O.C. Acts on Edison Notes

Criticized for sinking $40 million into battered Edison International, Orange County’s treasurer Friday formed an ad hoc committee he hopes will negotiate on behalf of all Edison investors should the utility continue to hover on the edge of bankruptcy.

“We believe this step is critically important in order to protect the rights of each and every unsecured creditor,” said John M.W. Moorlach, the county’s treasurer and tax collector.

The action comes on the heels of a disclosure that Moorlach’s office made two $20-million investments in the utility, one on Sept. 28 and the other Dec. 7, despite warnings then of a potential financial collapse of Southern California Edison, the state’s second-largest utility.

The investments represent 3.3% of about $1.1 billion in the county’s educational investment pool, which holds excess operating cash for every school district in the county.

If Edison defaults on the notes, the lost capital would be replaced by cutting off interest payments to the school districts, which could amount to millions for some districts.

Moorlach is soliciting other members for the ad hoc group. Several other unsecured creditors, including two in San Francisco, one in Canada and another in Connecticut, have expressed interest, said an aide to Moorlach. He declined to identify them, however.

The county treasurer was named chairman of the group.

The county also received $115,880 in interest Friday from Edison International on one of the $20-million notes. The note itself matures Jan. 31.

While encouraged by the payment, Moorlach said the critical moment will arrive Jan. 31, when the short-term note matures and the utility must make payment.