Thursday, June 01, 2006

Mirant Is On The Move

In 2003 Atlanta-based Mirant Corporation was bogged down in bankruptcy and now, after emerging from bankruptcy in January, they are making aggressive moves to steady their corporate ship. It was recently reported that Mirant made an unsolicited bid to buy Princeton NJ-based NRG Energy for $7.8 billion. NRG Energy has 19 ,000 megawatts in North America and Mirant has 14, 000 megawatts of capacity. Combined that is enough electricity for 33 million homes. It is being reported that J.P. Morgan would provide Mirant with $11.5 billion in financing for the NRG Energy purchase. Mirant still carries $2.8 billion in debt.

Today it was reported that Mirant has agreed to pay PEPCO $520 million in cash and stock to settle litigation over their power selling contract. During deregulation PEPCO sold Mirant four of its six power plants for $2.75 billion. Because rates were frozen for years under a flawed deregulation program, Mirant evidently could not make enough money to remain solvent and PEPCO refused to pay more for power. Mirant also tried to get an adjustment as part of the bankruptcy proceedings. Evidently this payment somehow rectifies the complex situation. The $520 million will go into a fund for PEPCO to buy power from another generator. It appears that maybe this agreement frees Mirant to cost-effectively sell its power to another purchaser at a higher price.

Update: Mirant has sued NRG Energy claiming they unfairly rejected the takeover bid. Mirant wants a Delaware court to order NRG to not obstruct the acquisition. NRG is claiming that Mriant's proposal undervalues NRG. Ah the joys of corporate courtships and mergers.

Update: Mirant has withdrawn its offer to buy NRG and has dropped the lawsuit.

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