SCE Creditors Eager to Discuss Fiscal Plan

Southern California Edison creditors said Friday that the company should call a meeting to begin work on a joint plan to return the insolvent utility to fiscal health, a process they believe can start without a bankruptcy filing.

Creditors said they are reluctant to file an involuntary-bankruptcy petition against SCE until the state Legislature makes one last effort to agree on a rescue plan. Additionally, the creditors said they want to see how a plan unveiled by Pacific Gas & Electric Co. on Thursday to emerge from its April bankruptcy filing is received in Sacramento and on Wall Street.

But several creditors expressed concern about the efforts of Mirant Corp., an Atlanta-based power plant owner, to force SCE into bankruptcy.

Mirant is seeking parties interested in joining an involuntary-bankruptcy petition against the utility, said Bill Adams, president of San Gorgonio Farms. Adams, whose firm owns a wind energy station near Palm Springs that SCE owes $3.2 million, said a Mirant attorney has called smaller generators and holders of the utility’s defaulted notes and bonds.

“They feel that SoCal Edison is never going to pay them. They believe it will always come up with some excuse, and that they will have a better case for collecting what’s owed them with a Bankruptcy Court judge,” Adams said.

He said he rejected Mirant’s overture because he believes creditors should allow the Legislature more time “to do the right thing.” Mirant declined to comment.

Any three unsecured creditors with a combined claim against SCE of $10,775 could file a petition in U.S. Bankruptcy Court seeking a filing.

Executives of Edison International, SCE’s parent company, said they are aware that the larger generators such as Mirant, which are owed a combined $1 billion, are the most skittish of their creditors.

“We have to come up with some sort of arrangement with the generators as part of the overall solution,” Ted Craver, chief financial officer of Edison International, told creditors during a conference call Friday.

The utility piled up $3.9 billion in debt when wholesale electricity prices started rising sharply in May 2000 and it could not recoup its costs because of a state-regulated freeze on customers’ rates.

Several proposed Edison rescue plans have failed in the state Legislature. Gov. Gray Davis has called lawmakers back into session next month to revisit the issue.

Craver said Edison would fight any involuntary-bankruptcy petition and remained hopeful that the Legislature would still approve a rescue plan. Bankruptcy remains an option of last resort, he said.

“I am not looking to pull the trigger at this point,” said John Moorlach, treasurer of Orange County. The county’s retirement system holds $1 million in defaulted SCE bonds.

“I would prefer that SoCal Edison sit down and meet with everybody. Let’s negotiate to see what we can get rolling outside of a bankruptcy,” Moorlach said.

The utility could later put itself through a “prepackaged bankruptcy”--in which the creditors and the debtor would agree to terms before a formal court filing--if that turns out to be required to execute a financial restructuring of SCE debts, he said.

Adams of San Gorgonio Farms said the utility not only should meet with creditors, but even use the nearly $2 billion in cash it has banked to start paying some of its debts.

SCE immediately should pay small creditors owed less than $100,000, Adams said. He wants SCE to use the remaining cash to pay off debts on a proportional basis, leaving $200 million in the bank for its working capital needs.

At the same time, he said, the company should enter into negotiations with its creditors, attempting to issue them bonds for the remaining debt or to work out refinancing.

Several of Adams’ suggestions mirror the reorganization plan Pacific Gas & Electric filed Thursday in U.S. Bankruptcy Court in San Francisco. The utility, a unit of PG&E; Corp., has a 60-day window to win the court’s confirmation but could seek an extension.

PG&E;’s plan provides for repayment of $13.2 billion in creditor claims using cash and notes.

The utility’s nuclear plant, hydropower assets, transmission wires and gas pipelines would be transferred to the parent company, and the remaining electricity and gas distribution operation would be spun off to shareholders as a separate company. If the plan is approved, rates would not rise in the near future, PG&E; said, because the parent company plans to sell power to the utility at 5 cents a kilowatt-hour for 12 years.

Some analysts expect state opposition to the plan because the utility’s power generation assets would be shifted away from regulation by the California Public Utilities Commission. Consumer advocates object to the transfer of power assets to the deregulated parent company.

Shares of Edison International rallied Friday, rising 44 cents to $11.79 on the New York Stock Exchange. PG&E; Corp. stock, which garnered an upgrade to “outperform” from “neutral” from Morgan Stanley Dean Witter, jumped $1.28, or 8.1%, to close at $17 a share, also on the NYSE.

*

Times staff writer Nancy Rivera Brooks contributed to this report.