Mirant submits today details of assets sale

The National Power Corp. (Napocor) expects Mirant Corp. to formally come up with concrete details on the sale of its Philippine assets today, Aug. 25.

Napocor president Cyril del Callar said they expect the US-based power firm to also inform them of the mode it would use in selling its generating assets.

Del Callar said they had written a letter to Mirant chairman and CEO Ed Muller on these two crucial points that the Philippine government, through Napocor, should know before the actual sale of Mirant’s assets is carried out.

It was pointed out earlier that Mirant would need the prior consent of Napocor before it could dispose of its more than 2,000 megawatt (MW) generating assets in the Philippines.

"We are waiting for their reply and that would be due Aug. 25. We want to be apprised on how they are going to undertake the sale of their assets," Del Callar said.

The government also wants to know up to what extent of consent would Mirant need to secure before the actual sale of assets is done.

It will be recalled that the government, through Energy Secretary Raphael P.M. Lotilla, said that "the standpoint of the Philippine government is that the consent of Napocor is necessary to ensure that the successor is able to deliver on the obligations under the contract".

It was also learned that top executives of Mirant Philippines have also asked management to come up with a separation package.

The proposed separation package for employees of the company, if approved, would cost Mirant only about $6 million, compared to the $22-million fee that Mirant will pay for the services of Credit Suisse First Boston as its financial advisor.

The issue of severance pay, among others, is seen to cause a possible delay in the sale of the $3-billion assets of Mirant Philippines.

The sale is supposed to be done in the last quarter of 2006 or the first quarter of 2007, but these concerns may cause some delay.

Aside from the apparent disagreement over separation pay, another issue facing Mirant’s sale is the P1.35 billion in excess payments made by Napocor to Mirant in connection with the 200-MW excess capacity of the 1,200-MW Sual power plant in Pangasinan for which Napocor is seeking reimbursement.

Another issue is the resolution of the non-payment of real property taxes (RPT) for its 735-MW facility in Pagbilao, Quezon for the past years, amounting to close to P4 billion.

Atlanta-based Mirant Corp. announced recently the start of an auction process to divest itself of its Philippine assets, namely the 1,200-MW Sual plant, the 735 MW Pagbilao plant and its 20-percent share in the Ilijan natural gas power plant.