Mirant exit financing request draws objection from bondholders, state

By Caroline Salls

Pittsburgh, May 31 - Mirant Corp.'s request for $2.35 million in exit financing drew objections from the state of New York and the company's ad hoc committee of bondholders, according to Friday filings with the U.S. Bankruptcy Court for the Northern District of Texas.

The bondholders committee said the exit financing is premature at this time because Mirant's plan of reorganization is "likely to change significantly."

Under the financing agreement, Mirant would have to pay the commitment parties a $15 million penalty fee if a plan of reorganization is confirmed that is materially different from the one proposed on the date of the fee letter.

According to the committee, numerous objections have been filed to the plan of reorganization.

"Thus, instead of rushing to seek approval of the exit financing motion and saddling the estate with an obligation to pay the $15 million penalty fee, [Mirant] should first work to resolve the numerous issues surrounding the structure of the plan."

The state said the motion fails to specify provisions of the exit financing agreement that will affect debtors, including the use of proceeds, so there is no way of knowing whether the agreement is in the best interest of all debtors.

The state also said all but one of Mirant's New York debtors will remain in bankruptcy while the rest of the enterprise emerges, which may in the long term impair their efforts to get exit financing and reorganize.

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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