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A measure of calm has finally arrived in the Mirant Corp. bankruptcy. The Atlanta-based utility announced Thursday that it reached an agreement with its key creditors on an amended reorganization plan. Mirant’s bankruptcy has been among the most rancorous since it filed for Chapter 11 protection on July 14, 2003, with creditors warring among themselves, with shareholders and with the company itself. To shareholders, who will get 3.75 percent of the reorganized Mirant’s stock under the plan, the turning point toward gaining consensus on a plan came when Judge D. Michael Lynn of the U.S. Bankruptcy Court for the Northern District of Texas in Fort Worth ordered Mirant to tack $450 million onto its valuation after 27 days of hearings last spring. “The valuation hearings certainly made a significant contribution to the term sheet and the resolution of the plan,” said the lawyer for Mirant shareholders, Eric Taube of Hohmann Taube & Summers in Austin, Texas. Mirant’s three official committees and one panel for bondholders agreed to withdraw all opposition to the current disclosure statement and to throw their support behind the revised plan at a Sept. 28 hearing before Lynn. “I’m very happy and I think other parties are happy and I think this is the beginning of the end,” said the lawyer for the official Mirant creditors committee, Paul Silverstein of Andrews Kurth in New York. “It’s been a long, grueling process, but everybody finally came together on a consensual plan that’s essentially a win-win situation for everybody,” said the counsel to Mirant’s unofficial bondholders committee, Matthew Cantor of Kirkland & Ellis. Thomas Lauria, Miami debtor counsel at White & Case, couldn’t be reached for comment. Bondholders and unsecured creditors will get the most under the plan, but Mirant shareholders may be the biggest winners. The shareholders went from zero recovery under the initial plan filed on March 25 to getting 3.75 percent of the reorganized Mirant’s common stock, plus warrants to buy an additional 10 percent, under the current one, Taube said. Shareholders will also be entitled to reap 50 percent of any recoveries from all pending litigation involving the contentious petition, he said. Mirant ran into a barrage of creditor opposition to its proposed $2.35 million exit loan from J.P. Morgan Chase & Co. due to a clause that called for a $15 million fee to be added if changes in the plan required any changes in the financing. But the shift in the plan calling for shareholders to get 3.75 percent of the new equity should not be significant enough to trigger that fee, Traube said. “Judge Lynn grilled the lenders very thoroughly on how much the plan could be revised and still not kick in that $15 million fee,” Taube said. “I think he came to the conclusion that it would only apply if there was a change in the exit financing package.” That slug of equity is coming out of the hide of unsecured creditors, who’ll now get 96.25 percent of reorganized Mirant’s equity in exchange for the $6.5 billion in debt they hold instead of all of it. Holders of $2.7 billion in bonds at Mirant’s largest unit, Mirant Americas Generation Inc. would get all interest accrued at the contract rate, according to term sheets filed Wednesday with the Securities and Exchange Commission. The plan includes covenants limiting the debt that can accrue to the bonds. All MAG claims would continue to be paid in full and MAG’s $1.7 billion in long-term debt would be reinstated, the term sheet said. The Mirant bondholders will benefit from fixed pricing on the debt and the compounding interest they’ll receive. Despite the agreement, no value has been set for Mirant. Valuation hearings were supposed to continue, but the parties agreed to withdraw their opposition so the hearings could be suspended. Lynn noted after the first round of valuation hearings that some shareholders would probably get a recovery if the revised worth climbed to $10.65 billion. Whether he’s right is academic now, given that shareholders are earmarked for recovery. But stranger things have happened in Mirant’s bankruptcy, and there may still be more to come. Copyright �2005 TDD, LLC. All rights reserved.

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