agreed to settle all outstanding issues between the companies arising from Mirant's 2003 bankruptcy and related matters. Under the proposed settlement, which must be approved by the bankruptcy court, Mirant will pay Potomac $520 million in cash and stock.
This is in exchange for the right to reject certain power purchase agreements and resolve all remaining claims pending between them in connection with Mirant's bankruptcy.
The proposed settlement relates to Mirant's wish to terminate an agreement under which Mirant is required to reimburse Pepco for Pepco's obligations under a long-term power purchase agreement with Panda Brandywine. Pepco is obligated to purchase from Panda, 230 megawatts of energy and capacity annually through 2021 at rates that currently are significantly in excess of market prices. Under the settlement, Mirant will be allowed to terminate the agreement in exchange for $450 million which will be paid in Mirant stock and cash.
Pepco will also receive $70 million as reimbursement for claims other than those relating to the Panda contract, and for legal fees.
"This settlement resolves the current legal disputes in a fair and reasonable way and frees both companies to move forward without the distractions of pending litigation," Pepco Holdings said.
The company's shares were trading at $22.76, up 23 cents, or 1% Wednesday.
This story was created through a joint venture between TheStreet.com and IRIS.