Mirant shares fell from the high $3.70s early last week to the mid $3.20s Friday after CEO Marce Fuller warned on Tuesday that the company was about 20 cents/share behind where it expected to be at this time in the year. Fuller expressed concerns about Mirant’s ability to meet its earnings forecast of $1.60/share for the year. The current average of Wall Street analysts’ estimates is $1.54 with a low of $1.45 and a high of $1.69, according to Thomson Financial.

“July and early August were very tough in terms of trading liquidity for longer-dated transactions,” Fuller said in a statement. “Although, our assets, particularly in the Mid-Atlantic, Northeast and West regions, have continued to perform in line with our expectations, our ability to leverage our assets has been limited by poor market conditions.

“Fortunately, we have seen some signs of recovery in the latter part of August and as we move into September,” she said. “I am hopeful that we can make some of this up, but at this time we are behind where we expected to be.”

Fuller told analysts at Lehman Brothers’ 16th annual CEO Energy/Power Conference in New York City that Mirant has nearly completed the sale of $1.6 billion in assets and expects to sell another $700 million to $1 billion. On Friday Mirant sold its 49% stake in Western Power Distribution Holdings Ltd. (WPD) and the related WPD Investment Holdings in the United Kingdom to PPL for $235 million in cash.

Fuller promised the company would be smaller but stronger with higher quality credit and critical mass in key markets. She also noted the company is cutting costs by $150 million and reducing balance sheet debt by $1.2 billion. Its debt-to-equity ratio stands at 60% but Mirant plans to get it below 50%.

Mirant is still looking for a partner to provide more financial support for its energy trading operation. However, Mirant is not planning a joint venture to take over the operation, said Fuller. It’s in talks with a financial/insurance company that would provide greater credit strength for long-term structured transactions.

Fuller said Mirant’s current liquidity stands at about $1.5 billion and is expected to be at that level at the end of the year. The company eliminated nearly $550 million in ratings triggers associated with its Perryville and BP contracts, which substantially reduced its need for liquidity. It made a $75 million loan to Perryville Energy Partners to eliminate a $300 million contingent collateral requirement associated with a 21-year power tolling agreement. It also suspended its Mint Farm project in Washington state, which removed the need for the completion of a construction loan of $165 million. Fuller also said the year-end $1.5 billion liquidity projection assumes no proceeds from Mirant’s asset sales program, which is expected to yield $750 million to $1 billion in assets.

She also said that even under the new California refund calculations by the Federal Energy Regulatory Commission, Mirant is still owed about $350 million in related receivables.

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