| |||||||||||||||
Reuters NEW YORK (Reuters) - Power producer and trader Mirant Corp. filed for Chapter 11 bankruptcy late on Monday after failing to reach agreements with bondholders and banks to restructure its debt. Court papers filed with the U.S. Bankruptcy Court of the Northern District of Texas showed that the Atlanta-based company listed $20.6 billion in assets and $11.4 billion in debt.
Mirant said in a statement it had secured a commitment, subject to court approval, for $500 million in debtor-in-possession (DIP) financing to provide additional working capital. As of July 11, Mirant and its subsidiaries had about $1.17 billion in total cash. Mirant, one of many energy companies struggling to restructure debt, has been in talks for months with its bank lenders and bondholders. To avert bankruptcy, it had made a sweetened offer to exchange up to $1.45 billion in bonds due within three years for new secured notes due in 2008. But both the exchange offer and Mirant's extensions on waivers of its bank loans had been set to expire at midnight EDT, one hour after Mirant filed for Chapter 11. "Although we received broad support from the company's creditors on our restructuring plan, failure to obtain the timely support of our key lenders created substantial uncertainty in the marketplace about the outcome of these discussions," Mirant said. That uncertainty strained Mirant's liquidity and threatened its business plan, so in the midst of a slump in energy prices and a tepid economy, Mirant said it had opted for Chapter 11. BACK AND FORTH A handful of U.S. power producers have been forced to restructure their heavy debt loads, after the historic collapse of energy trader Enron Corp. spurred a nosedive in investor confidence in the sector. Companies like Reliant Resources and Dynegy Inc. reached last-minute deals that bought them time to improve their balance sheets. Others, like Xcel Energy's NRG Energy unit and PG&E Corp.'s PG&E National Energy Group, filed for bankruptcy. Mirant asked its bank lenders in late June to approve a prepackaged bankruptcy plan, which had already been approved by bondholders and required less support than restructuring its debt and credit facilities outside the bankruptcy courts. But 10 days later, the company said two-thirds of its bondholders were in support of a sweetened debt exchange offer that could prevent a bankruptcy filing, and said it was optimistic it would win support from the 85 percent of bondholders needed for the offer to go through. Some analysts had expected earlier on Monday that Mirant would announce an extension of the exchange offer or bank waivers, instead of a bankruptcy filing. Mirant on Monday said that its reorganization plan had not been developed, so it was uncertain how the interests of its creditors and stockholders would be addressed. In conjunction with the bankruptcy, Mirant terminated its offers to exchange its 2.5 percent convertible debentures due in 2021 and its 7.4 percent senior notes due 2004. Mirant Americas Generation LLC also terminated its offer to exchange 7.625 percent senior notes due 2006. | |||||||||||||||
