Duke Capital $1.5 Bil Sr Unsecd Debt Rated A by Fitch IBCA.NEW YORK--(BUSINESS WIRE)--Sept. 21, 1999-- 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 has assigned an `A` rating to the expected $1.5 billion issue of senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. of Duke Capital Corp. (Duke Capital). Duke Capital is a direct subsidiary of `AA-` rated Duke Energy Corp. and the parent holding company to all of Duke Energy's domestic and international energy businesses other than the domestic electric utility. Duke Capital's aggressive investment strategy and entry into higher risk energy markets places the current credit ratings under some stress. However, Duke Capital benefits from the good quality of its assets and management and ample equity base and cash flows of its parent, Duke Energy. The Duke Capital rating is based on the collective cash flows and capital structure of Duke Capital's five major business segments: natural gas transmission (including Texas Eastern Transmission, `A+' senior unsecured debt), midstream mid·stream n. 1. The middle part of a stream. 2. The part of a course that is neither at the beginning nor at the end: the midstream of life. Noun 1. gas processing and field services, energy trading and marketing, global asset development and real estate. A majority of earnings and cash flow continue to be generated by regulated businesses, although that is expected to change over the next two or three years. Roughly 90% of Duke Capital's 1998 earnings before interest and taxes In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.[1] EBIT = Operating Revenue – Operating Expenses + Non-operating Income (EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). ) were derived from domestic operations and about 65% from regulated businesses which include domestic gas transmission, California generating assets, and the Queensland pipeline (Australia). The ratio of regulated EBIT is expected to fall to about 50% in 1999 and continue to trend lower thereafter reflecting recent acquisitions in Latin and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. , the sale of the mid-west pipelines, and Duke Capital's acquisition strategy that emphasizes global asset development. The capital structure is supportive of the current ratings with about 52% equity, 40% debt and 8% trust 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. . Going forward, management has targeted a capital structure with approximately 50% equity to support the ratings. Capital expenditures for diversified energy businesses are estimated at about $13.6 billion over the next three years (2000-2002). While these are substantial, a significant portion will be discretionary and depend on the company's ability to identify and fund acquisitions. Three recent acquisitions amounting to $1.2 billion are consistent with Duke Capital's growth strategy. However, the aggressive growth strategy and the increasing level of emerging market exposure pressures Duke Capital's credit ratings, mitigated to some extent by Duke Energy's ongoing commitment to infuse in·fuse v. 1. To steep or soak without boiling in order to extract soluble elements or active principles. 2. To introduce a solution into the body through a vein for therapeutic purposes. equity into Duke Capital. |
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