Terms

Series

5.10% Trust Preference Securities / Series G Preference Stock

Liquidation Preference

$25.00

Coupon Rate

5.1%

Rate Type

Fixed

Annual Dividend

$1.27

Payment Frequency

Quarterly

Cumulative

Yes

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

March 15, 2018

First Call Price

$25.00

Redemption Notice Period

30 days

Capital Stack Ranking

Junior To: Cumulative Preferred Stock, Secured Debt, Unsecured Debt; Pari Passu With: Series A Preference Stock, Series B Preference Stock, Series C Preference Stock, Series D Preference Stock, Series E Preference Stock, Series F Preference Stock; Senior To: Common Stock

Regulatory (Basel III) Call

No

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Depositary Share Fraction

0.01

Shares Offered

16,000,000

Prospectus Summary

SCE Trust II, a Delaware statutory trust subsidiary of Southern California Edison Company (SCE), is offering 16,000,000 Trust Preference Securities at $25 liquidation amount per security, each representing a 1/100th beneficial interest in the Trust's only asset — SCE's Series G Preference Stock bearing a fixed 5.10% annual coupon. Distributions of $0.31875 per security are paid quarterly on March 15, June 15, September 15, and December 15, beginning June 15, 2013. The securities are cumulative, meaning any unpaid distributions accrue and must be satisfied before SCE may resume common stock dividends — but dividends are paid only when, as, and if declared by SCE's board, so a declaration cannot be compelled. The securities are perpetual with no stated maturity and are callable at $25 (par) on or after March 15, 2018. The Trust Preference Securities effectively sit at the same level as SCE's Series G Preference Stock in SCE's capital structure: pari passu with SCE's other outstanding preference stock series (A through F), junior to all of SCE's secured and unsecured debt and its senior cumulative preferred stock, and senior only to SCE common stock. Because the Trust itself holds only Series G Preference Shares and the Trust's distributions depend entirely on SCE paying dividends on those shares, investors bear SCE operating company credit risk. There is no regulatory capital (Tier 1) call; however, an early redemption (in whole only) before March 15, 2018 is permitted if there is an adverse change in tax law or investment company law that would negatively affect the Trust's tax or regulatory status — a relatively common 'tax event' call seen in trust preferred structures. At the $25 offering price, the Trust Preference Securities yield 5.10% annually, or approximately $1.275 per security per year. Distributions that constitute dividend income to individual U.S. holders qualify as 'qualified dividend income' taxed at the preferential 15%/20% long-term capital gains rate rather than ordinary income rates; corporate U.S. holders may claim the dividends-received deduction. Record dates are set one business day before each quarterly payment date (in book-entry form). Distributions can be interrupted if SCE fails to declare dividends on the Series G Preference Shares — most critically, SCE is prohibited from paying Series G dividends if it is in default on any secured or unsecured debt or has failed to pay dividends on its senior cumulative preferred stock, creating a structural stopper that could suspend Trust distributions without triggering a default.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

SCE cannot pay dividends on the Series G Preference Shares (and thus the Trust cannot pay distributions on the Trust Preference Securities) if SCE is in default on any secured or unsecured debt payment or has failed to pay dividends on its senior cumulative preferred stock. Conversely, as long as Series G dividends are in arrears, SCE may not pay dividends on common stock.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 63 (Strong)