A Texas bankruptcy court judge approved the restructuring plan of power producer Mirant Corp. last Thursday, setting the stage for the troubled company to emerge from bankruptcy within a couple of weeks.
Noting the approval of Judge D. Michael Lynn of Fort Worth, Mirant spokesman Dave Thompson said the Atlanta, GA-based company will exit from bankruptcy either at the end of this year or the beginning of next year.
He noted that Lynn's action was one of the final steps before Mirant can come out of bankruptcy. Thompson said a 10-day waiting period will now occur, and the company will work on securing exiting financing. The last step involves a move toward consummation and payments by Mirant to its creditors under the bankruptcy plan.
Mirant sought Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Texas in July 2003 following months of speculation that the cash-strapped energy company was headed in that direction. Mirant's debt was approximately $8.6 billion at the start of the bankruptcy proceeding.
The plan of reorganization, which was approved last month by the majority of Mirant's unsecured creditors and shareholders who voted, is expected to cut the company's total debt by nearly half, according to M. Michele Burns, Mirant's chief restructuring officer. She further noted that the company has received commitments for over $2.35 billion in loans to finance the business upon exiting from Chapter 11.
Combined with Mirant's current cash and cash equivalents of over $1 billion and expected debt reduction, "Mirant can emerge from bankruptcy with one of the strongest balance sheets in the merchant power sector," she said in mid-November.
Mirant produces and sells electricity in North America, the Caribbean and the Philippines. It has approximately 25 generation power plants in the United States alone, many of which are fueled by natural gas. Mirant is a major buyer and seller of natural gas.
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