eix / eme bond sale fyi .
tuesday june 26 6 : 32 pm et
sources : edison reworking bond sale
by jonathan stempel
new york ( reuters ) - edison international ( nyse : eix - news ) , in a last - ditch bid to stay solvent , is restructuring a $ 1 . 2 billion junk bond sale because investors are afraid of getting caught in a second big california utility bankruptcy , bond market analysts and investors said on tuesday .
edison , the parent of cash - strapped utility southern california edison ( news - web sites ) , is considering trimming its bond sale and adding a bank term loan , the analysts and investors said .
rosemead , california - based edison needs cash this week as it struggles with california ' s power crisis , analysts said . the company is trying to rid itself of debt maturing this year , including a fully drawn down $ 618 million bank credit line expiring saturday .
the seven - year secured notes being sold by mission energy holding co . have not found enough buyers despite carrying yields as high as 13 . 5 percent , analysts said . that ' s more than four percentage points above the recent 9 . 33 percent yield on a typical junk - rated electric utility bond , according to merrill lynch & co .
` ` we were hearing it was significantly undersubscribed around midday when the deal was scheduled to price , so the assumption is it will resurface in another form , probably much cheaper and restructured , ' ' said john atkins , a corporate bond analyst at ideaglobal . com , a new york - based research firm .
in the utility ' s semi - weekly conference call with holders of defaulted socal edison debt , chief financial officer jim scilacci said tuesday afternoon there is ` ` virtually nothing the company can say ' ' about the private bond sale .
goldman sachs & co . , which sources said is arranging the bond sale , also declined to comment .
edison said earlier this month it intended to use bond sale proceeds to pay down the bank credit line , as well as $ 250 million of notes due july 18 and $ 350 million due nov . 1 .
mission energy holding , which edison created specifically to raise cash , was designed to be shielded from any bankruptcy of socal edison , edison or edison mission energy . some investors have said they are concerned the shield may not prove strong enough .
moody ' s investors service rated mission energy holding ' s notes ` ` ba 2 , ' ' its second highest junk grade . standard & poor ' s , rated them ` ` bb - minus , ' ' one notch lower .
socal edison , which has defaulted on $ 931 million of bonds and commercial paper , ran up more than $ 5 . 4 billion of debt because california ' s utility deregulation blocked it from recouping its soaring wholesale power costs . it agreed in april with gov . gray davis ( news - web sites - news ) , filed for bankruptcy protection on april 6 .
shares of edison closed tuesday on the new york stock exchange ( news - web sites ) at $ 11 . 24 , down 33 cents . they have fallen 28 percent this year .