Southern California Edison denies buyout bid

By the OGJ Online Staff

HOUSTON, Aug. 24 -- Southern California Edison Co. Friday said the financially ailing utility is not for sale and debunked published reports of a take over by City Light & Power Inc., Long Beach, Calif.

Reports circulated early Friday City Light intended to launch an unsolicited bid as early as Monday for Southern California Edison and its parent Edison International, Rosemead, Calif.

"On the so-called offer or intent to purchase the company, it's fair to say the idea was floated by City Light and is without any merit, " said Jim Scilacci, chief financial officer of Southern California Edison. Scilacci spoke to bond holders during a regularly scheduled weekly conference call.

Scilacci said City Light & Power "has no visible financial resources." More importantly, the company [Southern California Edison] "is not for sale," he added.

A published report on Friday identified Bear Stearns & Co. and Salomon Smith Barney as financial advisers to City Light. Both denied their involvement in any deal.

Separately, Scilacci told debt holders the company hasn't set a "drop dead" date to file for voluntary bankruptcy protection, if California lawmakers don't approve a rescue package plan before the legislature recesses until January.

"We have no intention to file for bankruptcy," he said. "We worked night and day to avoid that." Edison and California Gov. Gray Davis struck a deal under which the state would buy the utility's transmission system, among other provisions, in a bid to restore it to an investment grade credit rating. Much of the deal requires legislative approval.

SB 78XX, a draft bill intended to restore the company's financial health, is being 'marked up' in the California legislature, but there is not a version available that includes all the changes so far, Scilacci said.

One provision provides $2.9 billion in securitization and financing for Edison. Another section includes language that says the company must be returned to investment grade credit rating, which Scilacci praised.

The bill also calls for electric rates to be adjusted quickly should the utility find rates are not sufficient to keep the company financially sound in the future.

Scilacci said the company is troubled by a provision that gives the state a 5-year option to buy the transmission system at "book value." The transmission system involves a trust indenture that means the assets must be sold at "fair market value," he explained. "That has to change for our support," he said.