AmerenUE Lowered By Fitch Ratings.Business Editors NEW YORK--(BUSINESS WIRE)--Aug. 14, 2002 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has lowered AmerenUE's outstanding ratings as follows: first mortgage bonds to 'AA-' from 'AA', senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. to 'A+' from 'AA-', subordinated debentures and preferred stock to 'A' from 'A+' and commercial paper to 'F1' from 'F1+'. The Rating Outlook is changed to Stable from Negative. The lower ratings reflect expectations of a moderate decline in AmerenUE's very strong financial profile due to a recent rate settlement agreement that requires the company to phase-in a $110 million rate reduction over the next three years and to refund $40 million through a one-time bill credit. The settlement agreement also provides for a rate moratorium through June 2006. The rating action also reflects the financial pressures of a large capital program that will require external funding in each of the next several years, nuclear operating risk and the commodity exposure that results from frozen rates without a fuel or purchased power adjustment mechanism. The commodity price exposure is mitigated by the company's existing generation and by the sourcing capability of the company's generation affiliate. Even with the rate reduction and external financing needs, AmerenUE's financial profile remains strong. With moderate equity support from parent Ameren Corp., the equity ratio should remain in the mid 50% range. Interest coverage measures are expected to decline from the currently lofty levels, but remain supportive of the new ratings throughout the forecast period. Fitch expects earnings before interest and taxes In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.[1] EBIT = Operating Revenue – Operating Expenses + Non-operating Income (EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). ) and earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. after capital expenditures and dividends) will be negative for the next several years, largely due to higher capital expenditures of about $550 million to $650 million annually through 2005. The higher capital expenditures are needed for new generation capacity and upgrades to AmerenUE's existing generation and its gas and electric distribution networks. The rate settlement agreement requires AmerenUE to invest from $2.25 billion to $2.75 billion in energy infrastructure improvements through 2006. The company plans to add 700 megawatts (mW) of new generating capacity, which includes 240 mW that entered service in 2002. AmerenUE is a regulated and vertically integrated electric and gas utility primarily serving the St. Louis, Mo., area and portions of Southern Illinois. AmerenUE is a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Ameren Corp. |
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