Edison Mission Energy amended plan confirmed, includes settlement deal

By Kali Hays

New York, March 11 - Edison Mission Energy's amended plan of reorganization was confirmed in court, according to a Tuesday news release from the company.

The approved plan incorporates the settlement agreement between Edison Mission Energy, Edison International and some of the company's creditors.

Under the settlement, the company "will emerge from bankruptcy free of liabilities and remain a subsidiary of Edison International. All assets and liabilities of Edison Mission that are not otherwise discharged in the bankruptcy or sold to NRG Energy, Inc. will be transferred to a newly-formed trust under the control of Edison Mission's creditors," the release stated.

As previously reported, the settlement requires Edison International to pay the reorganization trust amounts equal to 50% of Edison Mission's federal And California income tax benefits generated as of the effective date that were not previously paid to Edison Mission under a tax allocation agreement that expired Dec. 31.

On the effective date, $225 million of the amount due to the trust will be paid in cash, with half of the balance payable on Sept. 30, 2015 and the other half on Sept. 30, 2016.

Edison International will also assume roughly $350 million of Edison Mission obligations, comprised of federal and certain state income tax and qualified executive pension and related liabilities. It will also be the beneficiary of bankruptcy court orders releasing Edison International from claims of third parties in Edison Mission's case.

The escrowed amount will decline over time to zero on the later of Sept. 30, 2016 and the date on which specified third-party claims pending as of that date are resolved.

Objections made by the Department of Treasury, Internal Revenue Service and Commonwealth Edison were resolved in the hearing, according to an attorney familiar with the case.

Plan terms

Plan creditor distributions will include the following:

• Holders of priority claims against Edison Mission and its debtor subsidiaries will be paid in full in cash;

• Holders of secured claims against Edison Mission, the debtor subsidiaries and the Homer City debtors will be paid in full in cash or receive another treatment that renders the claims unimpaired;

• Holders of general unsecured claims against the debtor subsidiaries will receive full payment of principal amount in cash;

• Holders of assumed liability general unsecured claims against Edison Mission will receive payment in full in cash under the terms of a purchase agreement;

• Holders of not-assumed liability general unsecured claims against Edison Mission and joint-liability general unsecured claims will receive a share of net sale proceeds, net settlement proceeds and new interests. The net settlement proceeds were not included in the previous version of the plan;

• Holders of allowed claims against the Homer City debtors will be paid in absolute priority from the Homer City wind-down proceeds for the applicable debtor;

• Holders of intercompany claims and subordinated claims will receive no distribution;

• Edison Mission interests will be reinstated. These interests were previously scheduled to be canceled; and

• Intercompany interests in subsidiary debtors will be reinstated, and Homer City debtor interests will be canceled.

Edison Mission, a Santa Ana, Calif.-based owner, operator and leaser of a portfolio of electric generating facilities, filed for bankruptcy on Dec. 17, 2012. Its Chapter 11 case number is 12-49219.

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