8-KOther Events

EDISON INTERNATIONAL 8-K Report (Oct 10, 2001)

Filed October 10, 2001For Securities:EIX

Summary

Edison International (EIX), through its subsidiary Edison Mission Energy (EME), announced significant divestitures of non-core assets on October 8, 2001. This includes the sale of two United Kingdom-based coal-fired power stations, Fiddler's Ferry and Ferrybridge, for 650 million pounds sterling. While this sale is expected to result in a substantial one-time after-tax write-off of approximately $1.18 billion, the company views it as a necessary step to reduce debt and improve financial performance, stemming from the original acquisition in 1999 for 1.3 billion pounds sterling. In addition to the UK divestiture, EME also entered into agreements to sell seven non-core U.S. power generation assets, which are expected to generate net proceeds of approximately $460 million and are being sold above book value. These strategic asset sales are aimed at strengthening EME's balance sheet and improving its credit quality and earnings potential. The company also noted the court approval of the settlement agreement between its subsidiary Southern California Edison (SCE) and the California Public Utilities Commission.

Key Highlights

  • 1Edison Mission Energy (EME) is selling its two UK coal-fired power stations (Fiddler's Ferry and Ferrybridge) for 650 million pounds sterling.
  • 2The sale of the UK assets is expected to result in a significant one-time after-tax write-off of approximately $1.18 billion.
  • 3The UK plants were acquired in 1999 for 1.3 billion pounds sterling, indicating a substantial loss on this investment.
  • 4EME anticipates improved credit quality and earnings potential following the divestiture and reduction of debt associated with these UK assets.
  • 5Contracts have been signed to sell seven non-core U.S. power generation assets, expected to yield net proceeds of approximately $460 million.
  • 6These U.S. asset sales are being conducted above book value.
  • 7The federal district court approved the settlement agreement between Southern California Edison (SCE) and the California Public Utilities Commission on October 5, 2001.

Frequently Asked Questions

Edison Mission Energy (EME) expects a one-time, after-tax write-off of approximately $1.18 billion as a result of the sale of its Fiddler's Ferry and Ferrybridge power stations. Despite this significant charge, the company believes the sale will improve its credit quality and earnings potential by reducing debt and eliminating operational losses.

The company stated that although the plants operated well, the market conditions led to operating losses and significant cash requirements due to the existing debt structure. These factors made it unsustainable for EME to maintain ownership. The sale is seen as a strategic move to mitigate further financial drag.

The sale of the two UK power stations is for an aggregate purchase price of 650 million pounds sterling. The sale of seven non-core U.S. assets is expected to generate net proceeds of approximately $460 million. The total cash inflow from these announced sales is substantial, though the UK proceeds will need to be converted from pounds sterling to U.S. dollars.

No, the company's CEO clarified that while the UK plants were a 'major disappointment,' EME's other acquisitions from 1999 – in Pennsylvania, Illinois, and New Zealand – are all performing well.