CalEnergy Rtgs Afrmd,NYSEG Rtgs on S&PWatch Neg After Anncmt.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 7/16/97 -- Standard & Poor's today has affirmed its double-'B'-plus issuer credit rating and double-'B'-plus rating on CalEnergy Co. Inc.'s senior debt and its double-'B'-minus rating on CalEnergy Capital Trust's 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. . The ratings outlook remains stable. This follows CalEnergy's announcement yesterday that 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. CE Electric (NY) has commenced a cash tender offer for about 9.9% of 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 State Electric & Gas Corp. (NYSEG NYSEG New York State Electric & Gas (utility) ) common stock. This is the first step in CalEnergy's stated plans to acquire 100% of NYSEG's common stock. At the same time, Standard & Poor's has placed its triple-'B'-plus corporate credit and senior secured debt ratings, triple-'B' senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. and preferred stock ratings, and 'A-2' commercial paper rating of NYSEG on CreditWatch with negative implications. About $1.7 billion of consolidated debt and preferred stock is outstanding at Binghamton, NY-based NYSEG. Standard & Poor's expects that CalEnergy will use a combination of cash, new debt, and common stock and/or convertible securities to fund the acquisition. CalEnergy has expressed to Standard & Poor's that it expects to maintain its current capitalization level. In addition, the incremental cash flows Incremental cash flows Difference between the firm's cash flows with and without a project. that CalEnergy should realize from the acquisition should maintain parent level debt service coverages at about current levels, which are appropriate for the current debt ratings. Standard & Poor's views the acquisition attempt as consistent with CalEnergy's strategic intent of becoming a global provider of energy services, and one that should benefit from CalEnergy's experiences with competitive generation and electricity and supply in the U.S. and abroad. Nevertheless, the regulatory environment in New York is difficult and even unpredictable and may prove to be a formidable challenge to CalEnergy's efforts. The negative CreditWatch implications on the ratings of NYSEG reflect uncertainty over the financing structure of the proposed bid and the likelihood of additional debt service obligations placed upon NYSEG as a result. This concern may be alleviated by the degree to which state regulators insulate 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. NYSEG's regulated utility business from CalEnergy. The negative implication also reflects uncertainty over any defense actions that NYSEG could take to fort CalEnergy's action. NYSEG's board of directors has stated that it will review the proposal from CalEnergy in due course. -- CreditWire CONTACT: Peter Rigby Sir Peter Rigby (born September 29, 1943) is a British Entrepreneur, owner of IT company SCC and one of Britain's richest people. Specialist Computer Centres Peter Rigby founded Specialist Computer Centres (SCC) (CalEnergy), New York (1) 212-208-8241 or Ronald M. Barone (NYSEG), New York (1) 212-208-1929 or Richard Cortright (NYSEG), New York (1) 212-208-1657 |
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