A total of nearly $400 million of Mirant Corp. and Mirant Americas Generation (MAGI) bank debt traded last week after Mirant filed its long-awaited reorganization plan. Market players swapped as much as $300 million of Mirant's '03 and '04 revolvers at around 73-74, while the '05 revolver was active in the 79-80 range. About $100 million of MAGI bank debt traded at 105 1/2-106 1/2. "There's surely been a lot of activity in the market. People were just grasping to get it," a trader said.
According to the plan, Mirant's bank debt holders will receive equity in the reorganized Mirant. MAGI's $300 million Lehman Brothers facility and the '06 and '08 bonds will receive 90% in new MAGI notes and 10% in the new Mirant's equity. MAGI's '11, '21 and '31 notes will be reinstated and accrued interest will be paid in cash. Current equity in Mirant will be cancelled and recovery for the current equity holders remains to be determined, though market participants anticipate a wipe out. MAGI has $2.5 billion in bonds.
Regardless of the plan, some major issues with the short-term creditors have not been solved and some push back is expected, a source familiar with the deal said. "The deal for those parties is very poor, for everybody else it is pretty much what you'd expect," he added. "I think the right deal will be something in short term notes or cash... something that puts the short-term debt holders at par plus accrued plus defaulted interest."
According to a trader, buyers of MAGI want to take advantage of the short-term yield to maturity. Buyers of Mirant, meanwhile, believe in the long-term viability of the company, he said. Obviously, plenty of people are selling. "There is a lot of uncertainty about how healthy this company is really going to be. What's the equity really going to be worth? Some people would just rather get their money now," another trader noted.
Creditors have been unable to agree on a restructuring plan since Mirant filed for bankruptcy in 2003. After extending the exclusivity period three times, Mirant had to file a consensual plan of reorganization before Jan. 30. The three creditor groups were the MAGI creditors committee, the corporate creditors committee and the equity committee.
Mirant's '03 and '04 credits moved up from 66 1/2-67 1/2, where they traded a month-and-a-half ago. MAGI bank debt has climbed approximately 16 points since November, when speculation arose that a dispute between the creditors committees had been solved and the MAGI credit would be repaid at par plus accrued (LMW, 11/22). A Mirant spokesman did not return calls.
