Edison Mission Energy has reportedly mandated Credit Suisse First Boston to lead a bond offering as part of its effort to reshape a load of bank debt, including a $911 million loan that falls due Dec. 11, according to LMW sister publication Power Finance & Risk. The IPP has been front and center for many lenders over the last few months. The size of the potential bond deal and its timing could not be ascertained. Kevin Kelley, a spokesman for EME, and John Gallagher, a spokesman at CSFB, declined to comment.
The loans taking center stage are at EME's Edison Mission Midwest Holdings unit. The bank debt has been slowly ticking up in the secondary market last week trading actively in the 95-96 range on the expectation that a plan to deal with the maturities would soon be presented to the lending group. There is a ton of demand at 93 and a ton of supply in the 96-97 context, explained one dealer. The price is not ticking closer to par because no firm details on the bond deal have surfaced, a dealer said. Traders said the company has for sometime disallowed the bank debt to trade via assignments in an attempt to maintain the bank group so all trades must be completed via participations.
Because of ratings downgrades, cash is now being trapped at Edison Mission Midwest Holdings and being used to pay off the debt. The $911 million loan now stands at $780.7 million and an $808 million loan due next year is also being paid down and currently stands at $692.7 million.
One lender said the bond refinancing route was floated a few months back, but now appears to be back in the frame. He was unsure why the idea has resurfaced, but he noted the timing issues appear to point to some form of reworking that doesn't involve the loan restructuring. With the Thanksgiving holiday falling before the Dec. 11 cut off, the company is cutting it fine to get even an extension through the lending group's credit committees, let alone a full scale restructuring, said another banker in the deal. "We're down to a very late stage," he said. Another lender added that there seems to be an unhurried pace to the talks between the loan leads and the company and that also makes the bond route more likely. Without some form of restructuring the unit of Edison International will likely end up in Chapter 11 (PFR, 8/11). Calls to J.P. Morgan, agent on the loans, were not returned by press time.