Chances of Bankruptcy Filing by SCE Increase

The prospect of a voluntary bankruptcy filing by Southern California Edison has increased because of a proposed sale of $1.2 billion in notes to refinance debt of Edison International (EIX), parent of the Rosemead utility, Wall Street analysts said Tuesday.

Edison International will use proceeds from the note sale to pay off bank loans and other debts that were due this year, but will provide no assistance for the beleaguered utility.

The move further insulates Edison International and its profitable Edison Mission Energy subsidiary from a bankruptcy filing by Southern California Edison. That would make such a filing more likely if the utility doesn’t win approval from legislators and regulators of the Edison rescue plan brokered by Gov. Gray Davis, analysts said.

“Although we expect [Edison] will continue its efforts to negotiate a legislative/regulatory solution to its current crisis in the near-term, ultimately patience may run thin and the company may seek to enter bankruptcy as a result of continued regulatory/legislative inaction,” Lehman Bros. energy analyst Daniel F. Ford said in a report to clients.

However, Edison International said it remains committed to waiting for action from legislators and regulators needed to put the rescue plan into motion.

Edison International shares rose 20 cents to $11.20 in NYSE trading.