Mirant shareholder files motion proposing new valuation method

By Caroline Salls

Pittsburgh, April 13 - Mirant Corp. shareholder Michael Sammons is proposing that the company be valued using a "market-based" method that could provide a distribution to existing equity holders, rather than risking an arbitrary assignment of no value to Mirant.

In a motion filed Tuesday with the U.S. Bankruptcy Court for the Northern District of Texas, Sammons set out a plan under which the stock market performance of Mirant's new shares within a reasonable period of time following confirmation would form the basis for a retroactive valuation of Mirant, according to a news release.

Sammons believes this will guarantee the fairest possible value distribution to all of Mirant's creditors and allow the company to exit bankruptcy more quickly than it would otherwise, according to the release.

"Some creditors will be very disappointed they may only receive 110% to 120% percent of what they are owned, rather than the anticipated windfall comparable to that reaped by the vulture creditors in the National Gypsum and Kmart cases," Sammons said in the release.

"We're hoping judge Lynn will protect Mirant's 200,000 shareholders - many with stock in retirement accounts and their children's education funds - from having billions of dollars wrongfully taken from shareholders in order to enrich large banks and hedge funds."

Sammons said in the release that the most difficult area of Mirant's bankruptcy is enterprise valuation. He said in such cases, the presiding judge is typically faced with a debtor that has long since given up any fiscal responsibility to shareholders and is intent instead on lowering asset values and income projections to secure management careers and future performance bonuses.

Such cases also typically involve creditors seeking windfalls of hundreds of millions of dollars that employ their own experts to support the debtor's dismal asset values and income projections, according to the release.

Though Sammons said in the release that he anticipates that certain creditor groups might object to waiting an average of 3.7 months for full payment in cash or stock following plan confirmation, he argues the debtor's enhanced ability to reach a plan of reorganization will result in creditors receiving payment more quickly than they would under the current system.

Mirant, an Atlanta-based power company, filed for bankruptcy on July 14, 2003. Its Chapter 11 case number is 03-46590.

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