M&A

Mirant Mulling Possible Sale

After abandoning a hostile bid for NRG Energy last year, the power company is already in the process of selling its Philippine business, its Caribb...
Stephen TaubApril 9, 2007

Mirant announced early Monday that it will explore strategic alternatives, including selling the company outright.

Already under way are a sale of Mirant’s Philippine business and six U.S. natural-gas-fired plants, expected to close in the second quarter, and the power company’s Caribbean business, expected to close midyear.

In a statement, Mirant affirmed that its board will determine whether shareholders would be better served by receiving excess cash from these divestitures or by a possible transaction with another company. Mirant, which last year was criticized by a number of hedge funds for its hostile bid for NRG Energy, stressed that it does not expect to consider an acquisition during its current exploration of alternatives.

The company’s share price surged more than 8 percent as of market close on Monday.

Mirant also stated that under Article 17 of its certificate of incorporation, certain transfer restrictions that are intended to preserve the value of the company’s substantial tax loss carry forwards apply when holders of 5 percent or more of the company’s stock own, in the aggregate, at least 35 percent. In such a case, 5 percent shareholders cannot acquire additional stock, and other investors cannot become 5 percent shareholders.

Currently, as much as 26 percent of the company’s stock is held by or committed to 5 percent shareholders, according to the company.

Mirant’s Chapter 11 filing in July 2003 was one of the largest U.S. corporate bankruptcies at the time. It emerged from bankruptcy in January 2006.