* Edison International unit misses $97 million interest
* Says bankruptcy likely if cannot make payment within 30
By Nick Brown
NEW YORK, Nov. 15Edison Mission Energy said on
Thursday it missed a $97 million interest payment on its
unsecured bonds and could file for bankruptcy as soon as next
Edison Mission, the unregulated power generation business of
Edison International, made the announcement in a filing
with the U.S. Securities & Exchange Commission. It said the
interest payment deadline carries a grace period that expires on
In a statement, Edison Mission said failure to make the
payment by the end of the grace period "will likely" trigger a
"(Edison Mission) and its parent, Edison International,
continue to engage in discussions with financial and legal
advisers to our noteholders on a potential financial
restructuring," the company said.
The energy sector has been hit hard as power prices have
fallen. Edison Mission has spent months in discussions with
debtholders in hopes of restructuring $3.7 billion in unsecured
Ted Craver, Edison International's chief executive,
acknowledged the possibility of a restructuring at Edison
Mission as early as February. Craver said on a conference call
that power price declines, impending debt maturities and the
need for retrofit investments could force the unit into
The company has hired restructuring lawyers from Kirkland &
Ellis and financial advisers from Moelis, according to two
people familiar with the matter. Its bondholders have tapped law
firm Ropes & Gray and financial adviser Houlihan Lokey, they
Bringing the company into bankruptcy poses some challenges.
Craver has said Edison Mission may also have to refinance
leveraged leases at two coal plants leased by Edison Mission's
Midwest Generation unit.
The bondholders who financed those leases have hired
restructuring lawyers from Cadwalader Wickersham & Taft, said
the people familiar with the matter.
There is also the issue of how to restructure Edison
Mission's debt. Bondholders traditionally demand equity in a
reorganized firm, but for Edison International, giving up equity
in Edison Mission would mean losing certain tax breaks related
to Edison Mission's operating losses.
That could pose a challenge in a restructuring, said the
people familiar with the matter.
Federal tax laws allow companies to offset taxable income
with operating losses at their subsidiaries, but only if they
retain at least 80 percent of the unit's equity.
A spokeswoman for Edison International declined to comment
on the issue of the tax losses.