March 1, 2002
New financing and cash on hand enable utility to pay off debt and power costs, marking another step toward financial stability.
ROSEMEAD, Calif., March 1, 2002—Southern California Edison (SCE) has obtained $1.8 billion in secured financing that, when combined with cash on hand, enabled the utility to pay off its past-due debt and purchased power obligations, incurred while buying power for its customers during the height of the state’s financially devastating energy crisis.
“This is a significant benchmark for SCE,” said SCE Chairman and CEO Al Fohrer. “Much more work remains to be done to fully accomplish our goal, but today’s successful borrowing means we are moving forward to restore SCE’s financial stability.”
The $1.8 billion in new financing consists of $1.6 billion in senior secured credit facilities and the sale of approximately $200 million of pollution control bonds that SCE repurchased in late 2000. Both the credit facilities and the pollution control bonds are secured by SCE’s first mortgage bonds.
In a Form 8-K filing today with the U.S. Securities and Exchange Commission, SCE reports total payments of $4.8 billion to repay previous credit facilities and to clear defaults and major power purchase obligations, including amounts owed to the California Power Exchange (PX) ($875 million), the California Independent System Operator ($99 million), and renewable energy and other QF power producers ($1.1 billion).
“We appreciate the patience of our creditors during this extraordinarily difficult period for both them and for us,” said SCE Vice President and CFO Jim Scilacci.
Scilacci also noted that SCE was able to secure the $1.8 billion in financing to pay creditors, in large part, because of the cost recovery lawsuit settlement agreement reached last October between SCE and the California Public Utilities Commission.
Having reached this milestone, several financial and regulatory issues still must be resolved before SCE’s investment-grade status is restored by credit rating agencies. Only then will the state’s second largest utility have the borrowing capability to enable the state to exit, and SCE to reenter, the power purchase marketplace on behalf of its customers.
Looking prospectively, SCE Chairman Fohrer underscored the importance of moving forward.
“While there’s much more work to be done, we are encouraged that paying SCE’s creditors clearly establishes the utility’s path to recovery and stability,” he said. “SCE is moving forward on that path, all the while remaining focused and committed to its core mission—providing the safe, reliable and well-maintained service that customers have relied upon for more than 100 years.”
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Editor’s Note: Edison International and Southern California Edison have disclosed further information regarding today’s announcement in respective 8-K filings with the U.S. Securities and Exchange Commission today. The filings are available on line at: http://www.sce.com/sc3/005_regul_info/005g_market/005g6_filings.htm#filings
An Edison International company, Southern California Edison is one of the nation’s largest electric utilities, serving a population of more than 11 million via 4.3 million customer accounts in a 50,000-square-mile service area within central, coastal and Southern California. For more information on the California electricity market, see www.sce.com.