Creditors Object to Mirant's Loans Plan
HARRY R. WEBER
Oct. 01, 2003
ATLANTA (AP) _ Several creditors have raised objections to bankrupt Mirant Corp.'s plan to acquire $500 million in financing _ money the energy supplier says it needs to operate as it reorganizes.
The creditors, affiliated with Bank One NA and Verizon Capital Corp., say in court papers that Atlanta-based Mirant hasn't adequately shown that, as a bankrupt company still in possession of its assets, it needs the money.
The creditors also say the financing plan would hinder agreements they have with other companies, and make it more difficult for them to get their money back. According to court papers, the creditors are concerned that the financing plan would give the proposed lender, General Electric Capital Corp., a ``super priority'' in recouping money it's owed.
Mirant said it is confident the objections can be worked out, but it needs the money soon.
In court papers filed Tuesday, Mirant also said it needs permission to pay $1 million to GE Capital for an extension the lender has given the energy supplier to complete the financing deal.
A hearing in U.S. Bankruptcy court in Fort Worth, Texas, was scheduled for Wednesday but postponed until Oct. 15, the same day as GE Capital's extension deadline, Mirant said.
In court filings, Mirant emphasized the importance of getting the financing.
Without the financing, some businesses Mirant is working with ``may hesitate or otherwise refuse to engage in transactions'' with Mirant.
Mirant said the money is necessary to continue ``the efficient operation of the debtors' businesses.''
Mirant said for the remainder of the bankruptcy case, it intends to fund its ongoing operations from cash on hand, cash generated from operations and the proceeds of the proposed $500 million financing plan.
As of last month, Mirant said it had $855 million in cash on hand, but given the volatility of the energy industry it needs the extra financing to function effectively.
Mirant filed for bankruptcy July 14, listing $11.4 billion in debt and $20.6 billion in assets.
Mirant, a spinoff of Southern Co., and its subsidiaries employ 7,000 people. In filings last month, the company said it plans an unspecified number of job reductions in October that it hopes will net Mirant up to $40 million in savings annually.
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