Mirant Corp. Files Chapter 11 Papers
Mirant Corp., an energy producer that operates power plants in 14 states, Monday filed for bankruptcy protection after slumping power prices and higher costs left it unable to refinance $4.9 billion in bank and bond debt.
Mirant was hurt by the evaporation of energy trading and by accounting changes in the aftermath of Enron Corp.’s collapse. Higher borrowing costs and increased prices for natural gas, which fuel some Mirant power plants, also contributed to company losses, which totaled about $2.4 billion last year.
Mirant is the third major energy producer to file for court protection in two months, joining Xcel Energy Inc.’s NRG Energy unit and PG&E; Corp.’s National Energy Group unit. Atlanta-based Mirant listed $20.6 billion of assets and $11.4 billion of debts in Chapter 11 papers filed in U.S. Bankruptcy Court in Fort Worth.
The bankruptcy filing is the largest since WorldCom Inc. filed in July 2002. With $19.4 billion in assets listed in an April 30 annual report to the Securities and Exchange Commission, Mirant’s bankruptcy filing is the 11th-largest bankruptcy in U.S. history, according to Boston-based Web site BankruptcyData.com.
Mirant has a $1.13-billion loan payment due today that will be blocked by the bankruptcy filing. The company had tried to refinance $950 million of bond debt coming due next year.
Mirant had set a midnight Monday deadline for banks and bondholders to approve plans to restructure the company’s debt. One plan would have avoided Bankruptcy Court and the other would have restructured the debt through a prearranged bankruptcy agreement.
State Street Bank & Trust Co., owed more than $486 million for bonds, is listed in the fling as Mirant’s largest unsecured creditor. Bear Stearns Securities Corp. is owed $447.3 million, according to the filing.
Lenders, including Citigroup Inc. and Credit Suisse First Boston Corp., opposed the plan to restructure outside bankruptcy proceedings because too much collateral would have been shared with holders of $950 million of bonds that come due next year, Mirant has said.
Mirant, which generates enough power for 17.6 million typical U.S. homes, had $1.4 billion in cash as of June 20 and $4.5 billion of “near-term debt repayment,” according to a June 30 regulatory filing.
