Mirant seeks $1.2-B refinancing for RP generating assets

US-based Mirant Corp. is looking at the possibility of tapping new investors for a $1.2 billion refinancing program for its generating assets in the Philippines, a ranking energy official said.

The official, who requested anonymity, said some Mirant officials recently informed the Department of Energy (DOE) of such a plan.

"They indicated to us that the plan is to pursue refinancing, among all other sale options being explored," the official said.

It was learned that the $1.2 billion refinancing plan accounts for almost half of the current $2.5 billion total valuation of Mirant’s Philippine subsidiary.

Energy Secretary Raphael P.M. Lotilla admitted that they have been notified about the planned divestment of Mirant. "We are holding them to their word that they will come back and inform us of the final plan before any sale would be pursued," the energy chief said.

According to the energy official, they need to ensure that Mirant’s plan to exit from the Philippine market or allow the entry of new investors or shareholders will not affect the Philippine energy market.

"We have to make sure that all agreements entered into with the Philippine government will be fairly and squarely honored," the official said.

Mirant’s transactions with government primarily relate to those covering its build-operate-transfer (BOT) contracts with the National Power Corp. (Napocor); including the expected savings for government resulting from the review of the contract with independent power producers (IPPs) in 2003.

Napocor had recently asked Mirant to refund some P1.35 billion in overpayments in relation to the sale of generated electricity from the 200-megawatt excess capacity of its Sual power plant.

Late last year, the parent firm, Mirant Corp. emerged from a bankruptcy filing in the US.

Observers said that Mirant Corp. may consider using its profits from its Philippine operations to infuse fresh capital into their global operations so they can settle some outstanding liabilities.

As reported earlier, Mirant plans to consummate the refinancing plan via its Asia Pacific operations unit in Singapore.

Before the planned divestment move, Mirant Philippines was one of the most aggressive investors eyeing to pursue expansion plans in the country.

According to industry sources, recent developments may affect the expansion program of Mirant in the country, including the planned capacity expansion of its Pagbilao power plant by another 350 megawatts.

Mirant, with partner Global Business Holdings Inc. of banker George Ty, earlier indicated a plan to increase its capacity of Toledo power plant by 100 MW.

Mirant Philippines had also signified a keen interest to participate in the privatization of Napocor’s generating assets, particularly its coal and natural gas-run facilities.

Under its reorganization plan, Mirant is converting more than $6 billion of debt and liabilities into equity in the reorganized company and will nearly halve its overall debt.

Mirant’s US and Canadian units filed for bankruptcy protection on July 14, 2003, and various dates thereafter.

Mirant Philippines, on the other hand, has always been a strong partner in providing reliable and cost effective electricity to help meet the country’s development needs.

In 2004, it initiated the largest rural electrification program ever implemented by a private corporation, which benefited over 1,000 barangays nationwide.

The power firm is committed to undertake the electrification of an additional 500 barangays this year as part of its corporate social responsibility program.

Mirant Philippines also has a stake in the 1,200 MW Ilijan natural gas project.

Mirant Corp. is a competitive energy company that produces and sells electricity in the United States, the Caribbean, and the Philippines.