This article appears courtesy of Institutional Investor
Source: Credit Investment News
K.M.
Mirant's bonds traded up 10 points on an upbeat view of the company's performance post-bankruptcy and speculation it could be an acquisition target. Its 2.5% '21 bonds climbed to the 110-111 range, while its 5.75% '07 bonds rose to 122. Mirant's loans also traded up. Its '03 revolving credit jumped six points to 117.
Investors' positive view of the company and the energy sector as a whole came after news of NRG's planned acquisition of Texas Genco in a deal valued at $5.8 billion. The acquisition has a total enterprise value of $8.3 billion, including $4 billion in cash, $1.8 billion in common and preferred stock, and $2.5 billion of Texas Genco debt. Equity sponsors of Texas Genco raked in a big profit from the merger, making 400% on their original equity investments.
Since the sale, shares in power companies have soared. A trader said private equity firms are seeking to make a hefty profit in Mirant by buying its unsecured debt, which will be converted into equity when the firm emerges from bankruptcy. As part of Mirant's reorganization plan, the holders of $6.35