Mirant buyer offered $ 1.3-B funding
Monday, October 02, 2006
By MYRNA M. VELASCO
Credit Suisse is reportedly offering $ 1.3-billion financing package that the winning investor in the sale of Mirant’s equity shares covering Philippines could tap into.
One of the investor groups undertaking due diligence revealed that they were apprised of the proposed financing package; as Mirant and Credit Suisse (as its sale advisor) have been holding negotiations with all the seven parties it selected to advance to the next round of bid submissions.
The shortlist of four reported earlier has been stretched to seven investor-groups, as Mirant also considered Carlyle group to move to the next stage of the auction; and two more investor groups. Only eight groups submitted bids, so it was just Avenue Capital that was dropped from the roster.
Aside from the brewing questions on seeking government consent and the separation package for employees, Hongkong-based Mirant Asia Pacific Ltd. which undertakes management presentation to prospective buyers was also hurled with questions on a newly-established subsidiary, Mirant Sweden International which was used for the $ 700-million term-loan that used the Philippine assets as collateral.
As this developed, Mirant Philippines president Jose P. Leviste disclosed in a press briefing that they will be amending the employee separation package that was presented to prospective buyers under the Mirant Information Package.
The company’s existing retirement plan, which is a defined benefit plan with a fund held in trust by a Philippine bank; pays 1.25 months salary per year of service for early and normal retirements. For voluntary separation, the plan pays one-half month salary per year of service provided the employee has served for not less than 15 years.
The plan covers all regular Filipino employees, including senior management and officers, and pays benefits that are above the minimum requirement of the law.
"That will be amended," Leviste noted, adding that this has already been approved by the company’s Atlanta head office and the entire process will be done until next week after meeting with the company’s Manila office, where the 33 executives which raised the concern on separation package are holding office.
What will hold as a new written policy, he said, will be a separation pay of 2.5 months per year of service based on a 14-month year; but Leviste clarified that none of the executives or employees will get separated, unless, they get booted out for other specific reasons, other than the sale of the equity shares.
The US firm said that the proposed 2.5 months per year will likewise be stipulated in the Purchase and Sale Agreement (PSA) that will be signed with the investor-buyer; which means that such responsibility will be passed on to them.
Despite the written policy, however, Mirant employees cannot still be assured that such will not change as the new owner can just wait for the transition time to lapse before invoking its own employee plan.
The bidders reportedly sent letters to Mirant asking them to specifically address the concern of the employees and the bid for consent of the Philippine government because these are seen as the "deal breakers" in the sale process. (MMV)
posted by philpower @ 7:53 AM,
