannot be confirmed, according to the trustee and owners.

It described the plan as failing to satisfy requirements in an "attempt to gerrymander voting and plan acceptance."

In addition, the owner lessors are being forced to give up their absolute right to block approval as the only impaired class of Mirant Mid-Atlantic creditors.

Mirant Mid-Atlantic has "sufficient cash" to pay the claims of its creditors "in full many times over," the filing said.

Mirant filed the amended plan and disclosure statement on March 28.

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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