Edison Mission Energy Files Plan to Pay Creditors

   By Jacqueline Palank 
 

Edison Mission Energy filed its plan to pay its creditors from the proceeds of its proposed $2.6 billion sale to NRG Energy Inc. (NRG)

The plan, filed Friday with the U.S. Bankruptcy Court in Chicago, carries the support of the official committee representing Edison Mission's unsecured creditors as well as the holders of about 75% of $3.7 billion in unsecured bond debt.

The plan centers around Edison Mission's sale to NRG Energy, which has offered to pay $2.285 billion in cash and $350 million in stock, subject to any higher offers that come in over the next few weeks.

Edison Mission will use the sale proceeds, as well as cash on hand, to pay the bondholders and other unsecured creditors.

In addition to receiving cash, the bondholders and other unsecured creditors may also share in the company's new common shares or other interests. Certain bondholders and unsecured creditors will also get to appoint three directors on Edison Mission's five-person board.

The plan proposes to cancel Edison Mission's existing shares, and holders aren't expected to receive any payment.

An additional key component of the plan would preserve legal claims against Edison Mission's publicly traded parent, Edison International (EIX). Edison Mission and its unsecured creditors have vied for the right to sue the parent, which they have accused of siphoning hundreds of millions of dollars from Edison Mission before the subsidiary's Chapter 11 filing.

Edison International, which isn't under court protection, has vowed to fight any lawsuit and says the claims lack merit.

Edison Mission is asking the court to review an outline of the plan, called a disclosure statement, at a Dec. 18 hearing. If the court finds the document contains enough information about the plan's terms, then Edison Mission's creditors will be able to start voting on the plan.

Edison Mission hopes to wrap up voting by the end of January and return to bankruptcy court in mid-February for a hearing on the plan itself.

Edison Mission generates energy at about 40 coal, wind and gas facilities in 12 states. It sought Chapter 11 protection last December.

(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)

Write to Jacqueline Palank at [e-mail].

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