Court of Appeals Issues Opinion - Denies Mirant's Request to Reject Contracts with Pepco
Thursday, August 05, 2004
Remands to District Court
For Immediate Release
Yesterday evening, the United States Court of Appeals for the 5th Circuit issued an Opinion denying Mirant's request to reject its contracts with Pepco and sending the case back to the District Court. The Court of Appeals ruling made clear that "important issues must still be resolved before a decision on the merits would be appropriate." Pepco is a subsidiaryof Pepco Holdings, Inc. (NYSE: POM)
While the Court of Appeals found that the District Court has jurisdictiont o rule on Mirant's request, it indicated that a contract for the sale of electricity is unique, and therefore the District Court should consider applying a more rigorous standard than the mere business judgment standard normally used by bankruptcy courts. The ruling stated, "Use of the business judgment standard would be inappropriate in this case because it would not account for the public interest inherent in the transmission and sale of electricity."
Whether or not Mirant will be successful in its attempts to reject its obligations to Pepco is yet to be determined. We expect that it will take some time as Mirant, FERC, Pepco and other parties to the case pursue various legal options, including possible efforts to seek review by the Supreme Court.
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Forward-Looking Statements:
Except for historical statements and discussions, the statements in this press release constitute "forward-looking statements"within the meaning of the federal securities laws. These statements contain management's beliefs based on information currently available to them and on various assumptions concerning future events. Forward-looking statements are not a guarantee of future performance or events. They are subjectt o a number of uncertainties and other factors, many of which are outsidethe company''s control. In connection with the transaction, additional important factors that could cause actual results to differ materially from those in the forward-looking statements herein include risks and uncertainties relating to delays in obtaining, or adverse conditions contained in, related regulatory approvals, changes in economic conditions, availabilityand cost of capital, changes in weather patterns, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines and other presently unknown or unforeseen factors. These uncertainties and factors could cause actual results to differ materially from such statements. The company disclaims any intention or obligation to updateor revise any forward-looking statements, whether as a result of new information, future events or otherwise. This information is presented solely to provide additional information to further understand the results and prospects of the company.
