• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Bankrupt Atlanta-Based Energy Firm Mirant Posts $1.5 Billion Third-Quarter Loss

Posted on: Wednesday, 9 November 2005, 09:00 CST

By Margaret Newkirk, The Atlanta Journal-Constitution

Nov. 9--Atlanta-based Mirant posted a $1.5 billion third-quarter loss this week -- although the news is not as bad as it first appears.

It translates to a $3.74-per-share loss for the company's current shareholders, whose existing stake in the bankrupt energy company is about to be wiped out anyway.

But the loss is good news for the company's future, post-bankruptcy investors, a group that will include current ones, too, if a pending reorganization plan is approved.

Most of Mirant's third-quarter loss -- $1.2 billion -- reflects the company's decision to take the hit now on interest accrued on pre-bankruptcy debts between Mirant's Chapter 11 filing in mid-2003 and Oct. 1 of this year.

Mirant didn't have to pay that interest while under bankruptcy protection. But it would be due when it emerges from Chapter 11, which is likely in December or early January.

By taking the loss this quarter, Mirant has wiped the obligation off its books, making an already-trimmed-down energy company even leaner.

Storm damage included According to Securities and Exchange Commission filings, Mirant's third-quarter loss also included some post-Hurricane Katrina damage to the value of some energy and fuel hedging contracts.

The company predicts that the hedging losses will likely reverse themselves and may not harm its year-end earnings.

Without the effect of the interest and the hedging losses, Mirant's third quarter would have been a good one, according to its SEC filings, because of both the summer's hot weather and high electricity prices.

Mirant is an independent energy company that sells wholesale power in the United States, the Philippines and the Caribbean and operates some electricity distribution systems overseas.

A 2001 spinoff of Atlanta's Southern Co., Mirant filed for Chapter 11 protection in July 2003 after an 18-month financial slide.

The Mirant case, filed in Fort Worth, Texas, has been unusually contentious, with stockholders and two separate groups of creditors sparring with the company over its future.

Voting continues In September, U.S. Bankruptcy Court Judge Michael Lynn approved a proposed reorganization plan now being voted on by all of the interested parties.

That plan would allow some creditors to be paid in full and others to be paid back with a combination of cash and most of the reorganized Mirant's new stock.

It would give current shareholders 3.75 percent of the reorganized company's stock and warrants to buy 10 percent more.

It also would give them 50 percent of any proceeds from ongoing litigation, including a $2 billion-plus claim against Southern Co.

Stockholders and creditors are now voting on Mirant's plan. The deadline for mailing in ballots is Thursday.

The quarterly results released late Monday said Mirant had $880 million in revenue in the three months that ended Sept. 30, compared with $1.121 billion in the same three months last year. The drop was related to the company's hedging losses.

The company reported $2.69 billion in revenue for the nine months ending Sept. 30, compared with $3.57 billion for that period in 2004.

The company's nine-month losses were $1.5 billion.

-----

To see more of The Atlanta Journal-Constitution, or to subscribe to the newspaper, go to http://www.ajc.com.

Copyright (c) 2005, The Atlanta Journal-Constitution

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

MIRKQ, SO,

Source: The Atlanta Journal and Constitution

More News in this Category