Atmos Energy's Debs Rated 'A-' By S&P.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 7/23/98 --Standard & Poor's today assigned its single-'A'-minus rating to Atmos Energy Atmos Energy (NYSE: ATO), headquartered in Dallas, Texas, is the largest distributor of natural gas in the United States, serving 3.1 million customers nationwide. Atmos acquired TXU's natural gas and pipeline holdings in 2004. Corp.'s $150 million 6.75% debentures due 2028. The rating reflects normally solid financials and a strong business profile. The current financial weakness is due to one-time merger costs combined with the increased use of debt, mainly to finance the customer-service initiative including the new customer service center in Amarillo, Texas “Amarillo” redirects here. For other uses, see Amarillo (disambiguation). Amarillo is the 14th-largest city in the U.S. state of Texas and the seat of Potter County. , and to cover transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). in connection with the merger of United Cities United cities refers to the neighbouring cities divided by political borders, that were united, when due to political changes they happened in the same entity. (See also Divided cities)
Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. equal 14% of debt, compared with the benchmark of about 20%, and cash flow interest coverage is less than 3 times (x), while the benchmark is about 3.5x. However, integration of the United Cities gas distribution operations are well under way. Earnings are expected to improve as cost-control measures are implemented, and increased sales efforts will be greatly aided by the new customer service center. The company's business operations span 12 states, giving it great economic and regulatory diversity. A weather-normalization clause in Tennessee and Georgia, which account for about 20% of operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , helps stabilize earnings. Management will continue to grow the company by acquiring other gas distribution companies, but the acquisitions are expected to be financed with an appropriate mix of debt and equity. OUTLOOK: STABLE The low-risk nature of the gas distribution business, the diversity of the service territory, and the traditionally conservative financial policy of the company support the stable rating outlook. However, the company will grow through acquisitions, which may cause some interim deterioration of the financial profile, but management is expected to maintain a balanced capital structure, cut costs aggressively, and target a moderate dividend payout ratio Dividend Payout Ratio The percentage of earnings paid to shareholders in dividends. Calculated as: , Standard & Poor's said. --CreditWire
CONTACT: Ronald A Johnson, New York (1) 212-208-5201
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