Mirant income seen to reach P272B up to 2025

US-based Mirant Corp. is forecast to earn some $5.32 billion (approximately P272 billion) in operating income for the period 2007-2025 or until the end of its contract with the National Power Corp. (Napocor), official documents showed.

The company’s projected income over the next 19 years is detailed in the Mirant Information Package (MIP) given out by Credit Suisse to prospective buyers. Mirant, however, plans to cash in some $2.8 billion to $3 billion through the equity sale of Mirant Philippines by the end of this year.

Prospective buyers are now conducting their respective due diligence on Mirant’s assets in the Philippines.

Sources said some interested buyers are wary of the issues confronting the sale, and could lead to a lowering of their bid price. Among the main issues are the consent that Napocor has to give before the sale and the fate of the employees.

Four interested bidders that are reportedly included in the shortlist of qualified buyers are Marubeni-Tokyo Electric-First Gen; Korea Electric Power Corp. (Kepco)/ Chubu Electric; One Energy with China Light and Power and Mitsubishi Corp; and Mitsui/International Power Group.

This means that the winning bidder will be left with an income of about $2.3 billion over the remainder of the 25-year contract. Mirant Philippines owns the 1,218 megawatt (MW) Sual coal-fired power plant and the 735-MW Pagbilao power plants.

Based on the MIP, earnings before interest, taxes, depreciation and amortization (EBITDA) could reach as high as $7.6 billion for the period 2007 to 2025.

Over the past years, Mirant had been posting earnings from its Philippine operations. For 2005, it earned $315.05 million and this year, is seen to increase to $338.9 billion.

In 2004, operating income stood at $322 million, lower than the $347.063 million posted in 2003.

Projected EBITDA for 2006 is seen at $425.73 million, higher than 2005’s $387.76 million. Next year, EBITDA is expected to rise further to $447.9 million.

Based on the MIP, most of the earnings would come from capacity payments for contracted volume of the power plants paid to Mirant by Napocor which reached $225.53 million in 2005. By next year, payments would increase to $226.36 million.

Another contributor is finance lease income, contributing $213.9 million in 2005 and $210.5 million in 2006.

Other income generating factor of Mirant is its 20-percent equity in the 1,200-MW Ilijan natural gas-fired facility, registering at $9.9 million in 2005 from $10.7 million in 2004.

As of March 2006, Mirant’s asset base stood at $3.2 billion from $1.3 billion as of end-December 2005.

For the first quarter of 2006, the company registered a profit of $46.324 million from $55.7 million in the same period in 2005.

The MIP documents showed that on top of the capacity fees for the Sual, Pagbilao and Ilijan plants, Mirant also registers earnings from energy fees.

Documents also indicate that supplementary revenues are also being realized from the excess 200 MW capacity of the Sual plant and the rights gained by Mirant to sell to a third party the capacity beyond the Pagbilao plant’s nominated capacity of 700 MW.