Cinergy Affirmed by Fitch on Duke Merger; Outlook Stable.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 -- Upon the announcement of Duke Energy's (senior unsecured rated 'BBB+' by Fitch) acquisition of Cinergy Corp (Cinergy), Fitch has affirmed the ratings of Cinergy and its subsidiaries, Cincinnati Gas and Electric Co. and PSI Energy, Inc. and Union Light Heat & Power Co. A full list of the ratings is shown below. The Rating Outlook is Stable. As Duke Energy and Cinergy both have credit profiles commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. to those of companies with senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. ratings of 'BBB+', Fitch anticipates the combined entity should be able to achieve a similar credit profile. Additionally, Fitch recognizes that synergistic synergistic /syn·er·gis·tic/ (sin?er-jis´tik) 1. acting together. 2. enhancing the effect of another force or agent. syn·er·gis·tic adj. 1. savings may occur especially as Duke has wholesale generation assets in the Midwest that will help reduce Cinergy's current short position in Ohio and Indiana. Also, the combination of Cinergy's gas trading and Duke's gas transportation assets may offer additional business opportunities. As the merged entity will fall under the Public Utilities Holding Act, Fitch does not anticipate a change in the business lines or corporate structures of Cinergy's regulated subsidiaries. While Duke and Cinergy have not specified in detail the organization of Duke's and Cinergy's non-utility businesses, the non-regulated generation, gas trading and other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. of Cinergy could be realigned along with the non-regulated assets of Duke. The credit implications of such corporate actions will be considered as the merger approaches. As is common in such cases, Fitch expects that it will take at least 12 months to secure required regulatory approvals. Cinergy Corp's ratings reflect the stable cash flows of its electric and gas utility operations and solid credit protection measures. However, leverage is aggressive for the ratings category at 4.2 times at Dec. 31, 2004. Cinergy is exposed to commodity price risk through its wholesale energy marketing business and to a lesser extent through its provider of last resort obligations in Ohio. The delays in Indiana and Kentucky of retail completion have and will continue to help stabilize earnings and cash flow. The ratings of each of the entities also reflect the centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. electric and treasury operations within the holding company group. Cinergy Corp. is a registered holding company under the Public Utility Holding Company Act Public Utility Holding Company Act The 1935 act that gives the SEC authority over the security issues, the accounting systems, the corporate structures, and the intercompany transactions of public utilities. (PUHCA PUHCA Public Utility Holding Company Act ) of 1935. Cinergy's principal operating utility subsidiaries are The Cincinnati Gas & Electric Company, PSI Energy, Inc. and The Union Light, Heat and Power Company. Cincinnati Gas & Electric, an Ohio corporation, is a combination electric and gas public utility company that provides service in the southwestern portion of Ohio. Union Light is a Kentucky corporation that provides electric and gas service in Northern Kentucky. PSI Energy is a regulated vertically integrated utility engaged in the generation, transmission, distribution and sale of electricity in north central, central and southern Indiana Southern Indiana, in the United States, is notable because it is culturally distinct from the rest of the state. The area's geography has led to a blend of Northern and Southern culture that is not found in the rest of Indiana. . Cinergy is also engaged in non-regulated activities including the wholesale trading and marketing of gas and electricity, as well as, offering energy infrastructure management services. Ratings affirmed by Fitch include the following: Cinergy Corp --Senior unsecured debt 'BBB+'; --Trust preferred securities 'BBB+'; --Commercial paper 'F2'. Cincinnati Gas and Electric Company --Senior Secured debt 'A-'; --Senior unsecured debt 'BBB+'; --Junior Subordinate debt See Junior debt. 'BBB'; --Preferred stock 'BBB'. --Commercial paper 'F2'. PSI Energy, Inc, --Senior secured debt 'A-'; --Senior unsecured debt 'BBB+'; --Junior Subordinate debt 'BBB'; --Preferred stock 'BBB'. The Union Light, Heat and Power Company --Senior unsecured 'BBB+'. |
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