Mirant Corp.'s '03 and '04 revolvers traded down a point-and-a-half to the 66 1/2-67 1/2 range. Market participants attribute the drop to the denial of Mirant's motion to reject out-of-market agreements to purchase power from electricity distribution company Pepco by the United States District Court for the Northern District of Texas. "That seems slightly negative and could have a cash impact going forward," a dealer noted. By press time Mirant had failed to make the scheduled payment despite the ruling. A Mirant spokesman did not return calls.
The court found the agreement to buy electricity from Pepco is part of a larger contract that cannot be rejected. Under the agreement, Mirant is compelled to buy power at prices that are out-of-line with market prices for power (LMW, 9/6).
Meanwhile, Mirant Americas Generation (MAGI) traded around 99-99 3/4. The name has recently climbed approximately nine points after speculation that a dispute between the unsecured creditor committees has been resolved and MAGI's credit will be paid at par plus accrued interest (11/15). MAGI could go up to 103 and if repaid with accrued interest the value could be about 107-109, according to a trader. In addition to the $300 million of bank debt, MAGI also has $2.5 billion in bonds.