Columbia Energy On Fitch IBCA Alert Evolv; NIPSCO On Alert Neg.NEW YORK--(BUSINESS WIRE)--June 8, 1999-- Columbia Energy Group's (Columbia's) ratings are placed on RatingAlert Evolving and the ratings of Northern Indiana Northern Indiana is the region of Indiana including 26 counties bordering parts of Illinois, Michigan, and Ohio. The area is generally sub-classified into other regions. The northwest is economically and culturally intertwined with Chicago, and is considered part of the Chicago Public Service Co. (NIPSCO NIPSCO Northern Indiana Public Service Company ) are placed on RatingAlert Negative by 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 following the announcement that NiSource Inc. (NI), NIPSCO's parent, made a $5.8 billion unsolicited cash offer for Columbia Energy Group (CG). Ratings affected at Columbia are its 'A' rated debentures and 'F1' rated 4(2) commercial paper program. Fitch IBCA believes that it is premature to take clearer rating actions, since Columbia has publicly indicated only that it would consider the offer. In addition, if the NI acquisition of Columbia were to be completed as proposed, it is not yet clear where Columbia's outstanding debt would be placed in the new holding company structure, an important consideration in the final ratings. Ratings affected at NIPSCO's are its 'A+' first mortgage bonds, 'A' unsecured medium-term notes, and '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. . The negative alert reflects the possibility that high leverage at the parent will pressure credit measures at the utility as the need for upstream dividends increases. NI's bid was made as a cash offer and will be accounted for as a purchase transaction. If the offer is accepted, a significant amount of new debt would be added at the parent company level, which currently has minimal debt. The planned acquisition would be funded with about $2.6 billion of equity and $3.2 billion of debt. Additionally, NI would add about $2 billion of Columbia debt to its consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. . According to NI management, Columbia would become a 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. of NI, and NI would seek regulatory approval to operate as a registered holding company. NI is currently an exempt holding company. Fitch IBCA will continue to monitor events at Columbia and NiSource. |
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