AGL Capital's $300MM Senior Notes Rated `BBB+' By Fitch.

Business Editors

NEW YORK--(BUSINESS WIRE)--Feb. 23, 2001

AGL Capital Corp.'s (AGCC) $300 million 7 1/8% senior notes, due 2011, are rated `BBB+' by Fitch. The notes are fully and unconditionally guaranteed by AGL Resources, Inc. (AGLR, `BBB+' implied senior unsecured rating). Note proceeds will be utilized to replace a portion of the short-term debt incurred by AGCC to fund AGLR's October 2000 acquisition of Virginia Natural Gas Co. (VNG). The Rating Outlook is Stable

The rating reflects the low-risk nature of AGLR's regulated gas distribution operations offset by the initial leveraging impact of the VNG acquisition. AGLR funded the $533 million cash purchase initially in the short-term commercial paper market and will permanently finance the deal with the aforementioned senior note issuance and an expected issuance of equity-like (e.g. trust preferred) securities later in 2001. As a result of the transaction, Fitch expects near-term pressure on consolidated credit measures, including total debt to capitalization, which approximated 65% at year-end 2000.

Considerable credit strength is derived from AGLR's stable regulated gas distribution operations which, including VNG, represent approximately 95% of operating income. Atlanta Gas Light Co. (AGLC, `A' senior unsecured debt rating), AGLR's largest subsidiary, is expected to remain a strong cash flow contributor to AGLR given its robust service territory economics, track record of profitable expansion and stable earnings stream following the full unbundling of the gas industry in Georgia. As a pure energy delivery company, AGLC operates under volume-insensitive straight-fixed variable rates. Accordingly, changes in customer usage patterns due to weather and improvements in equipment efficiencies or other business conditions now have minimal financial impact. In addition, AGLC is well insulated from current high natural gas commodity prices, the recovery of which has been a concern for some gas distribution companies. These factors, combined with ongoing debt reduction and synergistic cost savings resulting from the integration of VNG, should allow for gradual improvement in AGLR's consolidated credit profile.

Because AGLR is a shell holding company with no operating assets of its own, debt service at AGLR depends primarily on the ongoing ability of AGLC and VNG to make upstream dividend payments to the parent company. Based on Fitch's analysis, dividends and/or excess free cash flow from AGLC and VNG should continue to exceed debt service at AGLR by a comfortable margin. Positively, VNG has not been capitalized with external debt therefore maximizing the level of free cash flow available from VNG to service acquisition debt at AGLR.

A full report on AGLR is available on Fitch's web site at `www.fitchratings.com' or by contacting Market Services at 1-800-853-4824.