Mirant Corp. said last week it reached agreement with LS Power Equity Partners, a member of the LS Power Group, for the sale of six U.S. gas-fired plants for $1.407 billion, which includes estimated working capital. Net proceeds to Mirant after extinguishing $83 million of project-level debt are expected to total $1.324 billion. The company does not expect to recognize any significant tax or book gain on the transaction.

The plants are Zeeland (903 MW), West Georgia (613 MW), Shady Hills (469 MW), Sugar Creek (561 MW), Bosque (546 MW) and Apex (527 MW), constituting a total of 3,619 MW. The transaction is expected to close by the second quarter. The Zeeland plant is in Zeeland, MI; West Georgia is in Thomaston, GA; Shady Hills is in Shady Hills, FL; Sugar Creek is in West Terre Haute, ID; Bosque is in Laguna Park, TX; and Apex is in Las Vegas.

“Because these assets are generally located in markets that have seen limited deregulation, this acquisition plays well into one of LS Power’s key strengths — working directly with utilities and load-serving entities to help them satisfy their power needs,” said LS Power CEO Mike Segal.

Proceeds from the sales of the Zeeland and Bosque plants, expected to be approximately $500 million, will be reinvested in Mirant North America, a subsidiary of Mirant Americas Generation, and/or used to retire debt at Mirant North America.

Mirant said in August that the plants would be auctioned. The company announced a new strategic plan in July (see NGI, July 17, 2006). In 2005, on a pro forma basis, the plants contributed $77 million in adjusted earnings. The decision to sell the U.S. plants was in addition to an announcement by Mirant in July to sell its international assets in the Philippines (2,203 MW) and the Caribbean (1,050 MW). The sale of the Philippines assets to Tokyo Electric Power and Marubeni Corp. for $3.424 billion was announced in December.

Mirant emerged from bankruptcy one year ago. The company said Monday that it plans, as previously announced, to continue returning cash to its shareholders upon completion of its planned asset and business sales. Cash returned will be determined by the outlook for the continuing business (1) to preserve its credit profile, (2) to maintain adequate liquidity for expected cash requirements and (3) to retain sufficient working capital to manage fluctuations in commodity prices.

Last month the Federal Energy Regulatory Commission approved the joint venture of LS Power and Dynegy Inc. that combines the companies’ power generation under the Dynegy name. However, the assets being acquired by LS Power Equity Partners from Mirant are not party to the combination of assets with Dynegy. After the transaction with Dynegy closes, LS Power will continue to own and operate the plants being purchased from Mirant.

Mirant was advised by J.P. Morgan Securities Inc., as financial advisor, and King & Spalding, as legal counsel. LS Power Equity Partners was advised by Barclays Capital, as financial advisor, and Latham & Watkins, as legal counsel.

Atlanta-based Mirant produces and sells electricity in the United States, the Caribbean, and the Philippines. Mirant owns or leases approximately 17,300 MW of generating capacity globally. The company also operates an asset management and energy marketing organization from its headquarters in Atlanta.

LS Power was founded in 1990 and is a fully integrated development, investment and asset management group of companies focused on the power industry. LS Power maintains offices in New York, New Jersey, Missouri, California, Florida and Massachusetts. In 2005, LS Power launched LS Power Equity Partners, a $1.2 billion investment vehicle focused on the power industry.

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