THE Office of Utilities Regulation (OUR) says that the local light and power company, the Jamaica Public Service Company (JPSCo) would not be affected by the recent bankruptcy of its Atlanta-based parent Mirant Corporation because its long-term loans are not guaranteed by Mirant.

“Mirant does not act as a guarantor of JPSCo’s long-term loans, that is the primary reason why the move does not affect the company,” according to David Geddes, public relations manager at the OUR.

“JPSCo has not breached any obligations under its licence. The OUR is monitoring the situation closely and obviously should the situation change at any point we would issue a statement on the matter,” Geddes added.

The JPSCo said yesterday that it guarantees its own financing, and that its only major long-term loan is US $45-million from the World Bank subsidiary, the International Finance Corporation (IFC). The loan was secured in May and it is to finance the final stages of JPSCo’s US$100 million expansion to its power plant in Bogue, Montego Bay.

The JPSCo had finished paying off a US$30 million RBTT Merchant Bank loan, just before securing the IFC loan.

“No money is owed to Mirant by JPSCo,” David Payne, Mirant’s spokesman, said yesterday. He added that the US company was “not contemplating, at this time, the sale of JPSCo as a possible method of paying off its bank and bond debt”.

At the same time, he would not speculate if Mirant would consider selling its 80 per cent stake in the JPSCo, which it bought from the Government for US $201 million in 2001.

The JPSCo has been showing positive performances, closing with $1.17 billion in net profit for nine months at December 2002. This was $26.5 million more than the same period last year. But the company also reduced its operating expenses by $2.2 billion less than the previous period to $14.6 billion.

Mirant filed Chapter 11 bankruptcy Monday night after slumping power prices and higher costs left it unable to refinance US$4.9 billion in bank and bond debt.

The Chapter 11 papers were filed in US Bankruptcy Court in Fort Worth, Texas about an hour before a midnight deadline (New York time) the company had set for banks and bond holders to approve plans that would allow the company to restructure its debt.

Court papers listed Mirant’s assets as US$20.6 billion and placed the company’s debts at US$11.4 billion.

The company, in the meantime, said it has arranged for US$500 million in loans to help finance its operations as it reorganises.

Mirant was hurt by the evaporation of energy trading and accounting changes after the collapse of Enron Corp. Higher borrowing costs and increased prices for natural gas also contributed to the firm’s losses, which totalled about US$2.4 billion last year.

The bankruptcy filing is said to be the largest since WorldCom Inc a year ago and the 11th biggest in US history.

Rumours that Mirant held a “positive meeting” with its banks yesterday sparked a rally in the company’s stock. Shares rose 26 cents, or 14.9 per cent, to close at US$2.01 in trading on the New York Stock Exchange after falling about 20 per cent in the morning.