Mirant edges closer to bankruptcy

Gary Park, Petroleum News Calgary correspondent

Giant energy trader Mirant says it will seek bankruptcy protection — a move that would further rattle a nervous market — if creditors reject a plan to restructure $1.45 billion of debt.

The Atlanta-based company, one of the leading U.S. merchant traders, offered the plan June 2 as part of a more comprehensive refinancing effort designed to avert bankruptcy.

Mirant and its subsidiaries owe about $5.3 billion and recently reported a loss for 2002 of $2.4 billion, putting it in the same category as other troubled merchants such as NRG Energy and PG&E National Energy Group.

Mirant President and CEO Marce Fuller told analysts during a May 7 conference call that the company has made solid progress over 18 months in its commitment to repay debts by selling assets, cutting costs and reducing collateral needs. But she conceded there are “substantial risks” if it is unable to refinance its debt.

The sales included the bulk of Mirant’s Canadian assets, which were acquired by agricultural conglomerate Cargill for $200 million. They included purchasing contracts for 380 million cubic feet per day and 1.3 billion cubic feet of storage.

However, Executive Vice President Rick Pershing said the company would retain a presence in the Canadian gas sector “because we believe Canadian natural gas is important to our U.S. operations.”