Homer City power plant handed over to owner lessors, Homer City bonds, EIX equity up on the news

In a somewhat expected move, Edison International has handed over control of the Homer City power plant to the owner lessor’s and taken an impairment charge of $1.032 bln. The Homer City senior secured bonds (8.137% of 2019 and 8.734% of 2026) are up 5-7 points on the news and more than 10 points since the start of the year.

I believe this is a positive event for EIX equity holders and Homer City senior secured bond holders, however it is bad for the rest of the EME capital structure. Please email me for details.

My price targets and recommendations remain unchanged.

I recommend that all investors read the disclosures provided in the Homer City, EME and EIX 8k’s.

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2 thoughts on “Homer City power plant handed over to owner lessors, Homer City bonds, EIX equity up on the news

  1. Great long call on the Homer City’s. Can you elaborate why handing over Homer City to GECC is bad for the rest of the EME capital structure? Is it because the asset coverage of Homer City far exceeds the pass-through debt + $700mn capex?

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