Mirant to Complete Settlement with Pepco
August 07 2007 - 7:29PM
PR Newswire (US)
ATLANTA, Aug. 7 /PRNewswire-FirstCall/ -- Mirant Corporation
(NYSE:MIR) announced today that it has settled the challenge to its
2006 settlement of its disputes with Potomac Electric Power Company
(Pepco). The 2006 Pepco settlement therefore will become effective
in the third quarter of 2007, resulting in a 2007 pre-tax book gain
of approximately $370 million and an estimated federal tax
deduction of approximately $600 million related to the distribution
of Mirant common shares to Pepco and to a supplemental distribution
to other claims holders in Mirant's bankruptcy that is described
below. The 2006 Pepco settlement, once effective, will resolve all
remaining disputes between Pepco and Mirant in Mirant's bankruptcy
proceedings and will end Mirant's obligations to make any further
payments under out-of-market electricity supply contracts for which
Mirant became responsible in connection with its purchase of
Pepco's generation assets in 2000. Mirant also will receive from
Pepco cash reimbursements of $70 million for an advance payment
made by Mirant in 2006 under the 2006 Pepco settlement and
approximately $36 million for amounts paid by Mirant related to the
out-of-market contracts since May 31, 2006. Pepco will receive a
claim in Mirant's bankruptcy proceedings for $520 million. To
satisfy that claim, Mirant will distribute to Pepco shares reserved
by Mirant under its Plan of Reorganization to address unresolved
claims. The exact number of shares to be distributed will be
determined by Mirant after the 2006 Pepco settlement becomes
effective and will be based upon the then-current share price. The
challenge to the 2006 Pepco settlement was brought by some holders
of claims in Mirant's bankruptcy proceedings. Both the Bankruptcy
Court and the U.S. District Court approved the 2006 Pepco
settlement, and the challengers appealed to the United States Court
of Appeals for the Fifth Circuit. Mirant and those challengers have
reached a settlement and the parties shortly will request that the
Fifth Circuit dismiss the appeal, Upon the dismissal, the 2006
Pepco settlement will become effective. Under the settlement
reached with the claims holders, once the 2006 Pepco settlement has
become effective and Mirant has distributed to Pepco the shares due
it, Mirant will make a supplemental distribution under the Plan of
all but approximately 1 million of the reserved shares that remain
after the distribution of shares is made to Pepco on a pro rata
basis to the holders of allowed Mirant Debtor Class 3 - Unsecured
Claims in its bankruptcy proceedings. Calculated based upon the
closing price for Mirant's common stock on Tuesday, August 7, 2007,
of $39.63 per share, the number of reserved shares to be
distributed to Pepco under the 2006 Pepco settlement would be
approximately 13.5 million shares and the number of shares to be
distributed in the supplemental distribution under the Plan would
be approximately 6.3 million shares. These are estimates and the
actual amounts of the shares included in each of the two
distributions will depend on the closing price of Mirant's common
stock on the date on which the shares are distributed to Pepco.
Mirant expects that date to be within two weeks of the Fifth
Circuit's order dismissing the pending appeal. Regardless of
variances in the closing price of Mirant's common stock, the total
number of reserved shares included in both the distribution to
Pepco and the supplemental distribution will be approximately 19.8
million shares. Mirant expects to make the supplemental
distribution of shares to holders of allowed Mirant Debtor Class 3
- Unsecured Claims shortly after the number of shares to be
distributed to Pepco is set in accordance with the 2006 Pepco
settlement. The "reserved" shares, including the shares to be
distributed either to Pepco or as part of the supplemental
distribution, have been issued and included in the calculation of
shares outstanding and earnings per share since the Company emerged
from bankruptcy on January 3, 2006. As a result, the distributions
to Pepco and holders of allowed Mirant Debtor Class 3 - Unsecured
Claims will not dilute current shareholders. A summary of the
material terms of the 2006 Pepco settlement and the agreement
itself were filed with the Securities and Exchange Commission on
May 31, 2006, on a Form 8-K. The settlement agreement with those
holders of allowed claims who appealed the approval of the 2006
Pepco settlement was filed with the Securities and Exchange
Commission on August 7, 2007, on a Form 8-K. Mirant is a
competitive energy company that produces and sells electricity in
the United States, and the Caribbean. Mirant owns or leases
approximately 11,350 megawatts of electric generating capacity
globally. The company operates an asset management and energy
marketing organization from its headquarters in Atlanta. For more
information, visit http://www.mirant.com/. Cautionary Language
Regarding Forward-Looking Statements Some of the statements
included herein involve forward-looking information. Mirant
cautions that these statements involve known and unknown risks and
that there can be no assurance that such results will occur. There
are various important factors that could cause actual results to
differ materially from those indicated in the forward-looking
statements, such as, but not limited to, the net proceeds received
by Pepco from the disposition of the common stock distributed to it
under the settlement agreement could be more or less than expected,
and other factors described in Mirant's Quarterly Report on Form
10-Q for the quarter ended March 31, 2007 filed with the Securities
and Exchange Commission. Stockholder inquiries: 678 579 7777
DATASOURCE: Mirant Corporation CONTACT: Media, Felicia Browder,
+1-678-579-3111, ; Investor Relations, Mary Ann Arico,
+1-678-579-7553, , both of Mirant Corporation; Stockholder
inquiries, +1-678-579-7777 Web site: http://www.mirant.com/
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