Santa Ana-based Edison Mission Energy has filed for bankruptcy.
The unregulated power-generating unit of Rosemead-based Edison International Inc. filed for Chapter 11 bankruptcy protection in the U.S. bankruptcy court in Northern Illinois, listing more than $5 billion in both assets and liabilities.
The company said on Monday that it has agreed on a reorganization plan with Edison International and other major stakeholders that hold about $3.7 billion in unsecured debt.
Some of the creditors holding the largest amounts of debt include Wells Fargo Bank, Mitsubishi Power Systems Inc., and Safeway Services LLC.
Edison Mission will be referred to as discontinued operations by its parent company, which has “recently reaffirmed that it has no intention to invest further funds in [Edison Mission] given currently challenging market conditions,” according to a bankruptcy document filed by Edison Mission's Chief Financial Officer Maria Rigatti.
Edison Mission, producer of wholesale electricity of about $5.13 billion in total assets, has been seeing challenges for some time, including higher environmental cost requirements, a steady increase in natural gas supplies that have driven wholesale electricity prices down, as well as interest payment obligations totaling about $5 billion—factors that have “severely limited the [company's] ability to compete effectively,” according to Rigatti.
The company also felt a squeeze in revenue streams and missed a scheduled interest payment of $97.5 million in November. It has seen a decrease of cash reserves from about $1.3 billion at the end of 2011 to roughly $698 million as of September 30, 2012, Rigatti said in the filing.
The company, its parent and major stakeholders will have 90 days to agree on a restructuring plan.