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Austran Holdings A$500M CP Program Rated A-2 by S&P.



MELBOURNE--(BUSINESS WIRE)--S&P's CreditWire 27/7/98--Standard & Poor's today assigned as·sign  
tr.v. as·signed, as·sign·ing, as·signs
1. To set apart for a particular purpose; designate: assigned a day for the inspection.

2.
 its 'A-2' short-term credit rating to Austran Holdings Inc.'s A$500 million commercial paper program. The rating on Austran Holdings Inc. reflects the strength of its 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.
 GPU GPU: see secret police.


(Graphics Processing Unit) A specialized logic chip devoted to rendering 2D or 3D images. Display adapters contain one or more GPUs for fast graphics rendering.
 PowerNet, the high-voltage electricity transmission company in the State of Victoria. The rating is influenced by Austran Holdings' ultimate ownership by U.S. utility GPU Inc.

GPU PowerNet operates under a stable and predictable regulatory regime, has a good operational record, and is insulated in·su·late  
tr.v. in·su·lat·ed, in·su·lat·ing, in·su·lates
1. To cause to be in a detached or isolated position. See Synonyms at isolate.

2.
 from competitive pressures by its natural monopoly In economics, the term monopoly is used to refer to two different things. This has been a source of some ambiguity in discussions of "natural monopoly".[1] The two definitions follow:
  • An industry is said to be a natural monopoly
 status and regulatory protection. These strengths are offset by an aggressive financial profile. The ratings on Austran Holdings are also affected by the credit quality of GPU Inc. and subsidiaries.

GPU PowerNet's revenue is initially determined under a tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic  order put in place by the Victorian government before GPU PowerNet's privatization privatization: see nationalization.
privatization

Transfer of government services or assets to the private sector. State-owned assets may be sold to private owners, or statutory restrictions on competition between privately and publicly owned
. Transmission prices have been set under this tariff order until January 2003, which provides GPU PowerNet considerable medium-term cash flow certainty and stability. GPU PowerNet's customers are the Victorian Power Exchange The Victorian Power Exchange (VPX) was established in 1995 by the Government of Victoria as part of a restructuring of the State Electricity Commission of Victoria (SECV) and the establishment of a competitive electricity market.  and the Victorian distribution businesses and generators. Revenue certainty is enhanced by the lack of electricity volume risk to GPU PowerNet.

GPU PowerNet's function is an essential element of the state's economic infrastructure. High-voltage electricity transmission services in Victoria are a natural monopoly, and are not directly affected by the competition in the generation and retail segments. Amid the continuing industry reform at state and federal levels, GPU PowerNet's business position is sound.

Austran Holdings has been highly leveraged initially, however, Standard & Poor's expects Austran Holdings' financial profile to improve in the coming years as the acquisition finance is refinanced, and as internally generated cash flow is used to retire debt. Initial gearing (total debt-to-total capital) is relatively high at 74%, and funds flow interest coverage is initially modest at 1.7 times (x). The low level of business risk enables a strong investment grade rating, although the rating incorporates the expectation of a steadily improving financial profile, Standard & Poor's said.---CreditWire

    CONTACT:  Anthony Flintoff, Melbourne (61) 3-9250-4562
               For more information on criteria or subscriptions:
               http://www.ratings.standardpoor.com


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Publication:Business Wire
Article Type:Article
Geographic Code:8AUST
Date:Jul 27, 1998
Words:356
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