Perryville seeks court approval to auction claims against Mirant

New York, June 10 - Perryville Energy Holdings, LLC is looking to sell its claims against Mirant Corp. in an auction to be conducted by Credit Suisse First Boston, according to a filing Thursday with the U.S. Bankruptcy Court for the Western District of Louisiana.

The sale is intended to allow Cleco Corp., Perryville's owner, to monetize the claims now rather than wait for a distribution under Mirant's Chapter 11 plan of reorganization, according to the filing requesting court approval. Mirant may not pay out until the fourth quarter of this year or later and the value of the claims will fluctuate in the meantime, the company added.

Perryville expects to pay its major creditors in full following its planned sale to Entergy Louisiana, Inc., the filing noted, adding that there is "substantial value" available for distribution to equity holders.

Perryville has made claims against Mirant for more than $1 billion, but under a settlement agreement, due to be heard by the Western Louisiana bankruptcy court on June 24, the claims will be:

* An allowed claim of $207 million for damages caused by Mirant's rejection of its tolling agreement with Perryville;

* An allowed claim of $177.18 million against Mirant under its guaranty of the tolling agreement;

* An allowed guaranty claim against Mirant Americas Inc. of $98.7 million for its guaranty of the tolling agreement.

Perryville said in its filing that claims against Mirant are currently trading at 70 to 75 cents on the dollar, with claims against Mirant Americas Energy Marketing LP changing hands at a slight discount to those levels.

CSFB, which will market the claims, will use its contacts among investors in bank debt, trade debt and high-yield bonds along with hedge funds, to bring in potential buyers, Perryville said.

Marketing is expected to take three weeks, with closing four weeks after that.

A minimum sale price of 65 cents on the dollar will be set, although the provision can be waived with suitable approvals.

Perryville, based in Pineville, La., filed for bankruptcy on Jan. 28, 2004. Its Chapter 11 case number is 04-80109.

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