Ailing Edison International will have $46 million cash in hand by year's end thanks to a series of financial transactions and asset sales the Rosemead-based power company has undertaken in the last month, company executives said Tuesday.
Although the actions--which include a massive refinancing of bank loans and bonds, the sale of land and a home security company--will stabilize Edison International, the future of its Southern California Edison utility remains precarious, officials said.
In a conference call with creditors that are owed nearly $1 billion by SCE, Theodore Craver Jr., Edison's chief financial officer, said the fate of the utility is largely in the hands of a state Legislature that appears reluctant to take action on a rescue plan worked out by Gov. Gray Davis.
The agreement between Davis and Edison gives the Legislature until Aug. 15 to approve the deal. However, some lawmakers have said that's an arbitrary date and that the deadline could be extended.
The Legislature is scheduled to recess July 20.
One factor complicating efforts to rescue the utility is the recent failure in settlement talks between the state and power generators. In a hearing before a federal administrative law judge in Washington, state officials and power generators argued over $8.9 million in disputed charges without reaching an agreement.
Settling the dispute may take months, and the judge indicated Monday that California probably will recoup less than $1 billion.
"The delay doesn't help the odds of getting the Legislature to move," said Brian Youngberg, an analyst at Edward Jones in St. Louis. "A big refund in hand would have made things simpler for the Legislature."
The agreement with Davis calls for the state to purchase SCE's transmission lines for $2.8 billion and for SCE to issue bonds to repay as much as $3.5 billion in debts that accrued from selling power at a loss when prices spiked. The bonds would be paid off by a rate increase.
During the conference call Tuesday, several creditors expressed concern over the lack of legislative movement on the utility's rescue plan. SCE is making only interest payments to the creditors, which hold $931 million in defaulted bonds and notes.
One creditor asked whether SCE would file for bankruptcy if the Legislature fails to take action by the August deadline.
"We are not prepared to state what we would do," Craver responded.
However, he noted that the utility let pass an earlier deadline for the California Public Utilities Commission to approve aspects of the agreement. The commission has since addressed most of the issues.
He said SCE still believes that a bankruptcy would make solving the utility's financial problems more complicated.
The next significant date after the August deadline is Sept. 15, when $200 million in bank loans come due.
On Tuesday, Edison International's shares closed up 5 cents at $14.05 on the New York Stock Exchange. The stock has risen about 21% over the last five trading days.
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A debt refinancing and the sale of its home security business and other assets have helped stabilize the finances of Edison International, sparking a rally in its stock, which has gained nearly 21% over the last five trading days on the New York Stock Exchange.
Edison, weekly closes and latest
Tuesday: $14.05, up 5 cents
Source: Bloomberg News