CILCORP Placed On Rating Watch Evolving By Fitch.Business Editors NEW YORK--(BUSINESS WIRE)--July 17, 2000 CILCORP has been placed on Rating Watch Evolving by Fitch following AES' announced intention to restructure its ownership interests and/or organizational structure  This article has no lead section.To comply with Wikipedia's lead section guidelines, one should be written. in order to continue as an exempt holding company under PUHCA PUHCA Public Utility Holding Company Act following its planned acquisition of IPALCO IPALCO Indianapolis Power and Light Company . AES is evaluating several options with respect to its ownership stake in CILCORP, including a sell-down of its interests or a disaggregation dis·ag·gre·ga·tion n. 1. A breaking up into component parts. 2. An inability to coordinate various sensations and a failure to observe their mutual relations. and sale of Central Illinois Light Co.'s (CILCO CILCO Central Illinois Light Company ) transmission and distribution assets from the vertically integrated utility. Under a sell-down scenario, CILCORP noteholders are insulated from downside credit degradation under the Midwest Energy (MEI) indenture. Under the limitations on consolidation, merger, conveyance, sale or lease covenant, CILCORP's credit profile must not be negatively impacted and any resultant action under this covenant must not result in ratings downgrade. Coupled with this, AES has stated its intention that changes to CILCORP's ownership and/or organizational structure will have at minimum a neutral credit impact. The Watch Evolving status reflects an uncertain outcome of the disaggregation scenario mentioned earlier. Likewise, CILCO has also been placed on Rating Watch Evolving. CILCORP was acquired by AES in October 1999. To partially fund the CILCORP acquisition, MEI, an intermediate, temporary funding company, was formed and issued $475 million of senior notes, due 2009 and 2029. In accordance with the terms of the offering, MEI merged with CILCORP following the acquisition and its obligations are now obligations of CILCORP. While the outstanding medium-term notes of CILCORP are secured by the capital stock of CILCO, the senior notes issued by MEI will not be secured by a pledge of the capital stock until the earlier of maturity of the CILCORP medium-term notes (January 31, 2002) or early retirement. The `BBB' rating on both CILCORP and MEI reflects a diminimus amount of CILCORP secured notes relative to total CILCORP/MEI consolidated debt with both sets of obligations dependent on cash flows in the form of distributions and tax-sharing agreements from CILCORP's primary subsidiary, CILCO. Fitch rates CILCORP's medium-term notes and its MEI related senior notes `BBB' and CILCO's senior secured debt `A+', senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. `A', preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. `A-' and commercial paper `F1'. For a more detailed analysis of CILCORP/MEI and CILCO, see Fitch's report on Midwest Energy at `www.dcrco.com', dated October 1999. Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA IBCA International Braille Chess Association IBCA Institute of Burial and Cremation Administration IBCA Integrated Business Communications Alliance IBCA International Barbeque Cookers Association IBCA Department of Interior Board of Contract Appeals and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide. |
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