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14 August 2006 -- Reuters reports today that banking sources say U.S. power producer Mirant Corp. will borrow $735 million from 30 local and foreign banks to refinance its two core Philippine power plants before their sale. The seven-year loan, arranged by investment bank Credit Suisse, will be released on Tuesday, according to the report. A Mirant spokesman declined comment.
Unidentified sources quoted in the report said the loan was key to Mirant's plans to sell its Philippine power plants, estimated by some analysts to have an enterprise value of nearly $3 billion.
Mirant, which emerged from bankruptcy in January, said last month it would auction its Philippine and Caribbean businesses and expected the transaction to close by mid-2007. A sale of Mirant's 2,298-MW plants in the southeast Asian nation -- which accounts for nearly half of Mirant's overall cash flow -- would be the last major auction of power assets by a U.S. utility in the region.
A long-term sale contract for the Asian assets could provide the revenue stability that financial investors and some Japanese trading houses have been looking for as they begin to ramp up investments in the cyclical natural resources industry. However, unidentified banking sources mentioned in the report said in July that Western investors may decide the economic and political risks in the Philippines are too high. Mirant shares closed 0.84 percent higher at $27.47 on Friday. Last week, the group announced plans to sell six gas-fired intermediate and peaking power plants in the United States.
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