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Edison Mission Energy ratings remain on watch negative

NEW YORK, Jan. 4, 2001 (PRNewswire) — Standard & Poor’s credit ratings for Edison Mission Energy Co. remain on CreditWatch with negative implications where they were placed on Dec. 13, the agency said.

Standard & Poor is watching Edison Mission Energy Co.’s (EME) single-‘A’-minus issuer credit rating, single-‘A’-minus senior-unsecured debt rating, single-‘A’-minus senior-secured debt rating, ‘A-2’ commercial paper rating, and triple-‘B’ preferred securities rating on Edison Mission Energy Co. (EME).

Also, Standard & Poor’s single-‘A’-minus rating on Midwest Generation LLC’s (MG) series A, $335.5 million pass-through certificates, due 2009; and series B, $813.5 million pass-through certificates, due 2016, remain on CreditWatch with negative implications where they were placed on Dec. 13, 2000.

In addition, Standard & Poor’s triple-‘B’ issuer credit rating on Edison Mission Midwest Holdings Co. (EMMH), triple-‘B’ rating on EMMH’s revolving credit facilities, triple-‘B’ rating on Midwest Funding LLC’s senior-secured bank notes, and ‘A-2’ commercial paper rating for EMMH, remain on CreditWatch with negative implications where they were placed Dec. 13, 2000.

This action follows today’s related action where Standard & Poor’s lowered its rating on EME’s parent, Edison International (EIX, triple-‘B’ minus/CreditWatch Neg/’A-3′) and EIX’s subsidiary, Southern California Edison Co. (SoCalEd) (triple-‘B’-minus/CreditWatch Neg/’A-3′), and placed them on CreditWatch with negative implications. The downgrades reflect the failure of the California Public Utilities Commission’s Jan. 4, 2001, order to meaningfully address a dysfunctional market structure that compels SoCalEd to serve customers at retail rates substantially below its purchased power costs. The resulting rapidly escalating financial burden due to the mismatch between operating costs and retail rates has resulted in SoCalEd’s power purchases exceeding revenues by nearly $4.9 billion over the past six months. (See related stories)

Historically, EME’s credit strength in part rested on the financial flexibility that EIX provided. The extraordinary events in California now prevent EIX from being able to provide EME with any financial support in the near term or longer. Standard & Poor’s has excluded rating downgrade action today on EME and its subsidiaries due to a ring-fencing arrangement that EIX and EME are currently putting into place that will be designed to insulate EME from the rest of the EIX family.

EME is an international power developer, based in Irvine, Calif., with investments in 75 projects totaling 28,399 MW of generation capacity (22,814 net MW).

Standard & Poor’s expects that absent parent support, the rating on EME will likely fall into the triple-‘B’ category, assuming the ring-fencing effort is successful. Should the effort be unsuccessful, the EME ratings could fall with the ratings on EIX. Standard Poor’s could remove all ratings from the CreditWatch listing. — CreditWire

SOURCE: Standard & Poor’s