Large Midwest Generator Files for Bankruptcy

Edison Mission Energy announced that it has reached an agreement with the holders of a majority of EME's $3.7 billion of outstanding public indebtedness (Noteholders) and its parent company, Edison International, that, pursuant to a plan of reorganization and pending court approval, would transition Edison International's equity interest to EME's creditors, retire existing public debt and enhance EME's access to liquidity.

As EME implements its financial restructuring, which will ultimately result in a substantial deleveraging of the EME's balance sheet, its operations are expected to continue in the normal course without interruption.

Under the agreement, Edison International will, among other things, consensually transfer its 100% equity interest in EME to unsecured creditors, including the Noteholders, and continue certain tax sharing agreements through December 31, 2014. The continuation of the tax sharing agreements results in the potential recognition of a substantial amount in tax sharing payments to EME. As part of the restructuring process, Edison International and EME will begin immediately to negotiate agreements to ensure EME's smooth and effective transition to operating as an independent entity following its separation from Edison International, which is anticipated to occur by December 2014.

To implement the restructuring, EME and several of its subsidiaries today filed voluntary petitions with the U.S. Bankruptcy Court for the Northern District of Illinois under Chapter 11 of the United States Bankruptcy Code. EME's agreement with the Noteholders and Edison International is subject to Bankruptcy Court approval.

"We are pleased to have reached this agreement, which we believe reflects the long-term value potential of our organization," said Pedro Pizarro, president of EME. "This is an important first step in the process to reduce our debt, enhance our liquidity profile and position EME for continued operation and future success while preserving our ability to generate power safely and reliably at our electric facilities across the country. Throughout this process, business operations will continue in the normal course, and we will continue to support our customers, suppliers and employees."

"Like other independent power generators, EME has been challenged by depressed energy and capacity prices and high fuel costs affecting its coal-fired facilities, combined with pending debt maturities and the need to retrofit its coal-fired facilities to comply with environmental regulations. EME has taken numerous actions to address these external challenges, including retiring uneconomic power plants, implementing labor reductions, significantly reducing expenses without compromising safety and compliance, diversifying its portfolio of power generation assets, and developing a cost-effective environmental compliance program. The Company believes that these efforts, together with its financial restructuring, will position EME for profitability and long-term success," the company said.

EME filed a number of customary first-day motions requesting authority to continue operations in the ordinary course.

The EME subsidiaries that filed for Chapter 11 protection include Midwest Generation, which manages the company's fleet of coal-fired plants in Illinois.

Certain other subsidiaries -- including Edison Mission Marketing & Trading, Edison Mission Operation & Maintenance, and the company's wind energy projects -- were not included in the filings.