Mirant emerges from Chapter 11 by Claire Poole Posted 10:40 EST, 4, Jan 2006 After two and a half years, Atlanta power producer Mirant Corp. emerged from bankruptcy protection and secured $2.35 billion in exit financing, it said late Tuesday, Jan. 3.

The company, which filed for Chapter 11 in July 2003 in the U.S. Bankruptcy Court in Fort Worth after failing to reach a deal with creditors to restructure its debt, has cut its work force, sold hundreds of millions in assets and converted more than $6 billion in debt and liabilities into equity under its reorganization.

Mirant has applied to be relisted on the New York Stock Exchange under the symbol MIR beginning Jan. 11 and will issue 300 million shares of common stock to creditors and shareholders.

The court has approved the appointment of chairman and CEO Edward Muller, replacing former chairman William Dahlberg and former CEO Marce Fuller, and has installed a new nine-member board of directors.

Mirant and many other utilities that invested billions in new power plants were slammed when the California energy crisis and Enron Corp.'s bankruptcy rocked the market, leading to a power supply glut, rising natural gas prices and narrow margins.

The industry's doldrums continue, as evidenced by the Dec. 20 Chapter 11 filng of Mirant rival Calpine Corp., which listed $20.6 billion in assets and $11.4 billion in liabilities in court papers.

"This is a major milestone for Mirant," Muller said in a statement. "After 30 months in the bankruptcy process, we have successfully restructured Mirant to provide it with the financial flexibility necessary to be a leader in the industry. The talented employees of Mirant will create tremendous value for our shareholders through discipline, creativity and operational excellence."

Mirant has emerged as a smaller company, although not necessarily more profitable. In December, Mirant said its loss before items for the first nine months of 2005 widened to $225 million on operating revenue of $1.8 billion from a loss of $127 million on sales of $2.8 billion recorded in the same period a year earlier.

The exit financing, provided by J.P. Morgan Chase & Co., Deutsche Bank Securities Inc. and Goldman Sachs Credit Partners LP, consists of a $1 billion senior revolver, a $500 million term loan and a bridge component of not less than $850 million.

Units of Mirant owning generating facilities and other assets in New York state will remain in Chapter 11 proceedings pending the resolution of certain issues with local authorities.

Judge D. Michael Lynn in U.S. Bankruptcy Court for the Northern District of Texas in Fort Worth approved the utility's second amended plan without any major changes at a daylong hearing Dec. 1.

Mirant's contentious bankruptcy case was marked by a rare victory for shareholders after Lynn forced Mirant to immediately ramp up its valuation by $450 million. Investment house Blackstone Group LP calculated the initial valuation. The revision led to negotiations with shareholders and a second reorganization plan that enabled them to carve out a 3.75% recovery.

The shareholders were due to be wiped out under the first plan before Lynn made his revision ruling after a record 27 days of valuation hearings. Shareholders won their uncharacteristic victory when Mirant was told to update its value by using current natural gas prices after the equity holders argued that the utility was using

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outdated data in their valuation.

Unsecured creditors will reap the 96.25% balance while the shareholders also receive half of the proceeds from pending litigation upon Mirant's exit.

Holders of $2.7 billion in bonds at Mirant's largest unit, Mirant Americas Generation Inc., will also be paid in full in cash along with prepetition interest.

Thomas Lauria was debtor counsel from White & Case LLP in Miami. Matthew Cantor and Edward Sassower were New York counsel for the special bondholders from Kirkland & Ellis LLP, while Bruce Zirinsky and Gregory Petrick represented Mirant Americas Generation in New York at Cadwalader, Wickersham & Taft LLP. Paul Silverstein was New York creditors' counsel at Andrews Kurth LLP.

Edward Weisfelner was equity committee counsel in New York from Brown Rudnick Berlack Israels LLP, while Eric Taube was Austin, Texas-based co-counsel at Hohmann, Taube & Summers LLP. Anders Maxwell was financial adviser to the equity committee from New York investment bank Peter J. Solomon Co.

— Terry Brennan contributed to this report

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