8-KExhibits & Filings

EDISON INTERNATIONAL 8-K Report, Exhibit Filing (May 10, 2007)

Filed May 10, 2007For Securities:EIX

Summary

Edison International's indirect subsidiary, Edison Mission Energy (EME), has successfully completed a private offering of $2.7 billion in aggregate principal amount of Senior Notes. These notes are comprised of three tranches: $1.2 billion of 7.00% Senior Notes due 2017, $800 million of 7.20% Senior Notes due 2019, and $700 million of 7.625% Senior Notes due 2027. The offering was conducted on May 7, 2007, and the notes were sold to qualified institutional buyers under Rule 144A and to investors outside the U.S. under Regulation S. This transaction indicates EME's strategy to raise substantial capital through the debt markets. Investors should note that these Senior Notes are unsecured obligations of EME and rank equally with EME's existing senior unsecured indebtedness, but are subordinated to any secured debt of EME and effectively senior to any future subordinated debt. Crucially, none of EME's subsidiaries have guaranteed these notes, meaning all liabilities of EME's subsidiaries are effectively senior to these Senior Notes. The company has also entered into a registration rights agreement, obligating it to offer registered exchange notes to holders, with potential additional interest payments if EME breaches these obligations.

Key Highlights

  • 1Edison Mission Energy (EME) raised $2.7 billion through a private offering of Senior Notes.
  • 2The offering consists of three tranches: $1.2B (7.00% due 2017), $800M (7.20% due 2019), and $700M (7.625% due 2027).
  • 3The notes were issued under an Indenture and specific Supplemental Indentures dated May 7, 2007.
  • 4Interest payments are semi-annual, due on May 15 and November 15, with the first payment on November 15, 2007.
  • 5EME has the option to redeem the notes at any time with a 'make-whole' premium.
  • 6The Senior Notes are unsecured obligations of EME and rank equally with existing senior unsecured debt.
  • 7No subsidiaries have guaranteed the notes, making subsidiary liabilities effectively senior to these notes.

Frequently Asked Questions

While the specific use of proceeds is not detailed in this 8-K filing, such significant debt issuances by subsidiaries like EME typically aim to fund capital expenditures, refinancing existing debt, or for general corporate purposes. Investors should look to other filings or company statements for more specific information on fund allocation.

The Senior Notes are unsecured obligations of EME. They rank equally with EME's existing senior unsecured debt but are effectively junior to any secured debt EME may have and are also effectively senior to EME's future subordinated debt. A significant risk factor is that no subsidiaries have guaranteed these notes, meaning any liabilities at the subsidiary level would be paid before these notes in a liquidation scenario.

The Registration Rights Agreement means EME is obligated to register an equivalent amount of notes with the SEC and offer them to the original noteholders. This is a common practice for private debt offerings to provide liquidity to investors. If EME fails to meet its obligations under this agreement, it will face penalties in the form of additional interest payments to the noteholders.

The notes have staggered maturities and corresponding interest rates: $1.2 billion of 7.00% Senior Notes due May 15, 2017; $800 million of 7.20% Senior Notes due May 15, 2019; and $700 million of 7.625% Senior Notes due May 15, 2027.