NEW YORK, Sept. 3, 2002 — Marce Fuller, president and CEO of Mirant recently provided updates on several key topics during her presentation at the Lehman Brothers’ CEO Energy & Power Conference. The following summary is from Fuller’s presentation:
Strong Liquidity Outlook
Mirant’s current liquidity stands at about $1.5 billion and is expected to be approximately the same amount at the end of the year. Mirant eliminated nearly $550 million in ratings triggers associated with its Perryville and BP contracts, which substantially reduce its need for liquidity.
The current liquidity forecast reflects two primary changes from earlier estimates. First, Mirant made a $75 million loan to Perryville Energy Partners to eliminate a $300 million contingent collateral requirement associated with a 21-year power tolling agreement. Second, since the suspension of its Mint Farm project in Washington state the company is no longer assuming the completion of a construction loan, a portion of which would have funded the Mint Farm project. The construction loan had been expected to fund approximately $165 million expenditures this year.
This year-end $1.5 billion liquidity projection assumes no proceeds from the previously announced Phase II asset sales program which is expected to yield $750 million to $1 billion in assets.
Update on Earnings Guidance
As Mirant discussed during its 2002 second quarter analyst call, although there were a number of factors contributing pressure to fall below the low end of its guidance of $1.60 to $1.70 per share, it was too early in the quarter to change existing guidance.
“As you know,” Fuller said recently, “July and early August were very tough in terms of trading liquidity for longer-dated transactions. Although, our assets, particularly in the Mid-Atlantic, Northeast and West regions, have continued to perform in line with our expectations, our ability to leverage our assets has been limited by poor market conditions.
“Fortunately, we have seen some signs of recovery in the latter part of August and as we move into September. However, at this point, we are approximately 20 cents below where we expected to be at this time to achieve the lower end of our range or $1.60 per share,” Fuller said.
“I am hopeful that we can make some of this up, but at this time we are behind where we expected to be.”
California Refund Exposure Update
As publicly reported, the staff of the Federal Energy Regulatory Commission recently issued a preliminary report addressing California refunds. The staff report also included a recommendation to adopt a new natural gas pricing methodology for calculating refunds from generators.
Even if this methodology is adopted, Mirant’s refund exposure is expected to remain within the amount previously reserved for uncollected accounts receivable. Mirant is still owed about $350 million in related receivables and has taken $295 million in reserves.
For more information, visit www.mirant.com.