8-KOther Events

EDISON INTERNATIONAL 8-K Report (Dec 12, 2003)

Filed December 12, 2003For Securities:EIX

Summary

This 8-K filing from Edison International on December 11, 2003, primarily details significant financial maneuvers concerning its subsidiary, Edison Mission Energy (EME). EME has secured an $800 million loan to address substantial debt obligations, specifically repaying a $781 million indebtedness for Edison Mission Midwest Holdings and other subsidiary debt. This refinancing is a critical step in stabilizing EME's financial position and ensuring operational continuity. Furthermore, EME has established a new $100 million letter of credit facility for its subsidiary, Midwest Generation EME, requiring cash collateralization of outstanding letters of credit. This move reflects a shift in how EME manages its contingent liabilities. Investors should view these actions as efforts to deleverage and restructure EME's operations, which could have a material impact on Edison International's overall financial health and future performance.

Key Highlights

  • 1Edison International declared a common stock dividend of $0.20 per share, payable January 31, 2004.
  • 2Edison Mission Energy (EME) subsidiary secured an $800 million secured loan from a syndicate of banks including Citigroup, Credit Suisse First Boston, JPMorgan Chase Bank, and Lehman Brothers.
  • 3Proceeds from the $800 million loan were used to repay $781 million of indebtedness for Edison Mission Midwest Holdings.
  • 4Remaining loan proceeds were used for a $67 million cash collateral deposit under a new letter of credit facility and to repay approximately $160 million of foreign subsidiary debt.
  • 5Midwest Generation EME, an EME subsidiary, entered into a $100 million letter of credit facility with Citibank.
  • 6This new letter of credit facility requires cash collateralization of any outstanding letters of credit.
  • 7EME reduced its existing line of credit commitment by $67 million, with those letters of credit now issued under the new facility.

Frequently Asked Questions

The primary purpose of the $800 million secured loan was to refinance significant debt obligations. Specifically, it was used to repay $781 million in indebtedness for Edison Mission Midwest Holdings and to repay approximately $160 million of indebtedness for a foreign subsidiary. This action aims to improve EME's financial structure and manage its debt load.

The new $100 million letter of credit facility with Citibank requires Midwest Generation EME to deposit cash to collateralize any letters of credit issued under it. This means EME must set aside cash, which is pledged to the issuing bank, to back these financial instruments, ensuring greater certainty for the bank but tying up cash for EME.

The $67 million cash collateral deposit for the new letter of credit facility was funded by the new $800 million loan. Concurrently, EME canceled $67 million of its commitment under an existing line of credit, and those letters of credit were transferred to the new facility. This effectively shifts a portion of EME's contingent liabilities and associated collateralization from one facility to another, while also reducing its overall available credit under the older line.

The filing indicates that Edison International's Board of Directors declared a common stock dividend of $0.20 per share, payable on January 31, 2004, to shareholders of record as of January 6, 2004. This suggests a continued commitment to returning capital to shareholders.