U.S. Court Denies Mirant’s Motion to Reject Pepco Contracts
Friday, December 10, 2004
Today the United States District Court for the Northern District of Texas released an Order denying Mirant Corp.’s Motion to reject its obligations to pay Pepco as required by contract. These payments are required as part of the Back-to-Back Agreement in the Asset Purchase and Sale Agreement (APSA) under which Mirant purchased Pepco’s generating assets in December 2000. The Court found that the Back-to-Back Agreement is part of a larger contract (APSA) that cannot be rejected in part, as Mirant sought to do. Under the Back-to-Back Agreement, Mirant is required to purchase from Pepco, at the price Pepco is obligated to pay, the capacity and energy that Pepco must buy under power purchase agreements with FirstEnergy Corp. and Panda-Brandywine L.P. Pepco is a subsidiary of Pepco Holdings, Inc. (NYSE: POM).
“Now that their legal obligation has been clarified by the Court, we presume Mirant will follow the law and continue to meet their obligations to pay Pepco,” said Dennis Wraase, Chairman of the Board, President and Chief Executive Officer, Pepco Holdings. “If not, we will take appropriate legal action.”
Since declaring bankruptcy in July 2003, Mirant has repeatedly and unsuccessfully attempted to obtain legal approval to terminate its contractual obligations to pay Pepco for the cost of electricity which Pepco provides to Mirant. Contrary to prior representations made before the courts, Mirant yesterday issued a Notice that it would suspend payments to Pepco. Today’s Order reaffirms that Mirant is legally required to make the payments.
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About PHI: Pepco Holdings, Inc. is a diversified energy company with headquarters in Washington, D.C. Its principal operations consist of Pepco and Conectiv Power Delivery, which deliver 50,000 gigawatt-hours of power to more than 1.8 million customers in Washington, Delaware, Maryland, New Jersey and Virginia. PHI engages in regulated utility operations by delivering electricity and natural gas, and provides competitive energy and energy products and services to residential and commercial customers.
Forward-Looking Statements: Except for historical statements and discussions, the statements in this news release constitute "forward-looking statements" within the meaning of federal securities law. These statements contain management's beliefs based on information currently available to management and on various assumptions concerning future events. Forward-looking statements are not a guarantee of future performance or events. They are subject to a number of uncertainties and other factors, many of which are outside the company''s control. Factors that could cause actual results to differ materially from those in the forward-looking statements herein include general economic, business and financing conditions; availability and cost of capital; changes in laws, regulations or regulatory policies; weather conditions; competition; governmental actions; and other presently unknown or unforeseen factors. These uncertainties and factors could cause actual results to differ materially from such statements. PHI disclaims any intention or obligation to update or 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 PHI.
