Levels for Mirant Corp.'s various revolvers climbed more than 10 points into the 75-80 range last week with some original lenders taking the opportunity to get out of the name after a slump into the low 60s two weeks ago. Levels for the parent company's revolvers and the five-year revolver at the Mirant Americas Generation (MAG) subsidiary were "all over the place, but significantly higher" said one banker. She noted that the $1.125 billion revolver maturing in July was quoted in the 73-75 range. The $1.125 billion revolver, maturing in July 2005, was quoted in the 75-80 context, according to a trader. Only two weeks ago the '03 revolver was quoted as low as 57-62 (LMW, 6/16).
The reason for the climb was attributed to a bank meeting held last Thursday to discuss refinancing of the debt. In addition to refinancing the loans, Mirant is seeking to exchange new secured notes for existing debt. No agreement had been reached with the banks by the time LMW went to press and a Mirant spokesman declined to comment on the talks. One investor said the climb in bank debt values could be attributed to some form of agreement being reached, but another possibility is that a prepackaged bankruptcy will be pursued. This will "not be the worst-case scenario," he said.
If the refinancing is achieved, the new senior credit facilities and the new notes would be secured by first priority liens on the assets of certain direct and indirect U.S. subsidiaries of Mirant, according to a Mirant release. Currently, none of the Mirant or MAG debt that is the subject of the exchange offers and bank negotiations is secured. However, on May 30, two of the agent banks informed Mirant that they do not support sharing first priority liens with bondholders. As a part of the exchange offer, Mirant is asking holders of the target Mirant debt to vote in favor of a "fast track" pre-packaged plan of reorganization, in case an insufficient number of banks or bondholders agree with its out-of-court restructuring plan.