8-KMaterial AgreementsFinancial EventsExhibits & Filings

EDISON INTERNATIONAL 8-K Report, Material Agreement (May 18, 2018)

Filed May 18, 2018For Securities:EIX

Summary

Edison International (EIX) and its subsidiary Southern California Edison Company (SCE) have entered into new, larger revolving credit facilities. The parent company, EIX, secured a $1.5 billion facility, an increase from its previous $1.25 billion facility, maturing on May 17, 2023. SCE obtained a $3.0 billion facility, up from $2.75 billion, also maturing on May 17, 2023. These new facilities are intended to support commercial paper borrowings and general corporate purposes, with SCE's facility also covering letters of credit for specific operational needs. These actions demonstrate proactive financial management, providing enhanced liquidity and financial flexibility for both EIX and SCE. The increased credit limits suggest confidence from the lenders and provide a stronger financial cushion for ongoing operations and capital expenditures, especially important given the nature of utility businesses. Investors should view these developments positively as they bolster the companies' ability to meet their financial obligations and fund strategic initiatives.

Key Highlights

  • 1Edison International (EIX) entered into a $1.5 billion Second Amended and Restated Credit Agreement.
  • 2Southern California Edison Company (SCE) entered into a $3.0 billion Second Amended and Restated Credit Agreement.
  • 3Both new credit facilities are set to mature on May 17, 2023, with provisions for extension.
  • 4These facilities replace older, smaller credit agreements that would have terminated in July 2022.
  • 5The increased credit lines provide greater financial flexibility and liquidity for both EIX and SCE.
  • 6Funds will be used for commercial paper, general corporate purposes, and specific SCE needs like letters of credit for procurement and balancing accounts.
  • 7The agreements include customary covenants and a single, clear financial covenant regarding debt-to-capital ratios.

Frequently Asked Questions

The primary purpose is to enhance the liquidity and financial flexibility of Edison International and Southern California Edison. The new, larger credit facilities will be used to support commercial paper borrowings, general corporate purposes, and for SCE, specific operational needs like letters of credit for procurement-related collateral and balancing account undercollections.

Edison International's new facility is $1.5 billion, an increase from its previous $1.25 billion facility. Southern California Edison's new facility is $3.0 billion, an increase from its previous $2.75 billion facility. Both new facilities also have a later maturity date (May 17, 2023) compared to the ones they replace (July 20, 2022).

Each credit agreement has a single, primary financial covenant. Borrowers must maintain a ratio of total consolidated recourse indebtedness to total consolidated capital that does not exceed 0.65 to 1.0 for SCE and 0.70 to 1.0 for Edison International at the end of each fiscal quarter.

The agreements contain standard representations, warranties, covenants, and events of default, which are typical for such credit facilities. The primary financial covenant related to the debt-to-capital ratio suggests the companies are maintaining a certain level of financial leverage. Interest rates on borrowings will vary based on benchmark rates plus a margin tied to the companies' credit ratings.