Mirant Announces Plan to Repurchase Common Stock and Sell International Businesses
July 11 2006 - 9:00AM
PR Newswire (US)
* Immediate launch of a modified "Dutch Auction" tender offer for
up to 43 million shares of Mirant common stock for an aggregate
purchase price of up to $1.25 billion ATLANTA, July 11
/PRNewswire-FirstCall/ -- Mirant Corporation (NYSE:MIR) today
announced a strategic plan to enhance shareholder value. The
elements of Mirant's plan are (1) the immediate launch of a
modified "Dutch Auction" tender offer for up to 43 million shares
of Mirant common stock, using available cash and cash to be
distributed to Mirant upon completion of a term loan to be entered
into by Mirant's Philippines business, and (2) the commencement of
auction processes to sell Mirant's Philippines and Caribbean
businesses. As Mirant generates cash through these sales, it plans
to continue returning cash to its shareholders. Mirant Chairman and
Chief Executive Officer Edward R. Muller said, "Our strategic plan
reflects our continued commitment to enhance shareholder value,
both through the return of cash to our shareholders and through our
continuing U.S. business." Share Repurchases Mirant's Board of
Directors has authorized the repurchase of up to 43 million shares
of Mirant common stock for an aggregate purchase price of up to
$1.25 billion. The repurchase will be made through a modified
"Dutch Auction" tender offer in which Mirant's shareholders will be
given the opportunity, subject to certain conditions, to sell all
or a portion of their shares of Mirant common stock to Mirant at a
price not less than $25.75 and not more than $29.00 per share. The
tender offer will commence tomorrow and will be funded through a
combination of cash on hand and cash distributed to Mirant upon
completion of a term loan to be entered into by Mirant's
Philippines business. Sales of International Businesses Mirant also
is commencing auction processes to sell its Philippines and
Caribbean businesses. Certain of the sales will be subject to
regulatory and other approvals and consents. The planned sales will
result in these businesses being reported as "discontinued
operations" beginning in the third quarter of 2006. The sales are
expected to close by mid-2007. As Mirant generates cash from these
sales, it plans to continue returning cash to its shareholders
while maximizing the value of its net operating loss carryforwards.
Mirant's financial advisor for the sale of the Philippines business
will be Credit Suisse. JPMorgan will serve as financial advisor for
the sale of the Caribbean businesses. Mirant has ownership
interests in three generating facilities in the Philippines: Sual,
Pagbilao and Ilijan. Its net ownership interest in these three
generating facilities to be sold is 2,203 MW. The Philippines
business contributed $370 million in adjusted EBITDA in 2005. In
light of its decision to sell its Philippines business, Mirant has
adjusted its plan to recapitalize the business. The
recapitalization will now consist of a $700 million term loan for
which Mirant has obtained a commitment from Credit Suisse. The term
loan will be prepayable at par. Mirant's net ownership interest in
the Caribbean businesses comprises 1,050 MW. The ownership includes
controlling interests in two vertically integrated utilities: an
80% interest in Jamaica Public Service Company Limited and a 55%
interest in Grand Bahama Power Company. Mirant also owns a 39%
interest in the Power Generation Company of Trinidad and Tobago
(PowerGen), and a 25.5% interest in Curacao Utilities Company. In
2005, the Caribbean businesses contributed $156 million in adjusted
EBITDA. Continuing Business The continuing business of Mirant will
consist of its 14,161 MWs in the United States. Mirant expects to
generate sufficient cash from its continuing business to meet all
of its capital requirements, including planned environmental
capital expenditures. Estimated Available Cash Proceeds for the
tender offer will come from available cash on hand of $885 million
and cash to be distributed to Mirant upon completion of the $700
million term loan to be entered into by Mirant's Philippines
business. The remainder of the term loan will be used to pay off
existing debt in the Philippines. Estimated Available Cash (in
millions) Estimated consolidated cash & cash equivalents as of
June 30, 2006 $1,765 Less restricted international cash (403) Less
restricted cash at New York subsidiaries (72) Less restricted
Mirant North America cash (105) Total available cash at Mirant
Corporation 1,185 Less cash reserved for the Pepco settlement (100)
Less reserved corporate cash (200) Total available cash for
distribution as of June 30, 2006 885 Plus available cash to be
distributed to Mirant Corporation upon completion of the
Philippines term loan 376 Total estimated available cash for
distribution $1,261 Details of Tender Offer The modified "Dutch
Auction" tender offer for shares of Mirant common stock will
commence tomorrow and will expire on August 21, 2006, at 5:00 p.m.,
New York City time, unless extended by Mirant. Under the tender
offer, Mirant's shareholders will have the opportunity to tender
all or a portion of their shares at a price not less than $25.75
and not more than $29.00 per share. Based on the number of shares
tendered and the prices specified by the tendering shareholders,
Mirant will determine the single per share price within the
specified range that will allow it to buy 43 million shares, or
such lesser number of shares that are properly tendered. If
shareholders properly tender more than 43 million shares at or
below the determined price per share, Mirant will purchase shares
tendered by such shareholders, at the determined price per share,
on a pro rata basis based upon the number of shares each
shareholder tenders. All shares that have been tendered and not
purchased will be promptly returned to the shareholder.
Shareholders whose shares are purchased in the offer will be paid
the determined purchase price per share net in cash, without
interest, after the expiration of the offer period. The tender
offer is not contingent upon any minimum number of shares being
tendered. The offer is, however, subject to certain terms and
conditions that will be specified in the offer to purchase to be
distributed to shareholders, including obtaining the necessary
financing for the offer through the term loan to be entered into by
Mirant's Philippines business. JPMorgan will serve as dealer
manager for the tender offer. Innisfree M&A Incorporated will
serve as information agent and Mellon Investor Services will act as
depositary. Neither Mirant nor its Board of Directors, dealer
manager, depositary or information agent is making any
recommendation to shareholders as to whether to tender or refrain
from tendering their shares into the tender offer. Shareholders
must decide how many shares they will tender, if any, and the price
within the stated range at which they will offer their shares for
purchase to Mirant. This press release is for informational
purposes only and is not an offer to buy or the solicitation of an
offer to sell any shares of Mirant's common stock. The solicitation
of offers to buy shares of Mirant common stock will be made only
pursuant to the offer to purchase and related materials that Mirant
will send to its shareholders shortly. Shareholders should read
those materials carefully because they will contain important
information, including the various terms of, and conditions to, the
tender offer. Shareholders will be able to obtain the offer to
purchase and related materials at no charge at the SEC's website at
http://www.sec.gov/ or from our information agent, Innisfree
M&A Incorporated. We urge shareholders to read those materials
carefully when they become available prior to making any decisions
with respect to the tender offer. Conference Call and Webcast
Mirant is hosting a conference call to discuss the matters
described in the press release. The call will be held from 11:00
a.m. to noon Eastern Daylight Time today, July 11, 2006. To listen
to the webcast and view the accompanying slide presentation, log on
to Mirant's website at http://www.mirant.com/. Analysts are invited
to participate in the call by dialing 866.850.2201 and referencing
confirmation code 3755170. International callers should call
718.354.1362 and reference confirmation code 3755170. The call will
be available for replay shortly after completion of the live event
on the "Investor" section of the Mirant website or by dialing
866.239.0765 and referencing replay code 3755140. Mirant is a
competitive energy company that produces and sells electricity in
the United States, the Caribbean, and the Philippines. Mirant owns
or leases approximately 17,300 megawatts of electric generating
capacity globally. The company operates an asset management and
energy marketing organization from its headquarters in Atlanta. For
more information, please visit http://www.mirant.com/. Regulation G
Reconciliations Appendix Table 1 Adjusted Net Income & Adjusted
EBITDA Year-end December 31, 2005 (in millions) Businesses to be
Sold Sub United Philippines Caribbean Total States Total Net income
(loss) (1) $112 $59 $171 $(1,478) $(1,307) Mark-to-market losses -
- - 17 17 Other impairment loss and restructuring - 23 23 Loss
(Gain) on sales of assets, net (1) - (1) 19 18 Gain on sale of
investments, net - (45) (45) Impairment losses on minority owned
affiliates 23 23 - 23 Other, net 1 (5) (4) 63 59 Reorganization
items, net - - - 72 72 Income from discontinued operations, net - -
- 7 7 Cumulative effect of a change in accounting principle - 16 16
Adjusted net income (loss) $135 $54 $189 $(1,306) $(1,117)
Provision (benefit) for income taxes 131 6 137 (14) 123 Interest,
net 25 53 78 1,402 1,480 Amortization of transition power
agreements - - - (14) (14) Depreciation and amortization 79 43 122
185 307 Adjusted EBITDA $370 $156 $526 $253 $779 Adjusted net
income and adjusted EBITDA are non-GAAP financial measures.
Management and some members of the investment community utilize
adjusted net income and adjusted EBITDA to measure financial
performance on an ongoing basis. These measures are not recognized
in accordance with GAAP and should not be viewed as an alternative
to GAAP measures of performance. In evaluating these adjusted
measures, the reader should be aware that in the future Mirant may
incur expenses similar to the adjustments set forth above. (1) Net
income and adjusted EBITDA for the businesses to be sold excludes
corporate overhead expenses historically allocated to these
businesses. These amounts were $14 million for the Philippines
business, and $13 million for the Caribbean businesses. 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, our
subsidiary's ability to close the term loan facility and our
ability to cause our subsidiaries to distribute cash to us to use
in the tender offer; our ability to sell our businesses on terms
that we are willing to accept; legislative and regulatory
initiatives regarding deregulation, regulation or restructuring of
the electric utility industry; changes in state, federal and other
regulations (including rate regulations); changes in, or changes in
the application of, environmental and other laws and regulations to
which Mirant and its subsidiaries and affiliates are or could
become subject; the failure of Mirant's assets to perform as
expected; changes in market conditions, including developments in
energy and commodity supply, demand, volume and pricing or the
extent and timing of the entry of additional competition in the
markets of Mirant's subsidiaries and affiliates; increased margin
requirements, market volatility or other market conditions that
could increase Mirant's obligations to post collateral beyond
amounts which are expected; Mirant's inability to access
effectively the over-the-counter and exchange-based commodity
markets or changes in commodity market liquidity or other commodity
market conditions, which may affect Mirant's ability to engage in
asset management and proprietary trading activities as expected;
Mirant's inability to enter into intermediate and long-term
contracts to sell power and procure fuel, including its
transportation, on terms and prices acceptable to Mirant; weather
and other natural phenomena, including hurricanes and earthquakes;
war, terrorist activities or the occurrence of a catastrophic loss;
environmental regulations that restrict Mirant's ability to operate
its business; deterioration in the financial condition of Mirant's
customers or counterparties and the resulting failure to pay
amounts owed to Mirant or to perform obligations or services due to
Mirant; the disposition of the pending litigation described in
Mirant's Form 10-K for the year ended December 31, 2005, and Form
10-Q for the quarter ended March 31, 2006, filed with the
Securities and Exchange Commission; political factors that affect
Mirant's international operations, such as political instability,
local security concerns, tax increases, expropriation of property,
cancellation of contract rights and environmental regulations; the
inability of Mirant's operating subsidiaries to generate sufficient
cash flow and Mirant's inability to access that cash flow to enable
Mirant to make debt service and other payments; the resolution of
claims and obligations that were not resolved during Mirant's
Chapter 11 proceedings that may have a material adverse effect on
Mirant's results of operations and other factors discussed in
Mirant's Form 10-K for the year ended December 31, 2005, and its
Form 10-Q for the quarter ended March 31, 2006. Shareholder
inquiries: 678 579 7777 DATASOURCE: Mirant Corporation CONTACT:
Philippines Asset Sales: Credit Suisse/Singapore, Jason Fisher,
+65-6212-3811, , or Credit Suisse, Raymond Wood, +1-212-325-2845, ;
Caribbean Asset Sales: JPMorgan, Carlos Cerini, +1-212-622-8946, ,
or Scott T. Deghetto, +1-212-622-6924, ; Information Agent:
Innisfree M&A Incorporated, Shareholders Call Toll-Free,
1-877-750-5836, or Banks and Brokers Call Collect, +1-212-750-5833;
Media contact, David Reno, or Jonathan Gasthalter, or Brooke
Morganstein, Citigate Sard Verbinnen, +1-212-687-8080; Investor
Relations, Mary Ann Arico, +1-678-579-7553, , or Sarah Stashak,
+1-678-579-6940, ; Shareholder inquiries, +1-678-579-7777 Web site:
http://www.mirant.com/
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