Mirant urges 2 top bidders to improve on their offers

US-based Mirant Corp. has reportedly started talks with two groups, one led by Marubeni Corp. and the other by One Energy, for the sale of its power generating assets in the Philippines, industry sources said.

Sources said only the two consortia met the lower-end price target of $2.8 billion for Mirant Philippines Inc.’s equity placed on the auction block last Nov. 23 in Singapore .

Marubeni teamed up with another Japanese firm, Tokyo Electric Power Co., while US firm One Energy has partnered with Japan’s Mitsubishi Corp. and China Light and Power Co.

According to sources, Mirant has been negotiating with the two groups to explore the possibility of raising the price offers from both camps.

"The extended negotiations started last Friday (Dec. 1), mostly centered on the commercial terms of their bids," the sources said.

It was learned from highly-placed sources that Marubeni submitted a firm price offer of $2.85 billion, while One Energy’s bid was reportedly at $2.8 billion.

The sources added that the two groups based their valuation on the enterprise value of Mirant’s power generation portfolio in the Philippines.

Credit Suisse, the financial advisor for the sale, is also reportedly talking with another group of bidders led by Korea Electric Power Corp. (Kepco) and its French partner Suez SA.

Mirant, the sources said, is apparently trying to convince these three groups if they could just remove the "commercial conditions" tied to their respective bids. These undisclosed commercial conditions were on top of conditionalities set under the purchase sale agreement (PSA).

Under the PSA, the buyer should assume all the liabilities of Mirant to its employees and the government.

Specifically, the buyer should secure government consent on the sale through the National Power Corp.

On the employee severance package, the PSA prescribed that the buyer shall honor the policy of 2.5 months for every year of service severance package for two years.