PROSPECTUS SUPPLEMENT
(To prospectus dated July 21, 1999)
$350,000,000
Edison International
Floating Rate Notes due 2001
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Edison International will pay interest on the notes quarterly on
February 1, May 1, August 1 and November 1, commencing on February 1, 2001,
through the maturity date of November 1, 2001. The interest rate on the notes
for each quarterly interest period will be reset quarterly based on the
three-month LIBOR rate plus 0.50%; however, under the limited circumstances set
forth in this prospectus supplement, the interest rate on the notes for each
quarterly interest period will be determined without reference to LIBOR. Under
limited circumstances involving changes in the credit ratings of Edison
International, as set forth in this prospectus supplement, the interest rates on
notes may be adjusted.
The notes may not be redeemed prior to maturity.
The notes will be unsecured and will rank equally with all other
existing and future unsecured and unsubordinated indebtedness of Edison
International. The notes will be issued only in registered form in denominations
of $1,000 and integral multiples of $1,000.
Offering Price Underwriting Proceeds to Edison
to Investors Discounts and International
Commissions
---------------- ---------------- ------------------
Per Note.................. 100.000% 0.150% 99.850%
Total..................... $350,000,000 $525,000 $349,475,000
The public offering price set forth above does not include accrued
interest. Interest on the notes will accrue from November 8, 2000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the notes in book-entry form only
through the facilities of The Depository Trust Company on or about November 8,
2000.
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Joint Book Running Managers
CHASE SECURITIES INC. LEHMAN BROTHERS
Co-Managers
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
SALOMON SMITH BARNEY
November 3, 2000
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. We have not authorized anyone to
provide you with information different from that contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We are
offering to sell notes and seeking offers to buy notes only in jurisdictions
where offers and sales are permitted. The information contained herein is
accurate only as of the date of this prospectus supplement, regardless of the
time of delivery of this prospectus supplement and the accompanying prospectus
or any sale of the notes.
TABLE OF CONTENTS
Prospectus Supplement
Page
About This Prospectus Supplement and Prospectus.......................... S-3
Edison International..................................................... S-3
Recent Developments...................................................... S-3
Use of Proceeds.......................................................... S-8
Ratio of Earnings to Fixed Charges ...................................... S-8
Description of the Notes................................................. S-9
Underwriting............................................................. S-13
Validity of the Notes.................................................... S-14
Prospectus
Page
About this Prospectus.................................................... 3
Forward-Looking Statements............................................... 3
Where You Can Find More Information...................................... 4
Edison International..................................................... 5
The Trusts............................................................... 6
Use of Proceeds.......................................................... 7
Ratio of Edison International Earnings to Fixed Charges and
Preferred Stock Dividends............................................ 8
Description of Securities................................................ 8
Description of Debt Securities........................................... 9
Description of Edison International's Common Stock
and Preferred Stock.................................................. 18
Description of Preferred Securities...................................... 22
Description of Preferred Securities Guarantees........................... 28
Description of the Expense Agreements.................................... 30
Relationship Among Preferred Securities, Preferred Securities
Guarantees and Subordinated Debt Securities Held By Each Trust....... 30
Experts.................................................................. 31
Validity of the Securities and the Preferred Securities Guarantees....... 31
Plan of Distribution..................................................... 31
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ABOUT THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS
To fully understand the investment you are contemplating, you must
consider this prospectus supplement and the accompanying prospectus, together
with the detailed information incorporated into each of them by reference,
including Edison International's financial statements and the accompanying
notes.
In this prospectus supplement and the accompanying prospectus, unless
otherwise stated, the terms "we," "us" and "our" refer to Edison International.
In this prospectus supplement, the term "notes" refers to the floating rate
notes.
EDISON INTERNATIONAL
Edison International was incorporated on April 20, 1987, under the laws
of the State of California for the purpose of becoming the parent holding
company of Southern California Edison Company, a California public utility
corporation. Edison International is a multinational corporation and a global
leader in energy production and distribution and in energy and infrastructure
finance. Edison International owns all of the issued and outstanding common
stock of Southern California Edison Company and of the following subsidiaries
engaged in nonutility businesses: Edison Mission Energy, Edison Capital, Mission
Land Company, Edison O&M Services and Edison Enterprises. Headquartered in
Rosemead, California, Edison International has regional offices in New York,
Washington D.C., Australia, Indonesia, the Philippines, Singapore, Italy, Spain,
Turkey and the United Kingdom. The address of our principal executive offices is
2244 Walnut Grove Avenue, P.O. Box 999, Rosemead, California 91770. Our
telephone number is (626) 302-2222. We file annual, quarterly and special
reports, proxy statements and other information with the Securities and Exchange
Commission. These reports and other documents that we have filed with the
Securities and Exchange Commission are considered to be part of this prospectus
supplement and the accompanying prospectus through incorporation by reference.
You may read and obtain copies of those reports and other information to learn
more about us. Under the heading "Where You Can Find More Information" in the
accompanying prospectus we have described how you can do so.
RECENT DEVELOPMENTS
Although the assets and net income of Edison International's nonutility
subsidiaries, particularly Edison Mission Energy and Edison Capital, have grown
substantially in recent years, the largest portion of Edison International's
assets and net income (approximately 52% and 83%, respectively, at September 30,
2000) is still derived from Southern California Edison Company ("SCE"). SCE is a
public utility company primarily engaged in providing electricity to its
customers in central and southern California.
The retail rates charged to customers by SCE, as well as various other
aspects of its operations as a California public utility company, are regulated
by the California Public Utilities Commission ("CPUC") and governed by
California law. SCE's wholesale power transactions and related matters involving
interstate commerce are regulated by the Federal Energy Regulatory Commission
("FERC") and governed by federal law. California is restructuring its electric
utility industry under a statute unanimously adopted by the California
legislature in 1996 (known as "AB 1890") and decisions of the CPUC. AB 1890
established a transition period during which rates paid by retail electricity
consumers are frozen and investor-owned electric utility companies, including
SCE, are authorized to recover certain generation-related assets and obligations
(commonly referred to as "stranded costs"). A regulatory balancing account
called the transition cost balancing account ("TCBA") has been created to record
these costs.
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AB 1890 and the CPUC's implementing decisions authorize three sources
of revenue from which SCE may recover its stranded costs during the transition
period: (1) market revenues from sales of electricity produced by generation
assets that SCE continues to own, (2) the proceeds from divestiture of SCE's
generation assets, or the market valuation of generation assets that it retains,
to the extent that the sale proceeds or market valuations exceed the book value
of the assets, and (3) revenues from retail electricity sales to SCE's customers
to the extent that frozen rate levels exceed SCE's costs of providing service to
customers, including energy procurement costs (commonly referred to as
"headroom"). AB 1890 further provides that the rate freeze will end on "the
earlier of March 31, 2002, or the date on which the commission-authorized costs
for utility generation-related assets have been fully recovered." The CPUC has
ruled that the rate freeze will end when the balance in the TCBA is at zero or
is overcollected and the CPUC has completed its review of applications for
valuation of generation assets. The CPUC contemplated that its final approval
could take place some time after the TCBA reaches zero or is overcollected, in
which case the CPUC could make retroactive adjustments as though the rate freeze
had ended at an earlier date.
As a part of industry restructuring, SCE is required during the
transition period to sell all of the electricity it generates to the California
Power Exchange at prices determined by periodic public auctions. As noted above,
the revenues received are used to recover stranded costs. SCE also is required
to buy any electricity needed to serve its retail customers through the
California Power Exchange and the California Independent System Operator. SCE's
total procurement costs, along with its other authorized operating costs and
charges are recorded in a regulatory asset account called the transition revenue
account ("TRA"). SCE's total billed revenues from retail customers are also
recorded in this account. As noted above, whenever SCE's revenues exceed its
costs, it has headroom revenues which are used to recover stranded costs. On
November 1, 2000, the FERC issued a proposed decision, discussed below, which,
if implemented, would eliminate the requirement to buy and sell power only
through the California Power Exchange and California Independent System
Operator.
SCE is experiencing adverse impacts from unusually high prices for
energy and ancillary services procured through the California Power Exchange and
the California Independent System Operator. Because of the high prices, SCE has
received insufficient revenues from customers through current frozen rates to
cover all costs of providing service during each month since May 2000. The
amount by which the revenues are insufficient to cover costs is recorded as a
negative balance in the TRA. The amount of undercollections recorded by SCE in
its TRA was $2.358 billion as of September 30, 2000. Current published prices
for future deliveries of wholesale electricity suggest that wholesale prices and
other costs of providing service to customers will continue to exceed SCE's
authorized rates for the foreseeable future, resulting in continued increases in
the undercollected TRA balance.
Past decisions of the CPUC, as discussed below, allow SCE to recover
TRA undercollections only from any future positive revenues attributable to the
account through the end of the statutory rate freeze period, as defined above.
Based on current projections of future wholesale energy prices, SCE anticipates
that it will be unable to recover its TRA undercollections before the end of the
statutory rate freeze. Therefore, if the CPUC does not modify its past decisions
and SCE is unable to obtain other regulatory or judicial relief, SCE likely will
not be able to recover its TRA undercollections. That would result in charges
against earnings as discussed below.
In an October 1999 order, the CPUC interpreted and applied AB 1890 to
prohibit SCE and other California electric utility companies from either
recovering TRA undercollections after the end of the statutory rate freeze or
offsetting those undercollections with overcollections of stranded costs in the
TCBA. In March 2000, the CPUC denied a petition for rehearing of the October
1999 order. A subsequent petition for judicial review of the CPUC's decisions
was denied by the California Court of Appeal, and an appeal is now pending
before the California Supreme Court.
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On October 4, 2000, SCE filed with the CPUC an emergency petition for
expedited modification of the CPUC's October 1999 and March 2000 decisions. In
the emergency petition, SCE argued that: (1) modification of the prior decisions
is justified by significant new facts, a material change in conditions, and a
basic misconception of law by the CPUC; (2) the prior decisions violate federal
law by preventing SCE from recovering costs incurred pursuant to tariffs and
rate schedules filed with the FERC; and (3) the prior decisions seriously
misinterpreted AB 1890. SCE's emergency petition requested that the CPUC modify
its prior decisions to allow electric utility companies to carry over costs,
excluding stranded costs, incurred during the statutory rate freeze period to
the post-rate freeze period, and to recover those costs over a reasonable period
of time. SCE also filed with the CPUC on October 5, 2000, an ex parte request
for immediate suspension of the effectiveness of portions of the October 1999
and March 2000 CPUC decisions.
On October 17, 2000, the assigned commissioner and the administrative
law judge in the CPUC proceedings described above issued a joint ruling stating
that they would consider the accounting mechanisms developed by the CPUC,
including the TRA and TCBA. They scheduled a prehearing conference on October
27, 2000 to "develop a schedule for submitting testimony related to potential
changes to the TCBA, the TRA, and the interaction of these accounting
mechanisms, including, for example, such methods as applying generation revenues
to offset operating losses, or transferring the TRA undercollection to the
TCBA." In a statement accompanying the joint ruling, the President of the CPUC
stated that "it is crucial to explore equitable solutions to this problem,
including how the Commission should revise the accounting procedures and cost
recovery mechanisms related to the Transition Cost Balancing Account and the
Transition Revenue Account. These approaches might include, for example, whether
the generating revenues that have been earned should be used to net out
operating losses."
On October 17, 2000, The Utility Reform Network ("TURN"), a customer
advocacy group, petitioned the CPUC to modify, apparently retroactively, a 1998
CPUC decision in such a way as to require all TRA undercollections and
overcollections to be transferred to the TCBA on a monthly basis. SCE believes
that TURN's requested modifications likely would preclude SCE from recovering a
substantial portion of its stranded costs and ongoing power procurement costs,
which would require SCE and us to charge those costs to earnings in accordance
with generally accepted accounting principles, as discussed below. SCE will
oppose TURN's petition.
On October 25, 2000, SCE filed a statement required by the October 17
joint ruling. The statement proposed that the CPUC take four key actions: (1)
support market reform, including providing greater freedom for utilities to
contract for longer term supplies of power, completing review of SCE's bilateral
contract proposals, and urging other agencies to help rectify the market
structure problems that have become apparent; (2) confirm that utility companies
will be permitted to recover their reasonable procurement costs incurred on
behalf of customers; (3) protect customers by implementing a post-freeze rate
stabilization plan, including a modest near-term energy rate increase in the
interest of avoiding a much larger rate increase in 2002 and thereafter; and (4)
promptly decide whether the CPUC is going to permit the sale of the utilities'
remaining generation assets. SCE also proposed a schedule leading to adoption of
a new rate plan effective January 1, 2001. At the October 27, 2000 prehearing
conference, the administrative law judge extended the date for responses to
SCE's emergency motions to November 9, 2000, and set the same date for responses
to the TURN petition. Parties were also given until the same date to file
specific accounting proposals relating to the TRA undercollections. The
administrative law judge stated that the scope of the proceeding is limited to
changes in the applicable CPUC-authorized accounting mechanisms and is not
intended to address before the end of this year the question of whether prior
CPUC decisions should be modified to permit carryover of TRA undercollections
past the end of the rate freeze. On November 1, 2000, the assigned commissioner
issued a ruling confirming that this phase of the proceeding will explore
interim accounting measures that the CPUC can adopt by year-end. The ruling also
stated that the assigned commissioner will prepare an order instituting
investigation for consideration at the CPUC's December 21, 2000 meeting, which
"will allow the
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[CPUC] to consider alternative ways of handling the residual cash flow
problems from large TRA undercollections that have not otherwise been resolved
through accounting mechanisms."
Neither we nor SCE can predict what actions the CPUC will finally take
in the proceedings described above or their financial impact on us and SCE.
However, actions that would require us to charge the TRA undercollections to
earnings under generally accepted accounting principles, as discussed below,
could have a material adverse effect on our financial condition and results of
operations.
SCE is continuing to work with the CPUC, the FERC, the California
Electricity Oversight Board, the California Power Exchange, and the California
Independent System Operator to fix the market problems that have resulted in the
recent high prices for wholesale energy and ancillary services. On October 16,
2000, SCE filed a joint petition with Pacific Gas and Electric Company and TURN
asking the FERC to (1) immediately find the California wholesale electricity
market to be not workably competitive and the resulting prices to be unjust and
unreasonable; (2) immediately impose a cap on the price for energy and ancillary
services; and (3) institute further expedited proceedings regarding the market
failure, mitigation of market power, structural solutions, and responsibility
for refunds. Equitable solutions to the current market problems are essential to
the long-term financial stability of SCE. The FERC has not adopted a schedule
for acting on this petition.
On November 1, 2000, the FERC issued a report and proposed order
proposing remedies for California wholesale electric markets. The FERC found
that there is clear evidence that the California market structure provides the
opportunity for sellers to exercise market power and can result in unjust and
unreasonable rates. However, the FERC also found that the record before them
does not support refunds from power sellers for periods prior to October 2,
2000, but that subsequent rates could be subject to refund through December 31,
2002. The FERC described several immediate remedies and certain longer term
structural reforms. The immediate remedies include: (1) the elimination of the
requirement to buy and sell power only through the California Power Exchange and
California Independent System Operator; (2) incentives to ensure that
transactions occur outside of the California Independent System Operator's
imbalance energy market; (3) establishment of an independent, non-stakeholder
governing board for both the California Independent System Operator and
California Power Exchange; and (4) establishment of generation interconnection
procedures. The FERC also proposed modifying the auction procedures for the
California Power Exchange and California Independent System Operator so that
bids above $150 per megawatt hour cannot set the market clearing price. The FERC
will take comments on the proposed order, and will issue a final order in 60
days.
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As of September 30, 2000, the book value of SCE's stranded assets to be
recovered by the end of the rate freeze, less estimated credits from the market
valuation or pending sale of remaining generation assets, and the book value of
the TRA are as follows:
(in millions)
Unamortized nuclear investment - net........................... $ 783
Unamortized loss on sale of plant.............................. 76
Transition-related balancing accounts:
Transition cost balancing account (TCBA).................... (159)
Generation asset balancing account (GABA)................... 510
Coal and hydro balancing accounts........................... (807)
Flow-through taxes............................................. 132
Other regulatory assets........................................ 35
-----
Subtotal....................................................... $ 570
Book value of remaining generation plant....................... 363
===
Total stranded assets.......................................... $ 933
Less projected credits:
Excess of market value over book for hydro assets........... (500)
Market value of generating plants based on pending
sale prices.......................................... (1,083)
-----
Net amount of stranded assets (overcollection)................. $ (650)
Transition revenue account (TRA) undercollection............... $ 2,358
The amounts in the above table are based on SCE's application of the
ratemaking procedures previously approved by the CPUC for recording amounts in
the TRA, the TCBA and related accounts, but the balances reflected here have not
been approved by the CPUC. As discussed above, the CPUC may change the
applicable ratemaking and accounting procedures, and could propose to make
changes retroactively.
There are many factors that affect SCE's ability to recover its
stranded costs and its TRA undercollections. Based on the valuations of
generating assets that have been filed with the CPUC, we believe it is probable
that SCE will be able to recover its stranded costs that are recorded in the
TCBA. We also believe it is probable that SCE will be able to recover its costs
that are recorded as undercollections in the TRA. Recovery of SCE's TRA
undercollections, however, depends on favorable regulatory actions as described
above, as well as other factors such as weather conditions, market prices of gas
and electricity, levels of sales, and economic conditions, about which there can
be no certainty.
Under Statement of Financial Accounting Standards (FAS) No. 71,
"Accounting for the Effects of Certain Types of Regulation" ("FAS No. 71"), the
TRA undercollections can be recorded as a regulatory asset on the balance sheet
rather than being charged to earnings if it is probable that these
undercollections will be recoverable through the ratemaking process. At any time
that all or a portion of the existing TRA undercollections are not deemed to be
probable of recovery, the undercollections or a portion thereof must be charged
against earnings. Thereafter, any further undercollections not probable of
recovery also would be charged to earnings, and any overcollections would be
recorded as earnings. Substantial earnings charges at SCE could adversely affect
our financial condition and results of operations, as well as our ability to
declare and pay dividends. We are reviewing on an ongoing basis the facts and
circumstances relating to the TRA undercollections in light of FAS No. 71.
On October 30, 2000, a class action lawsuit was filed in federal
district court in California against SCE and us. The complaint alleges that the
companies are engaging in securities fraud by over-reporting
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revenues and income and improperly accounting for the TRA undercollections.
We believe that the complaint is mistaken in its description of the facts, its
interpretation of applicable accounting principles and its application of the
applicable laws.
SCE's liquidity is being affected materially and adversely by the
significant extent to which costs have exceeded revenues in recent months and
are continuing to exceed current revenues, as well as by uncertainties about
SCE's ability to recover these past and future undercollections. On October 10,
2000, the CPUC approved SCE's application to increase its authorized level of
borrowing to finance regulatory balancing accounts from $700 million to $2
billion. The increase may be used only to finance the purchase of wholesale
electric power for delivery to retail customers, which is the source of most of
the TRA undercollections. SCE is arranging additional bank credit facilities to
finance current and expected balancing account undercollections and other
operating requirements. SCE recently obtained a commitment from lenders to
provide a 364-day credit facility of up to $1 billion. The commitment is subject
to documentation and other conditions, and we cannot give assurance that the
facility actually will be obtained. The ability of SCE to meet its obligations
as they come due will depend in significant part upon the willingness of
regulatory bodies to allow SCE to recover in rates the costs discussed above.
We cannot give assurance that SCE will be able to fully recover from
ratepayers its uncollected TRA balance or that SCE will be able to reduce its
exposure to high power purchase costs in the future.
The matters discussed in the section are presented in more detail in
our Annual Report on Form 10-K for the year ended December 31, 1999, our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, and our
Current Report on Form 8-K dated October 17, 2000, which are incorporated by
reference into this prospectus supplement.
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the notes for
general corporate purposes, including investing in nonutility business
activities and reducing short-term debt incurred to finance such investments.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges
for Edison International for each of the five years in the five-year period
ended December 31, 1999, and for the 12-month period ended September 30, 2000:
12 Months Ended
Year Ended December 31, September 30,
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ---------------
Ratio of Earnings to Fixed Charges............... 2.58 2.42 2.41 2.33 1.85 1.76
Adjusted Ratio of Earnings to Fixed Charges (1).. 2.58 2.42 2.42 2.62 1.97 1.83
(1) The following effects of rate reduction notes are excluded from the
adjusted ratios for the years ended December 31, 1997, 1998, and 1999 and
the 12-month period ended September 30, 2000:
12 Months
Ended
Year Ended December 31, September 30,
1997 1998 1999 2000
---- ---- ---- ------------
(in thousands)
Income before interest expense .................. $8,142 $149,486 $132,359 $121,629
Interest expense................................. $8,142 $149,486 $132,359 $121,629
SCE Funding LLC, a special purpose entity, of which SCE is the sole
member, issued approximately $2.5 billion of rate reduction notes in December
1997. For further details concerning the rate reduction notes, you should refer
to the information described in "Where You Can Find More Information" in the
accompanying prospectus, and in particular, pages 54-55 of Edison
International's 1999 Annual Report to Shareholders.
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DESCRIPTION OF THE NOTES
The following description of the specific terms of the notes
supplements the general and more extensive description of debt securities,
including the notes, set forth in the accompanying prospectus under the heading
"Description of Debt Securities."
Interest and Maturity
The notes will be unsecured and will rank equally with all other
existing and future unsecured and unsubordinated indebtedness of Edison
International. The notes initially will be limited to $350,000,000 in aggregate
principal amount. Edison International may, without the consent of the holders
of the notes, issue additional notes having the same interest rate and other
terms as the notes. Any additional notes will, together with the existing notes,
constitute a single series of notes under the indenture. No additional notes may
be issued if any event of default has occurred with respect to the existing
notes.
Edison International will pay interest on the notes quarterly on
February 1, May 1, August 1 and November 1, commencing on February 1, 2001,
through the maturity date of November 1, 2001. Interest will accrue from the
issue date of November 8, 2000, and will be paid to persons who are registered
as holders of notes on the 15th calendar day before each interest payment date.
If any scheduled interest payment date falls on a day that is not a business
day, we will postpone the interest payment date to the next business day. If the
maturity date of the notes falls on a day that is not a business day, we will
make the required payment of principal and/or interest on the following business
day. Additional interest will not accrue as a result of this delayed payment.
The notes will bear interest for each quarterly Interest Period (as
defined below) at an annual rate determined by the Calculation Agent (as defined
below), subject to the maximum interest rate permitted by California or other
applicable state law, as such law may be modified by United States law of
general application. The interest rate applicable during each quarterly Interest
Period will be equal to LIBOR (as defined below) on the Interest Determination
Date (as defined below) for such Interest Period plus 0.50%; provided, however,
that under the limited circumstances described below, the interest rate will be
determined without reference to LIBOR. Promptly upon such determination, the
Calculation Agent will notify the Trustee (as defined below), if the Trustee is
not then serving as the Calculation Agent, of the interest rate for the new
Interest Period. The interest rate determined by the Calculation Agent, absent
manifest error, shall be binding and conclusive upon the beneficial owners and
holders of the notes, Edison International and the Trustee.
If the following circumstances exist on any Interest Determination
Date, the Calculation Agent shall determine the interest rate for the notes as
follows:
(1) In the event no Reported Rate (as defined below) appears
on Telerate Page 3750 (as defined below) as of approximately 11:00
a.m., London time, on an Interest Determination Date, the Calculation
Agent shall request the principal London offices of each of four major
banks in the London interbank market selected by the Calculation Agent
(after consultation with Edison International) to provide a quotation
of the rate (the "Rate Quotation") at which three month deposits in
amounts of not less than $1,000,000 are offered by it to prime banks in
the London interbank market, as of approximately 11:00 a.m., London
time, on such Interest Determination Date, that are representative of
single transactions at such time (the "Representative Amounts"). If at
least two Rate Quotations are provided, the interest rate will be the
arithmetic mean of the Rate Quotations obtained by the Calculation
Agent, plus 0.50%.
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(2) In the event no Reported Rate appears on Telerate Page
3750 as of approximately 11:00 a.m., London time, on an Interest
Determination Date and there are fewer than two Rate Quotations, the
interest rate will be the arithmetic mean of the rates quoted at
approximately 11:00 a.m., New York City time, on such Interest
Determination Date, by three major banks in New York City selected by
the Calculation Agent (after consultation with Edison International),
for loans in Representative Amounts in U.S. dollars to leading European
banks, having a term of three months for a period commencing on the
second London Business Day immediately following such Interest
Determination Date, plus 0.50%; provided, however, that if fewer than
three banks selected by the Calculation Agent are quoting such rates,
the interest rate for the applicable Interest Period will be the same
as the interest rate in effect for the immediately preceding Interest
Period.
Upon the request of a holder of the notes, the Calculation Agent will
provide to such holder the interest rate in effect on the date of such request
and, if determined, the interest rate for the next Interest Period.
The amount of interest for each day that the notes are outstanding,
which we refer to as the "Daily Interest Amount," will be calculated by dividing
the interest rate in effect for that day by 360 and multiplying that result by
the principal amount of the notes. The amount of interest to be paid on the
notes for each Interest Period will be calculated by adding the Daily Interest
Amounts for each day in the Interest Period. All dollar amounts resulting from
such calculation will be rounded, if necessary, to the nearest cent with
one-half cent rounded upward.
The notes may not be redeemed prior to their maturity. The notes will
not be entitled to the benefits of any sinking fund.
The notes will be issued under an indenture dated as of September 28,
1999, as amended and supplemented, between Edison International and Harris Trust
and Savings Bank, as trustee. The Bank of New York has acquired all the trust
business of Harris Trust and Savings Bank and is the successor trustee under the
indenture (the "Trustee"). We filed a form of the indenture as an exhibit to the
registration statement of which the accompanying prospectus is a part. The
descriptions of the indenture in this prospectus supplement and the accompanying
prospectus are subject to the terms of the definitive indenture. The Bank of New
York and certain of its affiliates act as trustees for SCE's first and refunding
mortgage bonds, certain of SCE's other debt securities and certain pollution
control bonds issued on behalf of SCE.
Interest Rate Adjustment
Our current senior unsecured long-term debt rating (the "Rating") by
Moody's Investors Service, Inc. ("Moody's") is A3 with a negative outlook, and
our current Rating by Standard & Poor's Rating Service ("S&P") is A- with a
negative outlook.
The interest rate on the notes will be subject to adjustment until the
maturity date. In the event of a downgrade in the Rating below A3 by Moody's or
A- by S&P, the interest rate on the notes will be adjusted in accordance with
the table below.
If, prior to the maturity date, either Moody's or S&P changes our
Rating subsequent to an adjustment in the interest rate as a result of a
previous Rating change by Moody's or S&P, the interest rate on the notes will be
re-adjusted in accordance with the table below.
The notes will bear interest at an annual rate of LIBOR plus 0.50% from
the Closing Date until the first day of the first Interest Period following a
downgrade below A3 by Moody's or A- by S&P.
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Beginning with the first day of the first Interest Period after a
Rating change, the notes will bear interest at an adjusted interest rate.
Subsequent interest rate adjustments (whether the adjustment is up or down) will
also become effective on the first day of the first Interest Period after such
Rating change.
The adjusted annual interest rate for the notes will be the sum of (1)
LIBOR, (2) 0.50% and (3) the sum of the Moody's and S&P adjustment amounts set
forth below.
Moody's Rating Moody's Adjustment S&P Rating S&P Adjustment
Amount Amount
- -------------------- ---------------------- ---------------- ------------------
A3 0.000% A- 0.000%
- -------------------- ---------------------- ---------------- ------------------
Baa1 0.125% BBB+ 0.125%
- -------------------- ---------------------- ---------------- ------------------
Baa2 0.250% BBB 0.250%
- -------------------- ---------------------- ---------------- ------------------
Baa3 0.375% BBB- 0.375%
- -------------------- ---------------------- ---------------- ------------------
Ba1 or lower 0.875% BB+ or lower 0.875%
- -------------------- ---------------------- ---------------- ------------------
Under the limited circumstances described under "Description of the
Notes - Interest and Maturity," the interest rate will be determined without
reference to LIBOR as provided therein.
Certain Definitions
"Calculation Agent" means the Trustee, or its successor appointed by
Edison International, acting as calculation agent.
"Interest Determination Date" means the second London Business Day
immediately preceding the first day of the relevant Interest Period.
"Interest Period" means the period commencing on an interest payment
date for the notes (or commencing on the issue date for the notes, if no
interest has been paid or duly made available for payment since that date) and
ending on the day before the next succeeding interest payment date for the
notes.
"LIBOR" for any Interest Determination Date will be the offered rate
for deposits in U.S. dollars having an index maturity of three months for a
period commencing on the second London Business Day immediately following the
Interest Determination Date in amounts of not less than $1,000,000, as such rate
appears on Telerate Page 3750 at approximately 11:00 a.m., London time, on the
Interest Determination Date (the "Reported Rate").
"London Business Day" means a day on which dealings in deposits in U.S.
dollars are transacted, or with respect to any future date are expected to be
transacted, in the London interbank market.
"Telerate Page 3750" means the display designated on page 3750 on Dow
Jones Markets Limited (or such other page as may replace the 3750 page on that
service or such other service as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates for
U.S. dollar deposits or such other successor reporter of such rates as may be
selected by the Calculation Agent and acceptable to Edison International).
Book-Entry Issuance
The certificates representing the notes will be issued in fully
registered form, without coupons. The notes will be deposited with, or on behalf
of, The Depository Trust Company ("DTC") and registered in the name of Cede &
Co., as DTC's nominee in the form of a global certificate representing the notes
or will remain in the custody of the Trustee pursuant to a FAST Balance
Certificate Agreement between DTC and the Trustee. Upon the issuance of the
global certificate, DTC or its custodian will credit, on its internal
S-11
system, the respective principal amount of the individual beneficial
interests represented by such global certificate to the accounts of persons who
have accounts with such depositary. Such accounts initially will be designated
by or on behalf of the underwriters. Ownership of beneficial interests in the
global certificate will be limited to persons who have accounts with DTC
(participants) or persons who hold interests through participants. Ownership of
beneficial interests in the global certificate will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
DTC or its nominee (with respect to interests of participants) and the records
of participants (with respect to interests of persons other than participants).
So long as DTC, or its nominee, is the registered owner or holder of
the global certificate, DTC or such nominee, as the case may be, will be
considered the sole owner or holder of the notes represented by such global
certificate for all purposes under the indenture and the notes. No beneficial
owner of an interest in the global certificate will be able to transfer the
interest except in accordance with DTC's applicable procedures, in addition to
those provided for under the indenture.
Payments of the principal of and interest on the global certificate
will be made to DTC or its nominee, as the case may be, as the registered owners
thereof. Neither Edison International, the Trustee nor any affiliate thereof or
any paying agent will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in the global certificate or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests. DTC or its nominee,
upon receipt of any payment of principal or interest in respect of the global
certificate, will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such global certificate as shown on the records of DTC or its nominee. Edison
International also expects that payments by participants to owners of beneficial
interests in such global certificate held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
Transfers between participants in DTC will be effected in the ordinary
way in accordance with DTC rules. If a holder requires physical delivery of a
certificated note for any reason, including to sell notes to persons in
jurisdictions that require such delivery of such notes or to pledge such notes,
such holder must transfer its interest in the global certificate in accordance
with DTC's applicable procedures and the procedures set forth in the indenture.
DTC will take any action permitted to be taken by a holder of notes
(including the presentation of notes for such exchange as described below) only
at the direction of one more participants to whose account the DTC interests in
the global certificate is credited and only in respect of such portion of the
aggregate principal amount of the notes as to which such participant or
participants has or have given such direction. However, if there is an event of
default under the notes, DTC will exchange the global certificate for
certificated notes, which it will distribute to its participants.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code and a "Clearing
Agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC was created to hold securities for its participants
and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of securities.
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations and may include certain other organizations. Indirect
access to the DTC system is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly. The rules applicable to DTC and
its participants are on file with the Securities and Exchange Commission.
S-12
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in the notes represented by the global
certificate among its respective participants, it is under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time. Neither Edison International nor the Trustee will have
any responsibility for the performance by DTC or its respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
If DTC is at any time unwilling or unable to continue as a depositary
for the global certificate and a successor depositary is not appointed by Edison
International within 90 days, Edison International will issue certificated notes
in exchange for the global certificate.
Settlement for the notes will be made by the underwriters in
immediately available funds. Edison International will make all payments of
principal and interest in immediately available funds.
Secondary trading in long-term bonds and notes of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, beneficial
interests in the notes that are not certificated notes will trade in DTC's Same
Day Funds Settlement System until maturity. Therefore, the secondary market
trading activity in such interests will settle in immediately available funds.
No assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in the notes.
Edison International has obtained this information concerning DTC and
DTC's book-entry system from sources that it believes to be reliable, but Edison
International does not take any responsibility for its accuracy.
UNDERWRITING
Edison International has entered into an underwriting agreement with
each of the underwriters named below, for whom Chase Securities Inc. and Lehman
Brothers Inc. are acting as representatives. Subject to the terms and conditions
set forth in the underwriting agreement, the underwriters have agreed to
purchase, and Edison International has agreed to sell to each of the
underwriters, the principal amount of notes set forth opposite their respective
names in the table below.
Principal
Amount of Notes
---------------
Chase Securities Inc.............................. $122,500,000
Lehman Brothers Inc............................... 122,500,000
Banc of America Securities LLC.................... 35,000,000
Credit Suisse First Boston ....................... 35,000,000
Salomon Smith Barney Inc. ........................ 35,000,000
------------
Total $350,000,000
The underwriting agreement provides that the obligation of the
underwriters to purchase the notes included in this offering is subject to
approval of certain legal matters by counsel and to certain other conditions.
The underwriters are obligated to purchase all the notes if they purchase any of
the notes.
The notes are new securities for which there is currently no market.
The notes will not be listed on any national securities exchange. The
underwriters have advised Edison International that they intend to make a market
for the notes, but they have no obligation to do so and may discontinue market
making at any time without providing any notice. We cannot assure you that there
will be liquidity in any trading market for the notes.
If the underwriters over-allot by selling more notes than are set forth
on the cover page of this prospectus supplement, and thereby create a short
position in the notes, in connection with the offering,
S-13
the underwriters may reduce that short position by purchasing notes in the
open market. Purchases of a security for the purpose of reducing a short
position could cause the price of the security to be higher than it might
otherwise be in the absence of such purchases.
Neither we nor the underwriters make any representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the notes. In addition, neither we nor the
underwriters make any representation that the underwriters will engage in such
transactions or that such transactions will not be discontinued without notice,
once they are commenced.
We estimate that our total expenses of this offering, excluding
underwriting discounts and commissions, will be $200,000.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
In the ordinary course of their respective businesses, the underwriters
and their affiliates are currently engaged in, have engaged in, and may in the
future engage in certain investment banking, commercial banking and/or general
financing services for Edison International and its affiliates. Certain of the
underwriters currently provide, and have in the past provided, financial
advisory services to Edison International and its affiliates. As described in
"Use of Proceeds," a portion of the net proceeds from the sale of the notes may
be used to repay short-term indebtedness, which includes short-term indebtedness
under our commercial paper program for which certain of the underwriters serve
as dealers.
VALIDITY OF THE NOTES
The validity of the notes will be passed upon on behalf of Edison
International by Kenneth S. Stewart, Assistant General Counsel of Edison
International. Mr. Stewart is a salaried employee of Southern California Edison
Company, a subsidiary of Edison International. As of September 30, 2000, Mr.
Stewart had a direct or indirect interest in 58,603 shares of common stock of
Edison International, including shares beneficially owned through Edison
International's employee stock plan and dividend reinvestment plan and options
awarded under Edison International's officer incentive plans. Certain legal
matters will be passed upon for the underwriters by Gibson, Dunn & Crutcher LLP,
Los Angeles, California.
S-14
PROSPECTUS
[GRAPHIC OMITTED]
$2,500,000,000
Edison International
Debt Securities, Common Stock, Preferred Stock and Guarantees
EIX Trust I
EIX Trust II
EIX Trust III
Preferred Securities Guaranteed by Edison International
---------
We may offer and sell the securities from time to time in one or more
offerings. This prospectus provides you with a general description of the
securities we may offer.
Each time we sell securities we will provide a supplement to this
prospectus that contains specific information about the offering and the terms
of the securities. The supplement may also add, update or change information
contained in this prospectus. You should carefully read this prospectus and any
supplement before you invest in any of our securities.
Edison International
Edison International may offer and sell the following securities:
o debt securities
o common stock
o preferred stock
o guarantees of preferred securities
The Trusts
EIX Trust I, EIX Trust II and EIX Trust III may offer and sell preferred
securities, guaranteed by Edison International.
---------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is July 21, 1999.
TABLE OF CONTENTS
Page
----
About this Prospectus..................................................... 3
Forward-Looking Statements................................................ 3
Where You can Find More Information....................................... 4
Edison International...................................................... 5
The Trusts................................................................ 6
Use of Proceeds........................................................... 7
Ratio of Edison International Earnings to Fixed Charges
and Preferred Stock Dividends.......................................... 8
Description of Securities................................................. 8
Description of Debt Securities............................................ 9
Description of Edison International's Common Stock and Preferred Stock.... 18
Description of Preferred Securities....................................... 22
Description of Preferred Securities Guarantees............................ 28
Description of Expense Agreements......................................... 30
Relationship Among Preferred Securities, Preferred Securities
Guarantees and Subordinated Debt Securities Held by Each Trust....... 30
Experts................................................................... 31
Validity of the Securities and the Preferred Securities Guarantees........ 31
Plan of Distribution...................................................... 31
ABOUT THIS PROSPECTUS
This prospectus is part of a "shelf" registration statement that we filed
with the United States Securities and Exchange Commission, or the "SEC." By
using a shelf registration statement, we may sell up to $2,500,000,000 offering
price of any combination of the securities described in this prospectus from
time to time and in one or more offerings. This prospectus only provides you
with a general description of the securities that we may offer. Each time we
sell securities, we will provide a supplement to this prospectus that contains
specific information about the terms of the securities. The supplement may also
add, update or change information contained in this prospectus. Before
purchasing any securities, you should carefully read both this prospectus and
any supplement, together with the additional information described under the
heading "Where You Can Find More Information."
This prospectus does not contain separate financial statements for the
trusts. Edison International files consolidated financial information with the
SEC that includes each of the trusts. The trusts do not have any independent
function other than to issue securities and to purchase subordinated debt
securities from Edison International. We do not believe that additional
financial information regarding the trusts would be useful to you.
You should rely only on the information contained or incorporated by
reference in this prospectus and in any supplement. We have not authorized any
other person to provide you with different information. If anyone provides you
with different or inconsistent information, you should not rely on it. We will
not make an offer to sell these securities in any jurisdiction where the offer
or sale is not permitted. You should assume that the information appearing in
this prospectus and the supplement to this prospectus is accurate as of the
dates on their covers. Our business, financial condition, results of operations
and prospects may have changed since that date.
FORWARD-LOOKING STATEMENTS
This prospectus, any accompanying prospectus supplement and the additional
information described under the heading "Where You Can Find More Information"
may contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are subject to risks
and uncertainties and are based on the beliefs and assumptions of our
management, based on information currently available to our management. When we
use words such as "believes," "expects," "anticipates," "intends," "plans,"
"estimates," "should" or similar expressions, we are making forward-looking
statements. Forward-looking statements include the information concerning
possible or assumed future results of operations set forth under "Business" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in our Annual Report on Form 10-K, under the same or similar
headings in our Quarterly Reports on Form 10-Q, and in our Current Reports on
Form 8-K, incorporated by reference into this prospectus.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. Our future results and shareholder value
may differ materially from those expressed in these forward-looking statements.
Many of the factors that will determine these results and value are beyond our
ability to control or predict. These statements are necessarily based upon
various assumptions involving judgments with respect to the future including,
among others, our ability to achieve synergies and revenue growth, national,
international, regional and local economic, competitive and regulatory
conditions and developments, technological developments, capital market
conditions, inflation rates, foreign currency exchange rates and valuations,
interest rates, energy markets, weather conditions, business and regulatory or
legal decisions, the pace of deregulation of retail natural gas and electricity,
the timing and extent of changes in commodity prices for oil, natural gas and
electricity, the timing and success of business development efforts, new or
increased environmental liabilities, the effects of Year 2000-related computer
problems, and other uncertainties, all of which are difficult to predict and
many of which are beyond our control. You are cautioned not to put undue
reliance on any forward-looking
3
statements. For those statements, we claim the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
You should also consider any other factors contained in this prospectus or
in any accompanying supplement, including the information incorporated by
reference into this prospectus or into any accompanying supplement.
WHERE YOU CAN FIND MORE INFORMATION
Available Information
Edison International files reports, proxy statements and other
information with the SEC. Information filed with the SEC by Edison International
can be inspected and copied at the Public Reference Room maintained by the SEC
and at the Regional Offices of the SEC as follows:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N. W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D. C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2551
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. Further information on the operation of the
SEC's Public Reference Room in Washington, D.C. can be obtained by calling the
SEC at 1-800-SEC-0330.
The SEC also maintains a web site that contains reports, proxy statements
and other information about issuers, such as Edison International, who file
electronically with the SEC. The address of that site is http://www.sec.gov.
Edison International's common stock is listed on the New York Stock
Exchange (NYSE: EIX), and reports, proxy statements and other information
concerning Edison International can also be inspected at the offices of the New
York Stock Exchange at 20 Broad Street, New York, New York 10005. In addition,
reports, proxy statements and other information concerning Edison International
can be inspected at its offices at 2244 Walnut Grove Avenue, Rosemead,
California 91770. You also can obtain copies of some of the above reports and
other information at the web site maintained by Edison International. The
address of that web site is http://www.edison.com.
This prospectus is part of a registration statement that we filed with the
SEC. The full registration statement may be obtained from the SEC or Edison
International, as indicated below. Forms of the indentures, the trust agreements
and other documents establishing the terms of the offered securities and the
guarantees are filed as exhibits to the registration statement. Statements in
this prospectus about these documents are summaries. You should refer to the
actual documents for a more complete description of the relevant matters.
Incorporation by Reference
The rules of the SEC allow us to "incorporate by reference" information
into this prospectus, which means that we can disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this prospectus,
and later information that we file with the SEC will automatically update and
supersede that information. The prospectus incorporates by reference the
documents set forth below that we have previously filed with the SEC. These
documents contain important information about Edison International.
4
SEC Filings (File No. 1-9936) Period
---------------------------- ------
Annual Report on Form 10-K Year ended December 31, 1998
Quarterly Report on Form 10-Q Quarter ended March 31, 1999
Current Report on Form 8-K Filed April 5, 1999
Current Report on Form 8-K Filed July 2, 1999
Registration Statement on Form 8-A Filed November 21, 1996
The "Description of Registrant's Securities Filed by SCEcorp (former name of
to be registered on pages 4-5 of the Edison International) on
Registration Statement on Form 8-B May 20, 1988
We are also incorporating by reference all additional documents that we
file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended, between the date of this prospectus and the
termination of the offering of securities described in this prospectus.
Upon request, Edison International will provide without charge to each
person to whom a copy of this prospectus has been delivered a copy of any and
all of these filings. You may request a copy of these filings by writing or
telephoning us at:
Edison International
2244 Walnut Grove Avenue
(P.O. Box 999)
Rosemead, California 91770
Attention: Corporate Governance
Telephone: (626) 302-2662
EDISON INTERNATIONAL
Edison International is a multinational corporation and a global leader in
energy production and distribution, and in energy and infrastructure finance.
Headquartered in Rosemead, California, Edison International has regional offices
in New York, Washington, D.C., Australia, Indonesia, the Philippines, Singapore,
Italy, Spain, Turkey and the United Kingdom. Edison International was
incorporated on April 20, 1987, under the laws of the State of California for
the purpose of becoming the parent holding company of Southern California Edison
Company, a California public utility corporation. Edison International directly
or indirectly owns all of the issued and outstanding common stock of Southern
California Edison Company and of other subsidiaries engaged in nonutility
businesses. Edison International's combined assets total nearly $27 billion.
The regulated utility and the nonutility subsidiaries are:
o Southern California Edison, one of the nation's largest investor-owned
electric utilities, serving approximately 11 million people within an
approximate 50,000-square-mile area in central, coastal and Southern
California. Based in Rosemead, California, the regulated utility is a
recognized leader in cutting-edge research and technology and for providing
reliable electrical service in its region for more than a century. The
company has assets of approximately $17 billion.
5
o Edison Mission Energy, specializing in the development, acquisition,
construction management and operation of global power production
facilities. Based in Irvine, California, it is among the world's leading
power producers with assets of nearly $7 billion and investments in
approximately 58 projects currently operating in Australia, New Zealand,
Spain, Turkey, the United Kingdom and the United States, and plants under
construction in Australia, Indonesia, Italy, New Zealand, Thailand, and the
United States (Puerto Rico). In total, these projects represent nearly
15,000 megawatts of generating capacity.
o Edison Capital, a provider of capital and financial services for global
energy, infrastructure and affordable housing projects. Headquartered in
Irvine, California, it has assets of nearly $2.5 billion. The company has
investments in energy and infrastructure projects in the United States,
Latin America, Australia, Europe, Asia and Africa and is one of the
nation's leading investors in affordable housing developments eligible for
tax credits.
o Mission Land Company, which is in the business of managing and selling real
estate projects.
o Edison Enterprises, a provider of products and services for commercial,
retail and utility markets. Based in San Dimas, California, it offers
energy management services for business customers, electrical and appliance
repair and home security services to residential consumers, and a wide
range of services to utilities both in the U.S. and in Canada.
Edison International is engaged in the business of holding, for investment,
the stock of its subsidiaries. Edison International may, in the future, engage
in other businesses. At year-end 1998, Southern California Edison Company had
13,177 full-time employees. Edison International had 20 full-time employees,
Edison Mission Energy had 1,180 full-time employees, Edison Capital had 85
full-time employees, and Edison Enterprises had 3,888 full-time employees.
The information above concerning Edison International and its subsidiaries
is only a summary and does not purport to be comprehensive. For additional
information concerning Edison International and its subsidiaries, you should
refer to the information described in "Where You Can Find More Information."
The principal executive offices of Edison International are located at 2244
Walnut Grove Avenue, Rosemead, California 91770, and its telephone number is
(626) 302-2222.
THE TRUSTS
Edison International created three Delaware business trusts pursuant to
three trust agreements. The trusts are named EIX Trust I, EIX Trust II and EIX
Trust III. Edison International will enter into an amended and restated trust
agreement (a "Trust Agreement") for each trust, which will state the terms and
conditions for each trust to issue and sell its preferred securities and common
securities. A form of Trust Agreement is filed as an exhibit to the registration
statement of which this prospectus forms a part.
Each trust will exist solely to:
o issue and sell its preferred securities (representing undivided beneficial
interests in the assets of the trust) to the public;
o issue and sell its common securities (representing undivided beneficial
interests in the assets of the trust) to Edison International;
o use the proceeds from the sale of its preferred and common securities to
purchase a series of Edison International's subordinated debt securities;
6
o distribute the cash payments it receives on the subordinated debt
securities it owns to the holders of the preferred and common securities;
and
o engage in other activities that are necessary or incidental to these
purposes.
Edison International will purchase all of the common securities of each
trust. The common securities will represent an aggregate liquidation amount
equal to at least 3% of each trust's total capitalization. The preferred
securities will represent the remaining 97% of the trust's total capitalization.
The common securities will have terms substantially identical to, and will rank
equal in priority of payment with, the preferred securities. However, if Edison
International defaults on the related subordinated debt securities, then cash
distributions and liquidation, redemption and other amounts payable on the
common securities will be subordinate in priority of payment to such amounts
payable on the preferred securities.
The preferred securities will be guaranteed by Edison International as
described later in this prospectus.
Edison International has appointed five trustees to conduct each trust's
business and affairs:
o The Chase Manhattan Bank ("property trustee");
o Chase Manhattan Bank Delaware ("Delaware trustee"); and
o Three Edison International officers ("regular trustees").
Except under certain limited circumstances, only Edison International can
remove or replace the trustees. In addition, Edison International can increase
or decrease the number of trustees.
Edison International will pay all fees and expenses related to each trust
and each offering of the related preferred securities and will pay all ongoing
costs and expenses of each trust, except the respective trust's obligations
under the related preferred and common securities.
The trusts will not have separate financial statements. The statements
would not be material to holders of the preferred securities because no trust
will have any independent operations. Each trust exists solely for the reasons
summarized above.
The principal offices of each trust will be located at 2244 Walnut Grove
Avenue, Rosemead, California 91770, and the telephone number of each trust will
be (626) 302-1930.
USE OF PROCEEDS
Unless stated otherwise in the applicable prospectus supplement, the net
proceeds from the sale of the offered securities will be:
o used by Edison International and/or its subsidiaries for general corporate
purposes, including investing in nonutility business activities and
reducing short-term debt incurred to provide interim financing for such
purposes; and
o used by the respective trusts to purchase subordinated debt securities of
Edison International.
7
RATIO OF EDISON INTERNATIONAL EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of Edison International earnings
to combined fixed charges and preferred stock dividends for Edison International
for each of the five years in the five-year period ended December 31, 1998:
Year Ended December 31,
----------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends 2.48 2.55 2.40 2.39 2.31
Adjusted Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends (1) NA NA NA 2.40 2.60
(1) The following effects of rate reduction notes are excluded from the
adjusted ratios for 1997 and 1998:
1997 1998
---- ----
Income before interest expense $8,142,000 $149,486,000
Interest expense 8,142,000 149,486,000
SCE Funding LLC, a special purpose entity, of which Southern California
Edison Company is the sole member, issued approximately $2.5 billion of
these notes in December 1997. For further details you should refer to the
information described in "Where You Can Find More Information" in the
Prospectus, particularly page 46 of Edison International's 1998 Annual
Report to Shareholders.
DESCRIPTION OF SECURITIES
The following is a general description of the terms and provisions of the
securities we may offer and sell by this prospectus. These summaries are not
meant to be a complete description of each security. This prospectus and any
accompanying prospectus supplement will contain the material terms and
conditions for each security. The prospectus supplement may add, update or
change the terms and conditions of the securities as described in this
prospectus. For more information about the securities offered by us, please
refer to:
o the indenture between Edison International and Harris Trust and Savings
Bank, as trustee, relating to the issuance of each series of senior debt
securities by Edison International;
o the indenture ("subordinated indenture") between Edison International and
The Chase Manhattan Bank, as trustee, relating to the issuance of each
series of subordinated debt securities by Edison International;
o the Trust Agreement of each trust; and
o the guarantee agreement between Edison International and The Chase
Manhattan Bank, as trustee, relating to Edison International's guarantee of
the preferred securities issued by each trust.
Forms of these documents are filed as exhibits to the registration
statement. The indentures listed above are sometimes collectively referred to as
the "indentures" and individually referred to as an "indenture." The trustee
under each indenture is referred to as the "indenture trustee." The indentures
are
8
subject to and governed by the Trust Indenture Act of 1939, and may be
supplemented or amended from time to time following their execution.
DESCRIPTION OF DEBT SECURITIES
The following description discusses the general terms and provisions of the
debt securities that Edison International may offer by this prospectus. The debt
securities may be issued as senior debt securities or subordinated debt
securities. Any subordinated debt securities issued by Edison International will
be purchased by a trust and correspond to the series of preferred securities
issued by the trust. The indebtedness represented by the senior debt securities
will rank equally with all other unsecured and unsubordinated debt of Edison
International. The indebtedness represented by the subordinated debt securities
will rank junior and be subordinate in right of payment to the prior payment in
full of the senior debt of Edison International, to the extent and in the manner
set forth in the prospectus supplement for the securities. See "--Subordination"
below.
Each indenture gives us broad authority to set the particular terms of each
series of debt securities, including the right to modify certain of the terms
contained in the indenture. The particular terms of a series of debt securities
and the extent, if any, to which the particular terms of the issue modify the
terms of the indenture will be described in the prospectus supplement relating
to the debt securities.
Each indenture contains the full legal text of the matters described in
this section. Because this section is a summary, it does not describe every
aspect of the debt securities or the applicable indenture. This summary is
subject to and qualified in its entirety by reference to all the provisions of
the applicable indenture, including definitions of terms used in the indenture.
We also include references in parentheses to certain sections of the indentures.
Whenever we refer to particular sections or defined terms of the indentures in
this prospectus or in a prospectus supplement, these sections or defined terms
are incorporated by reference herein or in the prospectus supplement. This
summary also is subject to and qualified by reference to the description of the
particular terms of the debt securities in the applicable prospectus supplement.
General
We may issue an unlimited amount of debt securities under each indenture in
one or more series. We need not issue all debt securities of one series at the
same time and, unless otherwise provided, we may reopen a series, without the
consent of the holders of the debt securities of that series, for issuances of
additional debt securities of that series.
The debt securities will be unsecured obligations.
Prior to the issuance of each series of debt securities, the terms of the
particular securities will be specified in a supplemental indenture (including
any pricing supplement) and a board resolution of Edison International or in one
or more officer's certificates of Edison International pursuant to a
supplemental indenture or a board resolution. We refer you to the applicable
prospectus supplement for a description of the following terms of the series of
debt securities:
(a) the title of the debt securities;
(b) any limit upon the principal amount of the debt securities;
(c) the date or dates on which principal will be payable or how to
determine the dates;
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(d) the rate or rates or method of determination of interest; the date
from which interest will accrue; the dates on which interest will be
payable, which we refer to as the "interest payment dates;" and any record
dates for the interest payable on the interest payment dates;
(e) any obligation or option of Edison International to redeem,
purchase or repay debt securities, or any option of the registered holder
to require Edison International to redeem or repurchase debt securities,
and the terms and conditions upon which the debt securities will be
redeemed, purchased or repaid;
(f) the denominations in which the debt securities will be issuable
(if other than denominations of $1,000 and any integral multiple thereof);
(g) any provision relating to deferral of interest payments;
(h) whether the debt securities are to be issued in whole or in part
in the form of one or more global debt securities and, if so, the identity
of the depositary for the global debt securities; and
(i) any other terms of the debt securities.
(See Section 301.)
Payment of Debt Securities--Interest
Unless indicated differently in a prospectus supplement, we will pay
interest on the debt security on each interest payment date to the person in
whose name the debt security is registered as of the close of business on the
regular record date relating to the interest payment date.
However, if we default in paying interest on a debt security, we will pay
defaulted interest in either of the two following ways:
(a) We will first propose to the indenture trustee a payment date for
the defaulted interest. Next, the indenture trustee will choose a special
record date for determining which registered holders are entitled to the
payment. The special record date will be between 10 and 15 days before the
payment date we propose. Finally, we will pay the defaulted interest on the
payment date to the registered holder of the debt security as of the close
of business on the special record date.
(b) Alternatively, we can propose to the indenture trustee any other
lawful manner of payment that is consistent with the requirements of any
securities exchange on which the debt securities are listed for trading. If
the indenture trustee thinks the proposal is practicable, payment will be
made as proposed.
(See Section 307.)
Payment of Debt Securities--Principal
Unless we indicate differently in a prospectus supplement, we will pay
principal of and any premium on the debt securities at stated maturity, upon
redemption or otherwise, upon presentation of the debt securities at the office
of the indenture trustee, as our paying agent. Any other paying agent initially
designated for the debt securities of a particular series will be named in the
applicable prospectus supplement.
In our discretion, we may change the place of payment on the debt
securities, and may remove any paying agent and may appoint one or more
additional paying agents. (See Section 1002.)
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Form; Transfers; Exchanges
The debt securities will be issued
(a) only in fully registered form;
(b) without interest coupons; and
(c) unless otherwise specified in a prospectus supplement, in
denominations that are integral multiples of $1,000.
You may have your debt securities divided into debt securities of smaller
denominations (of at least $1,000) or combined into debt securities of larger
denominations, as long as the total principal amount is not changed.
This is called an "exchange."
You may exchange or transfer debt securities at the office of the indenture
trustee. The indenture trustee acts as our agent for registering debt securities
in the names of holders and transferring debt securities. We may appoint another
agent or act as our own agent for this purpose. The entity performing the role
of maintaining the list of registered holders is called the "security
registrar." It will also perform transfers.
In our discretion, we may change the place for registration of transfer of
the debt securities and may remove and/or appoint one or more additional
security registrars. (See Sections 305 and 1002.)
Except as otherwise provided in a prospectus supplement, there will be no
service charge for any transfer or exchange of the debt securities, but you may
be required to pay a sum sufficient to cover any tax or other governmental
charge payable in connection with the transfer or exchange. We may block the
transfer or exchange of (a) debt securities during a period of 15 days prior to
giving any notice of redemption or (b) any debt security selected for redemption
in whole or in part, except the unredeemed portion of any debt security being
redeemed in part. (See Section 305.)
Redemption
We will set forth any terms for the redemption of debt securities in a
prospectus supplement. Unless we indicate differently in a prospectus
supplement, and except with respect to debt securities redeemable at the option
of the registered holder, debt securities will be redeemable upon notice by mail
between 30 and 60 days prior to the redemption date. If less than all of the
debt securities of any series or any tranche of a series are to be redeemed, the
indenture trustee will select the debt securities to be redeemed. In the absence
of any provision for selection, the indenture trustee will choose a method of
random selection it deems fair and appropriate. (See Sections 1102, 1103 and
1104.)
Debt securities will cease to bear interest on the redemption date. We will
pay the redemption price and any accrued interest once you surrender the debt
security for redemption. (See Section 1105.) If only part of a debt security is
redeemed, the indenture trustee will deliver to you a new debt security of the
same series for the remaining portion without charge. (Section 1107.)
We may make any redemption conditional upon the receipt by the paying
agent, on or prior to the date fixed for redemption, of money sufficient to pay
the redemption price. If the paying agent has not received the money by the date
fixed for redemption, we will not be required to redeem the debt securities.
(See Section 1104.)
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Events of Default
An "event of default" occurs with respect to debt securities of any series
if:
(a) we do not pay any interest on any debt securities of the
applicable series within 30 days of the due date (following any deferral
allowed under the terms of the debt securities and elected by us);
(b) we do not pay principal or premium on any debt securities of the
applicable series on its due date;
(c) we remain in breach of a covenant or warranty (excluding covenants
and warranties not applicable to the affected series) of the indenture for
90 days after we receive a written notice of default stating we are in
breach and requiring remedy of the breach; the notice must be sent by
either the indenture trustee or registered holders of at least 25% of the
principal amount of debt securities of the affected series;
(d) we file for bankruptcy or other specified events in bankruptcy,
insolvency, receivership or reorganization occur; or
(e) any other event of default specified in the prospectus
supplement occurs.
(See Section 501.)
No event of default with respect to a series of debt securities necessarily
constitutes an event of default with respect to the debt securities of any other
series issued under the indenture.
Remedies
Acceleration
If an event of default occurs and is continuing with respect to any series
of debt securities, then either the indenture trustee or the registered holders
of not less than 25% in principal amount of the outstanding debt securities of
that series may declare the principal amount of all of the debt securities of
that series to be due and payable immediately. (See Section 502.)
Rescission of Acceleration
After the declaration of acceleration has been made and before the
indenture trustee has obtained a judgment or decree for payment of the money due
on any series of debt securities, the registered holders of not less than a
majority in aggregate principal amount of the outstanding debt securities of
that series may rescind and annul the declaration and its consequences, if
(a) we pay or deposit with the indenture trustee a sum sufficient
to pay
(1) all overdue interest;
(2) the principal of and any premium which have become due other
than by the declaration of acceleration and overdue interest on these
amounts;
(3) interest on overdue interest to the extent lawful;
(4) all amounts due to the indenture trustee under the
indenture; and
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(b) all events of default with respect to the affected series, other
than the nonpayment of the principal which has become due solely by the
declaration of acceleration, have been cured or waived as provided in the
indenture.
(See Section 502.)
For more information as to waiver of defaults, see "Waiver of Default and
of Compliance" below.
Control by Registered Holders; Limitations
Subject to the indenture, if an event of default with respect to the debt
securities of any series occurs and is continuing, the registered holders of a
majority in principal amount of the outstanding debt securities of that series
will have the right to
(a) direct the time, method and place of conducting any proceeding
for any remedy available to the
indenture trustee, or
(b) exercise any trust or power conferred on the indenture trustee
with respect to the debt securities of the series.
If an event of default is continuing with respect to all the series of debt
securities, the registered holders of a majority in aggregate principal amount
of the outstanding debt securities of all the series, considered as one class,
will have the right to make such direction, and not the registered holders of
the debt securities of any one of the series. These rights of registered holders
to make direction are subject to the following limitations:
(a) the registered holders' directions will not conflict with any
law or the indenture; and
(b) the registered holders' directions may not involve the indenture
trustee in personal liability where the indenture trustee believes
indemnity is not adequate.
The indenture trustee may also take any other action it deems proper which
is consistent with the registered holders' direction. (See Sections 512 and
603.)
In addition, the indenture provides that no registered holder of any debt
security of any series will have any right to institute any proceeding, judicial
or otherwise, with respect to the indenture for the appointment of a receiver or
for any other remedy under the indenture unless
(a) that registered holder has previously given the indenture
trustee written notice of a continuing event of default;
(b) the registered holders of not less than 25% in aggregate principal
amount of the outstanding debt securities of all the series, considered as
one class, or, in the case of an event of default of the character
specified above in clause (a) or (b) under "Events of Default," that
series, have made written request to the indenture trustee to institute
proceedings in respect of that event of default and have offered the
indenture trustee indemnity satisfactory to it against costs and
liabilities incurred in complying with the request; and
(c) for 60 days after receipt of the notice, the indenture trustee has
failed to institute a proceeding and no direction inconsistent with the
request has been given to the indenture trustee during the 60-day period by
the registered holders of a majority in aggregate principal amount of
outstanding debt securities of all the series, considered as one class, or,
in the case of an event of default of the character specified above in
clause (a) or (b) under "Events of Default," that series.
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Furthermore, no registered holder will be entitled to institute any
action if and to the extent that the action would disturb or prejudice the
rights of other registered holders. (See Sections 507 and 603.)
However, each registered holder has an absolute and unconditional right to
receive payment when due and to bring a suit to enforce that right. (See
Sections 507 and 508.)
Notice of Default
The indenture trustee is required to give the registered holders of the
debt securities notice of any default under the indenture to the extent required
by the Trust Indenture Act, unless the default has been cured or waived; except
that in the case of an event of default of the character specified above in
clause (c) under "Events of Default," no notice shall be given to the registered
holders until at least 30 days after the occurrence thereof. (See Section 602.)
The Trust Indenture Act currently permits the indenture trustee to withhold
notices of default (except for certain payment defaults) if the indenture
trustee in good faith determines the withholding of the notice to be in the
interests of the registered holders.
We will furnish the indenture trustee with an annual statement as to our
compliance with the conditions and covenants in the indenture. (See Section
1005.)
Waiver of Default and of Compliance
The registered holders of a majority in aggregate principal amount of the
outstanding debt securities of all affected series (voting as one class) may
waive, on behalf of the registered holders of all debt securities of all such
series, any past default under the indenture, except a default in the payment of
principal, premium or interest, or with respect to compliance with certain
provisions of the indenture that cannot be amended without the consent of the
registered holder of each outstanding debt security. (See Section 513.)
Compliance with some of the covenants in the indenture or otherwise
provided with respect to debt securities may be waived by the registered holders
of a majority in aggregate principal amount of the affected debt securities,
considered as one class. (See Section 1006.)
Consolidation, Merger and Conveyance of Assets as an Entirety;
No Financial Covenants
Subject to the provisions described in the next paragraph, Edison
International will preserve its corporate existence. (See Section 1004.)
Edison International has agreed not to consolidate with or merge into any
other entity and not to convey, transfer or lease its properties and assets
substantially as an entirety to any entity, unless:
(a) the entity formed by the consolidation or into which Edison
International is merged, or the entity which acquires or which leases the
property and assets of Edison International substantially as an entirety,
is an entity organized and existing under the laws of the United States of
America or any State of the United States or the District of Columbia, and
expressly assumes, by supplemental indenture, the due and punctual payment
of the principal, premium and interest on all the outstanding debt
securities and the performance of all of the covenants of Edison
International under the indenture, and
(b) immediately after giving effect to the transactions, no event of
default, and no event which after notice or lapse of time or both would
become an event of default, will have occurred and be continuing.
(See Section 801.)
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The indenture contains no financial or other similar restrictive covenants.
Any such covenants with respect to any particular series of debt securities will
be set forth in the applicable prospectus supplement.
Modification of Indenture
Without Registered Holder Consent. Without the consent of any registered
holders of debt securities, we and the applicable indenture trustee may enter
into one or more supplemental indentures for any of the following purposes:
(a) to evidence the succession of another entity to Edison
International; or
(b) to add one or more covenants of Edison International or other
provisions for the benefit of the registered holders of all or any series
or tranche of debt securities, or to surrender any right or power conferred
upon Edison International; or
(c) to add any additional events of default for all or any series
of debt securities; or
(d) to change or eliminate any provision of the indenture or to add
any new provision to the indenture that does not adversely affect the
interests of the registered holders; or
(e) to provide security for the debt securities of any series; or
(f) to establish the form or terms of debt securities of any series
or tranche or any debt securities guarantees as permitted by the
indenture; or
(g) to provide for the issuance of bearer securities; or
(h) to evidence and provide for the acceptance of appointment of a
separate or successor indenture trustee; or
(i) to provide for the procedures required to permit the utilization
of a noncertificated system of registration for any series or tranche
of debt securities; or
(j) to change any place or places where
(1) we may pay principal, premium and interest,
(2) debt securities may be surrendered for transfer or
exchange, or
(3) notices and demands to or upon Edison International may be
served; or
(k) to cure any ambiguity, defect or inconsistency or to make any
other changes that do not adversely affect the interests of the registered
holders in any material respect.
(See Section 901.)
If the Trust Indenture Act is amended after the date of the indenture so as
to require changes to the indenture or so as to permit changes to, or the
elimination of, provisions which, at the date of the indenture or at any time
thereafter, were required by the Trust Indenture Act to be contained in the
indenture, the indenture will be deemed to have been amended so as to conform to
the amendment or to effect the changes or elimination, and Edison International
and the applicable indenture trustee may, without the consent of any registered
holders, enter into one or more supplemental indentures to effect or evidence
the amendment.
15
With Registered Holder Consent. We and the indenture trustee may, with some
exceptions, amend or modify any indenture with the consent of the registered
holders of at least a majority in aggregate principal amount of the debt
securities of all series affected by the amendment or modification (voting as
one class). However, no amendment or modification may, without the consent of
the registered holder of each outstanding debt security affected thereby,
(a) change the stated maturity of the principal or interest on any
debt security (other than pursuant to the terms of the debt security), or
reduce the principal amount, interest or premium payable or change the
currency in which any debt security is payable, or impair the right to
bring suit to enforce any payment;
(b) reduce the percentages of registered holders whose consent is
required for any supplemental indenture or waiver or reduce the
requirements for quorum and voting under the indenture; or
(c) modify certain of the provisions in the indenture relating to
supplemental indentures and waivers of certain covenants and past defaults.
A supplemental indenture which changes or eliminates any provision of the
indenture expressly included solely for the benefit of registered holders of
debt securities of one or more particular series or tranches will be deemed not
to affect the rights under the indenture of the registered holders of debt
securities of any other series or tranche. (See Section 902.)
Miscellaneous
The indenture provides that some debt securities, including those for which
payment or redemption money has been deposited or set aside in trust, will not
be deemed to be "outstanding" in determining whether the registered holders of
the requisite principal amount of the outstanding debt securities have given or
taken any demand, direction, consent or other action under the indenture as of
any date, or are present at a meeting of registered holders for quorum purposes.
(See Section 101.)
We will be entitled to set any day as a record date for the purpose of
determining the registered holders of outstanding debt securities of any series
entitled to give or take any demand, direction, consent or other action under
the indenture, in the manner and subject to the limitations provided in the
indenture. In some circumstances, the indenture trustee also will be entitled to
set a record date for action by registered holders. If a record date is set for
any action to be taken by registered holders of particular debt securities, the
action may be taken only by persons who are registered holders of the respective
debt securities on the record date. (See Section 104.)
Defeasance and Covenant Defeasance
The indentures provide, unless the terms of the particular series of debt
securities provide otherwise, that we may, upon satisfying several conditions,
cause ourselves to be:
(a) discharged from our obligations, with some exceptions, with
respect to any series of debt securities, which we refer to as
"defeasance"; and
(b) released from our obligations under specified covenants with
respect to any series of debt securities, which we refer to as "covenant
defeasance."
One condition we must satisfy is the irrevocable deposit with the indenture
trustee, in trust, of money and/or government obligations which, through the
scheduled payment of principal and interest on those obligations, would provide
sufficient moneys to pay the principal of and any premium and interest on those
debt securities on the maturity dates of the payments or upon redemption.
16
The indentures permit defeasance with respect to any series of debt
securities even if a prior covenant defeasance has occurred with respect to the
debt securities of that series. Following a defeasance, payment of the debt
securities defeased may not be accelerated because of an event of default.
Following a covenant defeasance, payment of the debt securities may not be
accelerated by reference to the specified covenants affected by the covenant
defeasance. However, if an acceleration were to occur, the realizable value at
the acceleration date of the money and government obligations in the defeasance
trust could be less than the principal and interest then due on the respective
debt securities, since the required deposit in the defeasance trust would be
based upon scheduled cash flows rather than market value, which would vary
depending upon interest rates and other factors.
Under current United States federal income tax law, the defeasance
contemplated in the preceding paragraphs would be treated as an exchange of the
relevant debt securities in which holders of the debt securities might recognize
gain or loss. In addition, the amount, timing and character of amounts that
holders would be required after the defeasance to include in income might be
different from that which would be includible in the absence of the defeasance.
Prospective investors are urged to consult their own tax advisors as to the
specific consequences of a defeasance, including the applicability and effect of
tax laws other than United States federal income tax laws.
Under current United States federal income tax laws, unless accompanied by
other changes in the terms of the debt securities, covenant defeasance generally
should not be treated as a taxable exchange.
Resignation and Removal of the Indenture Trustee; Deemed Resignation
The indenture trustee may resign at any time by giving written notice to
us.
The indenture trustee may also be removed by act of the registered holders
of a majority in principal amount of the then outstanding debt securities of any
series.
No resignation or removal of the indenture trustee and no appointment of a
successor indenture trustee will become effective until the acceptance of
appointment by a successor indenture trustee in accordance with the requirements
of the indenture.
Under some circumstances, we may appoint a successor indenture trustee and,
if the successor accepts, the indenture trustee will be deemed to have resigned.
(Section 610).
Subordination
Unless we indicate differently in a prospectus supplement, any subordinated
debt securities will be subordinated in the following manner. If Edison
International's assets are distributed upon our dissolution, winding up,
liquidation or reorganization, the payment of the principal of, premium, if any,
and interest on any subordinated debt securities will be subordinated, to the
extent provided in the subordinated indenture and the applicable supplemental
indenture, to the prior payment in full of all senior indebtedness, including
senior debt securities. However, Edison International's obligation to pay
principal, and premium, if any, or interest on the subordinated debt securities
will not otherwise be affected. No payment on account of principal, or premium,
if any, sinking fund or interest may be made on the subordinated debt securities
at any time when there is a default in the payment of principal, premium, if
any, sinking fund or interest on senior indebtedness. If, while Edison
International is in default on senior indebtedness, any payment is received by
the indenture trustee under the subordinated debt security indenture or the
holders of any of the subordinated debt securities before it has paid all senior
indebtedness in full, the payment or distribution must be paid over to the
holders of the unpaid senior indebtedness or applied to the repayment of the
unpaid senior indebtedness. Subject to paying the
17
senior indebtedness in full, the holders of the subordinated debt
securities will be subrogated to the rights of the holders of the senior
indebtedness to the extent that payments are made to the holders of senior
indebtedness out of the distributive share of the subordinated debt securities.
Due to the subordination, if Edison International's assets are distributed
upon insolvency, some or all of its general creditors may recover more, ratably,
than holders of subordinated debt securities. The subordinated indenture or
applicable supplemental indenture may state that its subordination provisions
will not apply to money and securities held in trust under the satisfaction and
discharge, and the legal defeasance provisions of the subordinated indenture.
If this prospectus is being delivered in connection with the offering of a
series of subordinated debt securities, the accompanying prospectus supplement
or the information incorporated by reference in it will set forth the
approximate amount of senior indebtedness outstanding as of a recent date.
Conversion Rights
The terms and conditions of any debt securities being offered that are
convertible into common stock of Edison International will be set forth in a
prospectus supplement. These terms will include the conversion price, the
conversion period, provisions as to whether conversion will be at the option of
the holder or us, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event that the debt securities are
redeemed.
Governing Law
The subordinated indenture and the related debt securities will be governed
by and construed in accordance with the laws of the State of California, except
that the rights, duties, immunities and indemnities of the indenture trustee
will be governed by the laws of the State of New York.
The senior indenture and the related debt securities will be governed by
and construed in accordance with the laws of the State of California.
DESCRIPTION OF EDISON INTERNATIONAL'S
COMMON STOCK AND PREFERRED STOCK
The following description of Edison International's common stock and
preferred stock is only a summary and is qualified in its entirety by reference
to the articles of incorporation and bylaws of Edison International. Therefore,
you should read carefully the more detailed provisions of Edison International's
Restated Articles of Incorporation, Edison International's Amended Bylaws, and
Edison International's Rights Agreement, dated November 21, 1996, between Edison
International and Harris Trust Company of California, as rights agent, copies of
which are incorporated by reference as exhibits to the registration statement of
which this prospectus is a part.
General
The authorized capital stock of Edison International consists of (1)
800,000,000 shares of Edison International common stock, without par value, and
(2) 50,000,000 shares of preferred stock, without par value. As of March 31,
1999, there were issued and outstanding 347,207,697 shares of Edison
International common stock and no shares of Edison International preferred
stock. No other classes of capital stock are authorized under the Edison
International articles of incorporation. The issued and outstanding shares of
Edison International common stock are duly authorized, validly issued, fully
paid, nonassessable and free of preemptive rights.
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Edison International Common Stock
The holders of Edison International common stock are entitled to receive
such dividends as the Edison International board of directors may from time to
time declare, subject to any rights of holders of outstanding shares of Edison
International preferred stock. Except as otherwise provided by law, each holder
of Edison International common stock is entitled to one vote per share on each
matter submitted to a vote of a meeting of shareholders, subject to any class or
series voting rights of holders of Edison International preferred stock.
In the event of any liquidation, dissolution or winding up of Edison
International, whether voluntary or involuntary, the holders of shares of Edison
International common stock, subject to any rights of the holders of outstanding
shares of Edison International preferred stock, are entitled to receive any
remaining assets of Edison International after the discharge of its liabilities.
Holders of Edison International common stock are not entitled to preemptive
rights to subscribe for or purchase any part of any new or additional issue of
stock or securities convertible into stock. Edison International common stock
does not contain any redemption provisions or conversion rights and is not
liable to assessment or further call.
Each outstanding share of Edison International common stock is accompanied
by a right to purchase one one-thousandth of a share of Series A Junior
Participating Cumulative Preferred Stock, without par value, of Edison
International at a price of $55.00 per right, subject to certain anti-dilution
adjustments. The Edison International board of directors has reserved 3,000,000
shares of such Series A preferred stock for issuance upon exercise of the
rights, as more fully discussed below under the heading "--Description of
Preferred Share Purchase Rights."
The registrar and transfer agent for the Edison International common stock
is Southern California Edison Company.
Preferred Stock
The Edison International board of directors is authorized, pursuant to the
Edison International articles of incorporation, to issue up to 50,000,000 shares
of Edison International preferred stock in one or more series and to fix the
number of shares of any series of preferred stock, to determine the designation
of any such series, to increase or decrease the number of shares of any such
series subsequent to the issue of shares of that series, and to determine or
alter the rights, preferences, privileges and restrictions granted to or imposed
upon any wholly unissued series of preferred stock. As of March 31, 1999, there
were no shares of Edison International preferred stock outstanding. However, the
Edison International board of directors has reserved 3,000,000 shares of Series
A preferred stock for issuance in connection with rights issued under the Edison
International rights agreement.
Prior to the issuance of shares of each series of preferred stock, the
board of directors is required to adopt resolutions and file a certificate of
determination with the Secretary of State of the State of California (other than
the Series A preferred stock, for which those actions have been taken
previously). The certificate of determination will fix for each series the
designation and number of shares and the rights, preferences, privileges and
restrictions of the shares including, but not limited to, the following:
(a) the title and stated value of the preferred stock;
(b) voting rights, if any, of the preferred stock;
(c) any rights and terms of redemption (including sinking fund
provisions);
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(d) the dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation applicable to the preferred stock;
(e) whether dividends are cumulative or non-cumulative and, if
cumulative, the date from which dividends on the preferred stock will
accumulate;
(f) the relative ranking and preferences of the preferred stock
as to dividend rights and rights upon the liquidation, dissolution or
winding up of our affairs;
(g) the terms and conditions, if applicable, upon which the preferred
stock will be convertible into common stock, including the conversion price
(or manner of calculation) and conversion period;
(h) the provision for redemption, if applicable, of the preferred
stock;
(i) the provisions for a sinking fund, if any, for the preferred
stock;
(j) liquidation preferences;
(k) any limitations on issuance of any class or series of preferred
stock ranking senior to or on a parity with the class or series of
preferred stock as to dividend rights and rights upon liquidation,
dissolution or winding up of our affairs; and
(l) any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock.
All shares of preferred stock will, when issued, be fully paid and
nonassessable and will not have any preemptive or similar rights.
In addition to the terms listed above, we will set forth in a prospectus
supplement the following terms relating to the class or series of preferred
stock being offered:
(a) the number of shares of the preferred stock offered, the
liquidation preference per share and the offering price of the preferred
stock;
(b) the procedures for auction and remarketing, if any, for the
preferred stock;
(c) any listing of the preferred stock on any securities exchange;
and
(d) a discussion of any material and/or special United States federal
income tax considerations applicable to the preferred stock.
Rank
Unless we specify otherwise in the applicable prospectus supplement, the
preferred stock will rank, with respect to dividends and upon our liquidation,
dissolution or winding up:
(a) senior to all classes or series of our common stock and to all
of our equity securities ranking junior to the preferred stock;
(b) on a parity with all of our equity securities the terms of which
specifically provide that the equity securities rank on a parity with the
preferred stock; and
(c) junior to all of our equity securities the terms of which
specifically provide that the equity securities rank senior to the
preferred stock.
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Description of Preferred Share Purchase Rights
On November 21, 1996, the Edison International board of directors adopted a
preferred share purchase rights plan providing that one preferred share purchase
right will attach to each share of Edison International common stock. The
description and terms of the rights are set forth in a rights agreement, dated
as of November 21, 1996, by and between Edison International and Harris Trust
Company of California, as rights agent. The purchase rights have an
anti-takeover effect that is intended to discourage coercive or unfair takeover
tactics and to encourage any potential acquirer to negotiate a fair price to all
Edison International shareholders. The purchase rights may cause substantial
dilution to any party that may attempt to acquire Edison International on terms
not approved by the Edison International board of directors. However, the
purchase rights are structured in a way so as not to interfere with any
negotiated merger or other business combination. The rights will expire on
November 21, 2006. Until a right is exercised, the holder of the right will have
no rights as a shareholder of Edison International beyond those rights afforded
to existing shareholders, including the right to vote or to receive dividends.
The rights are designed to assure that all of Edison International's
shareholders receive fair and equal treatment in the event of any proposed
takeover of Edison International and to guard against partial tender offers,
open market accumulations and other abusive tactics that may be deployed to gain
control of Edison International without a control premium paid to all
shareholders. Any time prior to the first date that a person or group has become
an "acquiring person" as defined in the rights agreement, the rights should not
interfere with any merger or other business combination as long as it is
approved by the Edison International board of directors.
Anti-Takeover Provisions
The Edison International articles of incorporation and bylaws contain
provisions that may have the effect of discouraging persons from acquiring large
blocks of Edison International stock or delaying or preventing a change in
control of Edison International. The material provisions which may have such an
effect are:
(a) a provision permitting the Edison International board of directors
to amend or repeal the Edison International bylaws, except that provisions
of the bylaws specifying or changing a fixed number of directors or the
maximum or minimum number or changing from a fixed to a variable board of
directors or vice versa may only be adopted by approval of outstanding
shares;
(b) authorization for the Edison International board of directors to
issue Edison International preferred stock in series and to fix rights and
preferences of the series (including, among other things, whether, and to
what extent, the shares of any series will have voting rights and the
extent of the preferences of the shares of any series with respect to
dividends and other matters); and
(c) a provision requiring the approval of holders of at least 80% of
the outstanding voting shares of Edison International for such acquisition
or change of control unless either a majority of the disinterested
directors of the Edison International board of directors approves such
acquisition or change of control or the consideration received in
connection with such acquisition or change of control equals at least the
fair market value of the capital stock of Edison International.
Some acquisitions of Edison International's outstanding voting shares would
also require approval of the SEC under the Public Utility Holding Company Act of
1935 and of various federal, state and foreign regulatory authorities.
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DESCRIPTION OF PREFERRED SECURITIES
General
Each Trust Agreement authorizes the regular trustees to issue on behalf of
each trust one series of preferred securities which will have the terms
described in a prospectus supplement. The proceeds from the sale of a trust's
preferred and common securities will be used by the trust to purchase a series
of subordinated debt securities issued by Edison International. The subordinated
debt securities will be held in trust by the property trustee for the benefit of
the holders of the preferred and common securities.
Under each preferred securities guarantee, Edison International will agree
to make payments of distributions and payments on redemption or liquidation with
respect to a trust's preferred securities, but only to the extent the trust has
funds available to make those payments and has not made the payments. See
"Description of Preferred Securities Guarantees."
The assets of a trust available for distribution to the holders of its
preferred securities will be limited to payments from Edison International under
the series of subordinated debt securities held by the trust. If Edison
International fails to make a payment on the subordinated debt securities, the
trust will not have sufficient funds to make related payments, including
distributions, on its preferred securities.
Each preferred securities guarantee, when taken together with Edison
International's obligations under the related series of subordinated debt
securities, the subordinated indenture, the related Trust Agreement and the
related expense agreement (as described below), will provide a full and
unconditional guarantee by Edison International of amounts due on the preferred
securities issued by a trust.
Each Trust Agreement will be qualified as an indenture under the Trust
Indenture Act. Each property trustee will act as indenture trustee for the
preferred securities to be issued by the applicable trust, in order to comply
with the provisions of the Trust Indenture Act.
Each series of preferred securities will have the terms, including those
regarding distributions, redemption, voting, liquidation rights and the other
preferred, deferred or other special rights or other restrictions, as described
in the relevant Trust Agreement or made part of the Trust Agreement by the Trust
Indenture Act or the Delaware Business Trust Act. The terms of the preferred
securities will mirror the terms of the subordinated debt securities held by the
trust.
The prospectus supplement relating to the preferred securities of a trust
will describe the specific terms of the preferred securities, including:
(a) the name of the preferred securities;
(b) the dollar amount and number of securities issued;
(c) any provision relating to deferral of distribution payments;
(d) the annual distribution rate(s), or method of determining the
rate(s), the payment date(s) and the record dates used to determine the
holders who are to receive distributions;
(e) the date from which distributions will be cumulative;
(f) the optional redemption provisions, if any, including the prices,
time periods and other terms and conditions for which the preferred
securities will be purchased or redeemed, in whole or in part;
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(g) the terms and conditions, if any, upon which the applicable series
of subordinated debt securities may be distributed to holders of the
preferred securities;
(h) the voting rights, if any, of holders of the preferred securities;
(i) any securities exchange on which the preferred securities will
be listed;
(j) whether the preferred securities are to be issued in book-entry
form and represented by one or more global certificates and, if so, the
depository for the global certificates and the specific terms of the
depositary arrangements; and
(k) any other relevant rights, preferences, privileges, limitations
or restrictions of the preferred securities.
Each prospectus supplement will describe various United States federal
income tax considerations applicable to the purchase, holding and disposition of
the series of preferred securities covered by the prospectus supplement.
Liquidation Distribution Upon Dissolution
Unless otherwise specified in an applicable prospectus supplement, each
Trust Agreement states that the related trust shall be dissolved:
(a) on the expiration of the term of the trust;
(b) upon the bankruptcy, dissolution or liquidation of Edison
International;
(c) upon direction by Edison International to the property trustee to
dissolve the trust and distribute the related subordinated debt securities
directly to the holders of the preferred and common securities of the
trust;
(d) upon the redemption of all of the common and preferred
securities of the trust in connection with the redemption of all of
the related subordinated debt securities; or
(e) upon entry of a court order for the dissolution of the trust.
Unless otherwise specified in an applicable prospectus supplement, in the
event of a dissolution as described in (a), (b), (c) or (e) above, after the
trust satisfies all liabilities to its creditors as provided by applicable law,
each holder of the preferred or common securities will be entitled to receive:
(a) the related subordinated debt securities in an aggregate principal
amount equal to the aggregate liquidation amount of the preferred or common
securities held by the holder; or
(b) if such a distribution of related subordinated debt securities is
determined by the property trustee not to be practical, cash equal to the
aggregate liquidation amount of the preferred or common securities held by
the holder, plus accumulated and unpaid distributions to the date of
payment.
If the trust cannot pay the full amount due on its preferred and common
securities because insufficient assets are available for payment, then the
amounts payable by the trust on its preferred and common securities will be paid
on a pro rata basis. However, if an event of default under the related
subordinated indenture has occurred and is continuing, the total amounts due on
the preferred securities will be paid before any distribution on the common
securities.
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Events of Default
An "event of default" under the Trust Agreement (a "Trust Agreement event
of default") occurs if: (a) an event of default under the subordinated indenture
relating to a series of subordinated debt securities occurs or (b) any other
event of default specified in the prospectus supplement occurs. See "Description
of Debt Securities--Events of Default."
Edison International and the regular trustees of a trust must file annually
with the property trustee for the trust a certificate stating whether or not
they are in compliance with all the applicable conditions and covenants under
the related Trust Agreement.
If an event of default occurs under the subordinated indenture, and the
indenture trustee and the holders of not less than 25% in principal amount of
the related subordinated debt securities outstanding fail to declare the
principal of all of such subordinated debt securities to be immediately due and
payable, the holders of at least 25% in aggregate liquidation amount of the
outstanding preferred securities of the applicable trust will have the right to
declare such principal immediately due and payable, by providing notice to
Edison International and the indenture trustee.
If Edison International fails to pay principal, premium, if any, or
interest on a series of subordinated debt securities when payable, then a holder
of the related preferred securities may directly sue Edison International to
collect its pro rata share of payments owed.
Consolidation, Merger or Amalgamation of the Trusts
A trust may not consolidate, amalgamate, merge with or into, or be replaced
by or convey, transfer or lease its properties and assets substantially as an
entirety to any corporation or other body ("Merger Event"), except as described
below or as described in "Liquidation Distribution Upon Dissolution." A trust
may, with the consent of the holders of at least a majority in aggregate
liquidation amount of its outstanding preferred securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey, transfer or lease
its properties and assets substantially as an entirety to another trust, if:
(a) the successor entity either
(1) expressly assumes all of the obligations of the trust
relating to its preferred securities; or
(2) substitutes for the trust's preferred securities other
securities having substantially the same terms as the preferred
securities ("successor securities"), so long as the successor
securities rank the same as the preferred securities for distributions
and payments upon liquidation, redemption and otherwise;
(b) Edison International expressly appoints a trustee of the successor
entity who has the same powers and duties as the property trustee of the
trust as the holder of the particular series of subordinated debt
securities;
(c) the preferred securities are listed or traded, or any successor
securities will be listed upon notice of issuance, on the same national
securities exchange or other organization on which the preferred securities
are then listed or traded;
(d) the Merger Event does not cause the preferred securities or any
successor securities to be downgraded by any national rating agency;
(e) the Merger Event does not adversely affect the rights, preferences
and privileges of the holders of the preferred securities or any successor
securities in any material way;
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(f) the successor entity has a purpose substantially identical to
that of the trust;
(g) prior to the Merger Event, Edison International has received an
opinion of counsel from a nationally recognized law firm stating that:
(1) the Merger Event does not adversely affect the rights,
preferences and privileges of the holders of the trust's preferred
securities or any successor securities in any material way; and
(2) following the Merger Event, neither the trust nor the
successor entity will be required to register as an investment company
under the Investment Company Act of 1940, as amended; and
(h) Edison International owns all of the common securities of the
successor entity and guarantees the obligations of the successor entity
under the successor securities at least to the extent provided under the
applicable preferred securities guarantee.
In addition, unless all of the holders of the preferred securities approve
otherwise, a trust may not consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it, if the transaction would cause
the trust or the successor entity to be classified other than as a grantor trust
for United States federal income tax purposes.
Voting Rights; Amendment of Trust Agreement
Unless otherwise specified in an applicable prospectus supplement, the
holders of preferred securities will have no voting rights except as discussed
below and under "--Consolidation, Merger or Amalgamation of the Trusts" and
"Description of the Preferred Securities Guarantees--Amendments and Assignment,"
and as otherwise required by law and the Trust Agreement for the trust.
If any proposed amendment to the Trust Agreement of a trust provides for,
or the regular trustees of the trust otherwise propose to effect:
(a) any action that would adversely affect the powers, preferences or
special rights of the trust's preferred securities in any material respect,
whether by way of amendment to the Trust Agreement or otherwise; or
(b) the dissolution, winding-up or termination of the trust other
than pursuant to the terms of its Trust Agreement,
then the holders of the trust's preferred securities as a class will be
entitled to vote on the amendment or proposal. In that case, the amendment or
proposal will be effective only if approved by the holders of at least a
majority in aggregate liquidation amount of the preferred securities.
The Trust Agreement of a trust may be amended from time to time by Edison
International and the property trustee and the regular trustees of the trust,
without the consent of the holders of preferred securities of the trust, to:
(a) cure any ambiguity, correct or supplement any provision which may
be inconsistent with any other provision, or make provisions not
inconsistent with any other provisions with respect to matters or questions
arising under the Trust Agreement, in each case to the extent that the
amendment does not adversely affect the interests of any holder of
preferred securities of the trust in any material respect; or
25
(b) modify, eliminate or add to any provisions to the extent necessary
to ensure that the trust will not be classified as other than a grantor
trust for United States federal income tax purposes or to ensure that the
trust will not be required to register as an "investment company" under the
Investment Company Act.
Except a provided in the next paragraph, other amendments to the Trust
Agreement of a trust may be made by Edison International and the trustees of the
trust upon:
(a) approval of the holders of a majority in aggregate liquidation
amount of the outstanding preferred securities of the trust; and
(b) receipt by the trustees of an opinion of counsel to the effect
that such amendment will not affect the trust's status as a grantor trust
for United States federal income tax purposes or the trust's exemption from
the Investment Company Act.
Notwithstanding the foregoing, without the consent of each affected holder
of common or preferred securities of a trust, the Trust Agreement of the trust
may not be amended to:
(a) change the amount or timing of any distribution on the common or
preferred securities of the trust or otherwise adversely affect the amount
of any distribution required to be made in respect of such securities as of
a specified date; or
(b) restrict the right of a holder of any such securities to institute
suit for the enforcement of any such payment on or after such date.
In addition, no amendment may be made to a Trust Agreement if the amendment
would:
(a) cause the related trust to be characterized as other than a
grantor trust for United States federal income tax purposes;
(b) cause the related trust to be deemed to be an "investment
company" which is required to be registered under the Investment
Company Act; or
(c) impose any additional obligation on Edison International, the
property trustee or the Delaware trustee without its consent.
Without obtaining the prior approval of the holders of a majority in
aggregate liquidation amount of the preferred securities of a trust, the
trustees of the trust may not:
(a) direct the time, method and place of conducting any proceeding for
any remedy available to the indenture trustee for the subordinated debt
securities held by the trust or executing any trust or power conferred on
the property trustee with respect to such securities;
(b) waive any default that is waivable under the subordinated
indenture;
(c) cancel an acceleration of the principal of the subordinated
debt securities; or
(d) consent to any amendment, modification or termination of the
subordinated indenture or the subordinated debt securities where such
consent is required.
However, if a consent under the subordinated indenture requires the
consent of each affected holder of subordinated debt securities, then the
property trustee must obtain the prior consent of each holder of preferred
securities. In addition, before taking any of the foregoing actions, the
property trustee
26
must obtain an opinion of counsel stating that the action will not cause
the trust to be classified as other than a grantor trust for United States
federal income tax purposes.
The property trustee of a trust will notify all preferred securities
holders of the trust of any notice of default received from the indenture
trustee with respect to the subordinated debt securities held by the trust.
Removal and Replacement of Trustees
The holder of a trust's common securities may remove or replace any of the
regular trustees and, unless an event of default has occurred and is continuing
under the subordinated indenture, the property and Delaware trustees of the
trust. If such an event of default has occurred and is continuing, only the
holders of a trust's preferred securities may remove or replace the property and
Delaware trustees. The resignation or removal of any trustee will be effective
only on the acceptance of appointment by the successor trustee in accordance
with the provisions of the Trust Agreement for the trust.
Information Concerning the Property Trustees
For matters relating to compliance with the Trust Indenture Act, the
property trustee of each trust will have all of the duties and responsibilities
of an indenture trustee under the Trust Indenture Act. Each property trustee,
other than during the occurrence and continuance of a default under the
applicable Trust Agreement, undertakes to perform only the duties as are
specifically set forth in the applicable Trust Agreement and, after a default,
must use the same degree of care and skill as a prudent person would exercise or
use in the conduct of his or her own affairs. Subject to this provision, a
property trustee is under no obligation to exercise any of the powers given it
by the applicable Trust Agreement at the request of any holder of preferred
securities unless it is offered reasonable security or indemnity against the
costs, expenses and liabilities that it might incur. If the property trustee is
required to decide between alternative courses of action, construe ambiguous
provisions in the applicable Trust Agreement or is unsure of the application of
any provision of the applicable Trust Agreement, and the matter is not one on
which the holders of preferred securities are entitled to vote, then the
property trustee will take such action as it deems advisable and in the best
interests of the holders of the preferred and common securities. In this event,
the property trustee will have no liability except for its own bad faith,
negligence or willful misconduct.
The property trustee for each of the trusts is the same entity and will
also serve as the indenture trustee under each of the indentures and the
guarantee trustee under each of the guarantee agreements. Edison International
and certain of its subsidiaries maintain deposit accounts and banking
relationships with the property trustee.
Miscellaneous
The trustees of each trust are authorized and directed to conduct the
affairs of and to operate the trust in such a way that:
(a) it will not be deemed to be an "investment company" required to
be registered under the Investment Company Act;
(b) it will be classified as a grantor trust for United States
federal income tax purposes; and
(c) the subordinated debt securities held by it will be treated as
indebtedness of Edison International for United States federal income tax
purposes.
27
Edison International and the trustees of each trust are authorized to take
any action (so long as it is consistent with applicable law or the applicable
certificate of trust or Trust Agreement) that Edison International and the
trustees of the trust determine to be necessary or desirable for such purposes.
Registered holders of preferred securities have no preemptive or similar
rights.
A trust may not borrow money, issue debt, execute mortgages or pledge any
of its assets.
Governing Law
Each Trust Agreement and the related preferred securities will be governed
by and construed in accordance with the laws of the State of Delaware.
DESCRIPTION OF PREFERRED SECURITIES GUARANTEES
General
Edison International will execute a guarantee agreement (a "preferred
securities guarantee"), for the benefit of the holders of preferred securities,
at the time that a trust issues those preferred securities. Each preferred
securities guarantee will be qualified as an indenture under the Trust Indenture
Act. The Chase Manhattan Bank will act as indenture trustee ("guarantee
trustee") under each preferred securities guarantee for the purposes of
compliance with the Trust Indenture Act.
The guarantee trustee will hold each preferred securities guarantee for the
benefit of the preferred securities holders of the applicable trust.
Edison International will irrevocably agree, as described in each preferred
securities guarantee, to pay in full, to the holders of the preferred securities
issued by the applicable trust, the preferred securities guarantee payments (as
defined below) (except to the extent previously paid), when and as due,
regardless of any defense, right of set-off or counterclaim which the trust may
have or assert. The following payments, to the extent not paid by a trust
("preferred securities guarantee payments"), will be covered by the applicable
preferred securities guarantee:
(a) any accumulated and unpaid distributions required to be paid on
the applicable preferred securities, to the extent that the trust has funds
available to make the payment;
(b) the redemption price, to the extent that the trust has funds
available to make the payment; and
(c) upon a voluntary or involuntary dissolution, termination,
winding-up or liquidation of the trust (other than in connection with a
distribution of subordinated debt securities to holders of the preferred
securities), the lesser of:
(1) the aggregate of the liquidation amounts specified in the
prospectus supplement for each preferred security plus all accumulated
and unpaid distributions on the preferred security to the date of
payment, to the extent the trust has funds available to make the
payment; and
(2) the amount of assets of the trust remaining available for
distribution to holders of its preferred securities upon liquidation
of the trust.
Edison International's obligation to make a preferred securities guarantee
payment may be satisfied by directly paying the required amounts to the holders
of the preferred securities or by causing the trust to pay the amounts to the
holders.
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Status of the Preferred Securities Guarantees
Each preferred securities guarantee will constitute an unsecured obligation
of Edison International and will rank:
(a) subordinate and junior in right of payment to all of Edison
International's other liabilities except those that rank equally or are
subordinate by their terms; and
(b) equal with any other preferred securities guarantee now or
hereafter issued by Edison International on behalf of the holders of
preferred securities issued by any other trust.
Each preferred securities guarantee will constitute a guarantee of payment
and not of collection (in other words, the holder of the guaranteed security may
sue Edison International, or seek other remedies, to enforce its rights under
the preferred securities guarantee without first suing any other person or
entity). A preferred securities guarantee will not be discharged except by
payment of the preferred securities guarantee payments in full to the extent not
otherwise paid or upon distribution to the applicable preferred securities
holders of the related subordinated debt securities pursuant to the applicable
Trust Agreement.
Amendments and Assignment
Except with respect to any changes which do not adversely affect the rights
of holders of preferred securities in any material respect (in which case no
consent of the holders will be required), a preferred securities guarantee may
be amended only with the prior approval of the holders of at least a majority in
aggregate liquidation amount of the preferred securities. A description of the
way to obtain any approval appears under "Description of the Preferred
Securities--Voting Rights; Amendment of Trust Agreements." All guarantees and
agreements contained in a preferred securities guarantee will be binding on
Edison International's successors, assigns, receivers, trustees and
representatives and are for the benefit of the holders of the applicable
preferred securities.
Events of Default
An event of default under a preferred securities guarantee occurs if Edison
International fails to make any of its required payments or fails to perform any
of its other obligations (and such failure continues for 30 days) under the
preferred securities guarantee.
The holders of at least a majority in aggregate liquidation amount of the
preferred securities relating to each preferred securities guarantee will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the guarantee trustee relating to the preferred
securities guarantee or to direct the exercise of any trust or power given to
the guarantee trustee under the preferred securities guarantee.
Information Concerning Guarantee Trustees
The guarantee trustee under a preferred securities guarantee, other than
during the occurrence and continuance of a default under the preferred
securities guarantee, will perform only the duties that are specifically
described in the preferred securities guarantee. After such a default, the
guarantee trustee will exercise the same degree of care and skill as a prudent
person would exercise or use in the conduct of his or her own affairs. Subject
to this provision, a guarantee trustee is under no obligation to exercise any of
its powers as described in the applicable preferred securities guarantee at the
request of any holder of covered preferred securities unless it is offered
security and indemnity satisfactory to it against the costs, expenses and
liabilities that it might incur.
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Termination of the Preferred Securities Guarantees
Each preferred securities guarantee will terminate once the applicable
preferred securities are paid in full or upon distribution of the related
subordinated debt securities to the holders of the preferred securities in
accordance with the applicable Trust Agreement. Each preferred securities
guarantee will continue to be effective or will be reinstated if at any time any
holder of preferred securities issued by the applicable trust must restore
payment of any sums paid under the preferred securities or the preferred
securities guarantee.
Governing Law
The preferred securities guarantees will be governed by and construed in
accordance with the laws of the State of California, except that the rights,
duties, immunities and indemnities of the guarantee trustee shall be governed by
the laws of the State of New York.
DESCRIPTION OF EXPENSE AGREEMENTS
Edison International will execute an expense agreement at the same time
that a trust issues preferred securities. Under the expense agreement, Edison
International will irrevocably and unconditionally guarantee to each creditor of
the trust, the full amount of the trust's costs, expenses and liabilities, other
than the amounts owed to holders of its preferred and common securities pursuant
to the terms of those securities. Third parties will be entitled to enforce the
expense agreement.
Edison International's obligations under the expense agreement will be
subordinated in right of payment to the same extent as the preferred securities
guarantee. The expense agreement will contain provisions regarding amendment,
termination, assignment, succession and governing law similar to those contained
in the preferred securities guarantee.
RELATIONSHIP AMONG PREFERRED SECURITIES, PREFERRED SECURITIES
GUARANTEES AND SUBORDINATED DEBT SECURITIES HELD BY EACH TRUST
Payments of distributions and redemption and liquidation payments due on
each series of preferred securities (to the extent the applicable trust has
funds available for the payments) will be guaranteed by Edison International to
the extent described under "Description of the Preferred Securities Guarantees."
No single document executed by Edison International in connection with the
issuance of any series of preferred securities will provide for its full,
irrevocable and unconditional guarantee of the preferred securities. It is only
the combined operation of Edison International's obligations under the
applicable preferred securities guarantee, Trust Agreement, subordinated
indenture and subordinated debt securities and expense agreement that has the
effect of providing a full, irrevocable and unconditional guarantee of a trust's
obligations under its preferred securities.
As long as Edison International makes payments of interest and other
payments when due on the subordinated debt securities held by a trust, the
payments will be sufficient to cover the payment of distributions and redemption
and liquidation payments due on the preferred securities issued by that trust,
primarily because:
(a) the aggregate principal amount of the subordinated debt securities
will be equal to the sum of the aggregate liquidation amounts of the
preferred and common securities;
(b) the interest rate and interest and other payment dates on the
subordinated debt securities will match the distribution rate and
distribution and other payment dates for the preferred securities;
30
(c) Edison International has agreed to pay for any and all costs,
expenses and liabilities of each trust except the trust's obligations under
its preferred securities; and
(d) each Trust Agreement provides that the related trust will not
engage in any activity that is not consistent with the limited purposes of
the trust.
If and to the extent that Edison International does not make payments on
the subordinated debt securities, the trust will not have funds available to
make payments of distributions or other amounts due on its preferred securities.
In those circumstances, a holder of preferred securities of the trust will not
be able to rely upon the preferred securities guarantee for payment of these
amounts. Instead, the holder may directly sue Edison International or seek other
remedies to collect its pro rata share of payments owed. If a holder sues Edison
International to collect payment, then Edison International will assume the
holder's rights as a holder of preferred securities under the trust's Trust
Agreement to the extent Edison International makes a payment to the holder in
any legal action.
A holder of any preferred security may sue Edison International, or seek
other remedies, to enforce its rights under the applicable preferred securities
guarantee without first suing the applicable guarantee trustee, the trust which
issued the preferred security or any other person or entity.
EXPERTS
The consolidated financial statements and schedule incorporated by
reference in this prospectus and the registration statement of which this
prospectus is a part have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
VALIDITY OF THE SECURITIES AND THE PREFERRED SECURITIES GUARANTEES
Kenneth S. Stewart, Assistant General Counsel of Edison International, will
pass upon the validity of the debt securities, the common and preferred stock
and the preferred securities guarantees for Edison International. Richards,
Layton & Finger, P.A. will pass upon certain matters of Delaware law relating to
the validity of the preferred securities for Edison International and the
trusts.
PLAN OF DISTRIBUTION
We may sell the securities described in this prospectus from time to time
in one or more transactions
(a) to purchasers directly;
(b) to underwriters for public offering and sale by them;
(c) through agents;
(d) through dealers; or
(e) through a combination of any of the foregoing methods of sale.
We may distribute the securities from time to time in one or more
transactions at:
(a) a fixed price or prices, which may be changed;
(b) market prices prevailing at the time of sale;
31
(c) prices related to such prevailing market prices; or
(d) negotiated prices.
Direct Sales
We may sell the securities directly to institutional investors or others
who may be deemed to be underwriters within the meaning of the Securities Act of
1933, as amended, with respect to any resale of the securities. A prospectus
supplement will describe the terms of any sale of securities we are offering
hereunder.
To Underwriters
The applicable prospectus supplement will name any underwriter involved in
a sale of securities. Underwriters may offer and sell securities at a fixed
price or prices, which may be changed, or from time to time at market prices or
at negotiated prices. Underwriters may be deemed to have received compensation
from us from sales of securities in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of securities for
whom they may act as agent. Underwriters may be involved in any at the market
offering of equity securities by or on our behalf.
Underwriters may sell securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions (which may be changed from time to
time) from the purchasers for whom they may act as agent.
Unless otherwise provided in a prospectus supplement, the obligations of
any underwriters to purchase securities will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all the securities
if any are purchased.
Through Agents and Dealers
We will name any agent involved in a sale of securities, as well as any
commissions payable by us to such agent, in a prospectus supplement. Unless we
indicate differently in the prospectus supplement, any such agent will be acting
on a reasonable efforts basis for the period of its appointment.
If we utilize a dealer in the sale of the securities being offered pursuant
to their prospectus, we will sell the securities to the dealer, as principal.
The dealer may then resell the securities to the public at varying prices to be
determined by the dealer at the time of resale.
Delayed Delivery Contracts
If we so specify in the applicable prospectus supplement, we will authorize
underwriters, dealers and agents to solicit offers by certain institutions to
purchase the securities pursuant to contracts providing for payment and delivery
on future dates. Such contracts will be subject to only those conditions set
forth in the applicable prospectus supplement.
The underwriters, dealers and agents will not be responsible for the
validity or performance of the contracts. We will set forth in the prospectus
supplement relating to the contracts the price to be paid for the securities,
the commissions payable for solicitation of the contracts and the date in the
future for delivery of the securities.
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General Information
Underwriters, dealers and agents participating in a sale of the securities
may be deemed to be underwriters as defined in the Securities Act, and any
discounts and commissions received by them and any profit realized by them on
resale of the securities may be deemed to be underwriting discounts and
commissions, under the Securities Act. We may have agreements with underwriters,
dealers and agents to indemnify them against certain civil liabilities,
including liabilities under the Securities Act, and to reimburse them for
certain expenses.
Underwriters or agents and their associates may be customers of, engage in
transactions with or perform services for us or our affiliates in the ordinary
course of business.
Unless we indicate differently in a prospectus supplement, we will not list
the securities on any securities exchange. The securities will be a new issue of
securities with no established trading market. Any underwriters that purchase
securities for public offering and sale may make a market in such securities,
but such underwriters will not be obligated to do so and may discontinue any
market making at any time without notice. We make no assurance as to the
liquidity of or the trading markets for any securities.
33
Edison International
$350,000,000
FLOATING RATE NOTES DUE 2001
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PROSPECTUS SUPPLEMENT
NOVEMBER 3, 2000
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Joint Book Running Managers
CHASE SECURITIES INC. LEHMAN BROTHERS
Co-Managers
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
SALOMON SMITH BARNEY