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Mirant Promises Security To Lenders

03 May 2003

Mirant Corp. bank debt ticked up into the mid 80s last week following the company's earnings report as market players anticipate receiving additional security for their exposure in connection with planned debt restructuring efforts. A $10 million piece of the bank debt was believed to have traded the day before earnings came out. The levels where the trade went off could not be confirmed, but traders said the market for the name was in the 771/2 ­ 78 context at that time.

The company is currently working to refinance roughly $5.3 billion in debt. Mirant has a $1.125 billion revolver maturing in July, a $450 million revolver maturing in April 2004, and a $1.125 billion revolver maturing in July 2005. "To reassure creditors who will be asked to extend maturities, all of whom are currently unsecured, the company intends to offer security interests in substantially all of its and its subsidiaries' unencumbered assets as well as terms more favorable to the creditors," said the company in its 10-K filed last week.

Mirant's auditors included a "going concern" clause along with the annual earnings report, but the company asserted that once the refinancing is complete this issue will be removed. Calls to Harvey Wagner, executive v.p. and cfo, were referred to a spokesman. The spokesman said there was no timeline as to when the refinancing would be completed but noted that the earliest maturity date was on the $1.125 billion revolver due in July.


03 May 2003