Mirant Corp.'s bank debt continued to trade actively last week as the debt dropped and then bounced back some by week's end. The debt sank into the 60s with the maturity on its $1.125 billion revolver looming and the company still trying to complete its debt overhaul plan. But the bank debt did regain some ground late in the week as the company amended the package that will be given to lenders for their cooperation in the restructuring plan.
The company's '03 revolver maturing this week traded up from the 621/2 63 range to the 64-65 context. Last week, the paper was quoted in the 72-74 range. The company's $1.125 billion revolver maturing in July 2005 trades at roughly a five point premium to the '03 facility and changed hands at the 68 level on Wednesday. It traded back up to 681/2 691/2 last Thursday. "It's hard to peg because it's very volatile," said one trader of the loans. A lot of the trading came from inter-dealer activity, he added, noting that there was some supply coming out of banks. But a dealer explained that much of the selling came from original lenders.
The sweetened offer includes up to $1.25 billion of credit secured by a first lien, an increased spread over LIBOR, and warrants to purchase shares of Mirant stock. A company spokesman explained that first lien exposure will be shared between Mirant Corp. lenders, Mirant Americas Generation (MAG) lenders and the exit financing lenders if the company decides to reorganize in-court. The debt overhaul will also include the exchange of some of the company's bonds, but that offer expires today. "You [have] got to think something gets done. [But the banks are] going to play hard ball till the 11th hour," the trader speculated. The spokesman declined to comment on the progress of the negotiations, noting only that discussions continue.