SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 27, 2002
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Mirant Corporation
(Exact name of registrant as specified in its charter)
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Delaware 001-16107 58-2056305
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(State or other jurisdiction (Commission File (IRS Employer Identification
of incorporation) Number) No.)
1155 Perimeter Center West Suite 100, Atlanta, Georgia 30338
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (678) 579-5000
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N/A
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(Former name or former address, if changed since last
report.)
Item 5. Other
Recent Developments
Liquidity and Capital Resources:
Mirant Corporation ("Mirant" or "the Company") has three revolving credit
facilities: its April 1999 $450 million Credit Facility C, its July 2001 $1.125
billion 4 - year Credit Facility and its July 2001 $1.125 billion 364 - Day
Credit Facility. Credit Facility C matures in April 2004.
At June 21, 2002, Mirant had $650 million outstanding under its 364 - Day
Credit Facility, which matures in July 2002. Mirant is negotiating with various
lending institutions to enter into a new 364 - day revolving credit facility in
an amount up to $750 million to replace, in part, its existing 364 - Day Credit
Facility. As a result of present market conditions and other factors, Mirant
cannot provide assurance that it will be successful in entering into a new
credit facility. If Mirant is successful in entering into a new credit facility,
it expects the facility will be smaller and will have slightly higher pricing
and more restrictive covenants than the current facility. In the event Mirant
does not reach agreement with a syndicate of lending institutions on the terms
of a new credit facility, Mirant anticipates that it will exercise the Company's
option under its existing 364 - Day Credit Facility to convert the facility into
a term loan with a maturity of one year.
Mirant Canada Energy Marketing, Mirant's wholly owned subsidiary, has an
approximately $44 million (denominated as 70 million Canadian dollars) revolving
credit facility that initially matured in November 2001, but was extended to
July 29, 2002. Mirant Canada Energy Marketing is negotiating with various
lending institutions to enter into a new credit facility. Mirant cannot provide
assurance that as a result of market conditions and other factors, Mirant Canada
Energy Marketing will be successful in entering into a new credit facility. In
the event that Mirant Canada Energy Marketing does not enter into a new credit
facility, Mirant will be required to fund the repayment of the existing credit
facility.
West Georgia Generating Company, LLC ("West Georgia"), a wholly owned
subsidiary acquired by Mirant in August 2001, has an approximately $144 million
project finance credit facility ($144 million drawn balance at June 27, 2002).
Under the terms of that credit facility, West Georgia is required to deliver
audited financial statements to the lenders thereunder within 120 days of fiscal
year end. On May 24, 2002, within the thirty day cure period under the credit
agreement, the agent under the credit facility extended the period for delivery
of such audited financial statements until the end of July. Mirant is working,
together with its auditors, to complete the audit before the expiration of the
waiver. However, completion of the audit in a timely manner depends, in part, on
the availability of records and information held by the prior owner of the
facility. In the event the Company is unable to deliver the audited financial
statements within the required period, the lenders may have the right to declare
a default and accelerate the repayment of the loan.
Asset Sales:
In June 2002, Mirant completed the sale of its State Line generating
facility for $182 million plus an adjustment for working capital.
In June 2002, Mirant completed the sale of its 50% ownership interest in
Perryville Energy Partners, LLC to Cleco Corporation ("Cleco"). Cleco paid $54.4
million in cash to Mirant as repayment of project debt, invested capital to date
and other miscellaneous costs. In connection with the existing project
financing, Mirant made a $25 million subordinated loan to the project. In
addition, Mirant retains certain obligations as a project sponsor, some of which
are subject to indemnification by Cleco. The obligations retained by Mirant and
not subject to indemnity relate primarily to an existing 20-year power sales
agreement with a Mirant subsidiary.
Pending or Threatened Litigation:
California Rate Payer Litigation: Six additional rate payer lawsuits have
been filed since May 10, 2002 alleging that certain owners of electric
generation facilities in California, as well as certain energy marketers,
including Mirant and several of its subsidiaries, engaged in various unlawful
and fraudulent business acts that served to manipulate wholesale markets and
inflate wholesale electricity prices in California. Each of the complaints
alleges violation of California's Unfair Competition Act. The RDJ Farms
complaint also alleges violation of California's anti-trust statute. Each of the
plaintiffs seeks class action status for their respective case. The actions
seek, among other things, restitution, compensatory and general damages, and to
enjoin the defendants from engaging in illegal conduct. The captions of each of
the cases follow:
CAPTION DATE FILED COURT OF ORIGINAL FILING
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RDJ Farms, Inc., et al. v. May 10, 2002 Superior Court of California - San Joaquin County
Allegheny Energy Supply Company,
LLC, et al.
Century Theatres, Inc., et al. May 14, 2002 Superior Court of California - San Francisco County
v. Allegheny Energy Supply
Company, LLC, et al.
El Super Burrito, Inc., et al. May 15, 2002 Superior Court of California - San Mateo County
v. Allegheny Energy Supply
Company, LLC, et al.
Leo's Day and Night Pharmacy, et May 21, 2002 Superior Court of California - San Francisco County
al. v. Duke Energy Trading and
Marketing, LLC, et al.
J&M Karsant Family Limited May 21, 2002 Superior Court of California - Alameda County
Partnership, et al. v. Duke
Energy Trading and Marketing, LLC, et al.
Bronco Don Holdings, LLP, et al. May 24, 2002 Superior Court of California - San Francisco County
v. Duke Energy Trading and
Marketing, LLC, et al.
Additionally, on June 3, 2002, a lawsuit, Hansen v. Dynegy Power Marketing,
et al., was filed in the Superior Court for the County of San Francisco alleging
substantially similar claims to the rate payer actions described above. The
plaintiff seeks class action status for the lawsuit and purports to represent
residential rate payers located in various public utility districts in the State
of Washington. The complaint seeks, among other things, injunctive relief,
disgorgement of profits, restitution and treble damages.
DWR Power Purchases: Two lawsuits have been filed that seek relief for
contracts between the California Department of Water Resources (the "DWR") and
certain marketers of electricity, including Mirant, that allegedly contain
unfair terms. The plaintiffs allege that the terms of the contracts are unjust
and unreasonable and that the DWR was forced to enter into these long-term
contracts due to dysfunctions in the California market and alleged market power
of the sellers. Plaintiffs seek, among other things, a declaration that the
contracts are void and unenforceable, enjoinment of the enforcement and
performance of those contracts and restitution for funds allegedly obtained
wrongfully under the contracts. The captions of each of the cases follow:
CAPTION DATE FILED COURT OF ORIGINAL FILING
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McClintock, et al. v. Vikram May 1, 2002 Superior Court of California - San Francisco County
Budraja, et al.
Millar, et al. v. Allegheny May 13, 2002 Superior Court of California - Los Angeles County
Energy Supply Company, LLC, et al.
Shareholder Litigation: Fourteen lawsuits have been filed to date against
Mirant and four of its officers alleging, among other things, that defendants
violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and
Rule 10b-5 promulgated thereunder by making material misrepresentations and
omissions to the investing public regarding Mirant's business operations and
future prospects during the period from January 19, 2001 through May 6, 2002.
The complaints have each been filed in the Federal District Court for the
Northern District of Georgia, with the exception of the Thomas and Purowitz
complaints, which were filed in the Federal District Court for the Northern
District of California. The complaints seek unspecified damages, including
compensatory damages and the recovery of reasonable attorneys' fees and costs.
It is expected that additional "copy cat" law suits will be filed. The captions
of each of the cases follow:
CAPTION DATE FILED
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Kornfeld v. Mirant Corp., et al. May 29, 2002
Holzer v. Mirant Corp., et al. May 31, 2002
Abrams v. Mirant Corp., et al. June 1, 2002
Kellner v. Mirant Corp., et al. June 14, 2002
Sved v. Mirant Corp., et al. June 14, 2002
Teaford v. Mirant Corp., et al. June 14, 2002
Woff v. Mirant Corp., et al. June 14, 2002
Purowitz v. Mirant Corp., et al. June 10, 2002
Peruchi v. Mirant Corp., et al. June 14, 2002
Froelich v. Mirant Corp., et al. June 4, 2002
Rand v. Mirant Corp., et al. June 5, 2002
Thomas v. Mirant Corp., et al. June 18, 2002
Urgenson v. Mirant Corp., et al. June 18, 2002
Orlofsy v. Mirant Corp., et al. June 18, 2002
California Attorney General Litigation: On May 31, 2002, the Federal
Regulatory Energy Commission (the "FERC") issued an order dismissing the
California Attorney General's April 9, 2002 complaint. The complaint had
alleged, among other things, that Mirant and several of its wholly owned
subsidiaries had violated the Federal Power Act by failing to properly file its
rates, prices and charges with FERC and by charging unjust and unreasonable
prices in violation of the Federal Power Act. The time for filing a motion for
rehearing of the complaint has not yet expired. The Attorney General's
California lawsuit predicated on nearly identical grounds was unaffected by
FERC's action.
Western Power Markets Price Mitigation and Refund Proceedings: On September
4 and 5, 2001, a hearing was held concerning a complaint filed with FERC seeking
refunds of approximately $90 million from Mirant and several of its subsidiaries
for sales made in the Pacific Northwest during the period from December 15, 2000
to June 20, 2001. On September 24, 2001, the administrative law judge
recommended to FERC that there was no finding of unjust or unreasonable rates
charged in the Pacific Northwest and that there were no justifiable claims for
refunds based on bilateral agreements. The FERC has not yet issued a final
decision on the matter. On May 13, 2002 and May 24, 2002, the City of Tacoma,
Washington and the City of Seattle, Washington, respectively, filed to reopen
the evidentiary record in this proceeding as a result of the contents of three
internal Enron Power Marketing, Inc. memoranda that had been obtained and
publicly released by FERC as part of its continuing investigation.
Wallula Power Project: On June 20, 2002, Wallula Generation, LLC
("Wallula") sent a letter to Mirant Americas Energy Marketing, L.P. ("Mirant
Americas Energy Marketing"), a wholly-owned subsidiary of Mirant, requesting a
letter of credit in the amount of $166 million in connection with a tolling
arrangement pursuant to a Conversion Services Agreement (the "Agreement")
between Mirant Americas Energy Marketing and Wallula for the planned Wallula
Power Project to be constructed by Wallula in the State of Washington by October
2004, as may be extended pursuant to the Agreement. The letter indicated that
Wallula may consider commencing arbitration if Mirant Americas Energy Marketing
does not provide the letter of credit by July 8, 2002. Mirant Americas Energy
Marketing disagrees with Wallula's interpretation of the collateral and credit
requirements of the Agreement and believes it is not required to post a letter
of credit unless and until commercial operation of the proposed plant were to
commence. Mirant does not believe that the outcome of any such arbitration, if
pursued, would be material to the Company's business, financial condition or
results of operations.
Other Recent Developments:
Arthur Andersen LLP, Mirant's former independent auditor, was indicted on
March 14, 2002 and convicted by a jury on June 15, 2002 on federal obstruction
of justice charges arising from the government's investigation of Enron
Corporation. Although Mirant dismissed Arthur Andersen LLP on May 15, 2002, and
engaged KPMG LLP to conduct the audit of its financial statements for the fiscal
year ending December 31, 2002, it is possible that events arising out of the
indictment and conviction may adversely affect the ability of Arthur Andersen
LLP to satisfy any claims arising from auditing Mirant's financial statements
and other services provided to Mirant. The foregoing dismissal and engagement
also could be disruptive to Mirant's business and financing activities and could
affect the price and liquidity of its securities.
On June 24, 2002, Fitch lowered its rating on Mirant's senior notes and
convertible senior notes to BBB- from BBB and Mirant's convertible trust
preferred securities to BB from BBB-. Fitch's new ratings on Mirant securities
each include a negative outlook.
Item 7. Financial Statements and Exhibits
Exhibits (c)
Exhibit No. Exhibit Name
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12.1 Computation of Ratio of Earnings to Fixed Charges
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: June 27, 2002 MIRANT CORPORATION
By /s/ James A. Ward
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James A. Ward
Senior Vice President
and Controller
(Principal Accounting
Officer)