Creditors patient, frustrated with near bankrupt California utility

Edison International unit Southern California Edison Co. expects creditors to remain patient and keep the utility out of bankruptcy a little longer, while the California legislature works out a plan to resolve the credit crisis. But in a Tuesday conference call, creditors holding Southern California Edison Co. notes already in default or in danger of default expressed frustration with the limited progress.


Ann de Rouffignac
OGJ Online

HOUSTON, Feb. 13�Edison International unit Southern California Edison Co. expects creditors to remain patient and keep the utility out of bankruptcy a little longer, while the California legislature works out a plan to resolve the credit crisis.

Even though it has suspended interest and principal payments on debt since Jan. 16, the company has received no notice from any creditor group so far concerning involuntary bankruptcy. But in a Tuesday conference call, creditors holding Southern California Edison Co. notes already in default or in danger of default expressed frustration with the limited progress.

Banks holding credit facilities have already granted the company forbearance on certain obligations. That forbearance expired Tuesday and there is no grace period, said Ted Craver, chief financial officer. The company made a formal request to extend that forbearance period. He said the banks are currently considering the request.

�The banks will be patient. Our relationship with the banks is strong,� he said. �They are looking for ways to be constructive.�

Craver noted creditors have been patient so far but warned that may not last much longer. He would not speculate on how much longer the company could avoid involuntary bankruptcy.

�We are one month into stopping making payments for purchased power debt and interest. Creditors are patient but everybody�s patience gets thinner as we move forward each week,� Craver said.

Generators forced to sell power under court order without being paid for deliveries have formed a creditors' committee. �They have made no moves,� Craver said. �We are talking to them individually and received no notice from them yet.�

During the conference call, one holder of the 5 7/8% unsecured notes due Jan. 15 said the unpaid holders could file a petition for involuntary bankruptcy now. �Will it take an involuntary filing to light the fire and get things moving,� the note holder asked. Craver said the company hopes that it will not require such a move to get legislation action.

The legislature is debating several plans that will purportedly resolve the �undercollection� crisis that thrust the utility into a financial crisis. The utility has amassed billions of dollars in debt for power because it paid more for wholesale electricity than it can pass on to retail customers under a rate freeze.

The utility tried in a federal court to get rates hiked immediately to cover its costs. A ruling Feb. 12 by the court denied the request for an immediate increase and set a hearing for March 5.

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