Express Pipeline Project CreditWatch Update.Business Editors NEW YORK--(BUSINESS WIRE)--Standard & Poor's Sept. 22, 2000-- Standard & Poor's believes the rating on the $146.6 million senior secured notes issued by Express Pipeline Partnership and Express Pipeline L.P. (the Express pipeline project) may be adversely affected should Alberta Energy Company Ltd. (AEC AEC US Atomic Energy Commission Noun 1. AEC - a former executive agency (from 1946 to 1974) that was responsible for research into atomic energy and its peacetime uses in the United States Atomic Energy Commission : triple-'B'-plus/Positive/--) exercise its option, which expires Oct. 2, 2000, to acquire TransCanada PipeLines The TransCanada pipeline is a system of natural gas pipelines, up to 48 inches (1219 millimetres) in diameter, that carries gas through Alberta, Saskatchewan, Manitoba, Ontario and Quebec. It is maintained by TransCanada PipeLines, LP. It is the longest pipeline in Canada. Ltd.'s (TransCanada: single-'A'-minus/Stable/--, TransCanada) 50% interest in the Project. However, should appropriate structural protections be incorporated into the transaction, such risk could be mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. . The project is a 1,717-mile pipeline that runs from Hardisty, Alberta Hardisty, Alberta is a town in Flagstaff County in Alberta, Canada. It is located in east-central Alberta, km ( mi) from the Saskatchewan border, near the crossroads of Highway 13 and Highway 881, in the Battle River Valley. , to Wood River, Ill. Standard & Poor's placed its single-'A'-minus and triple 'B'-minus ratings on Express Pipeline L.P.'s (issuer), the Express Pipeline Partnership's (issuer), and Platte Pipe Line Co.'s (guarantor guarantor n. a person or entity that agrees to be responsible for another's debt or performance under a contract, if the other fails to pay or perform. (See: guarantee) GUARANTOR, contracts. He who makes a guaranty. 2. ), collectively the project, outstanding $146.6 million senior secured and $249.5 million subordinated secured notes, respectively, on CreditWatch with negative implications on Jan. 14, 2000. The placement on CreditWatch followed TransCanada's announcement that it may sell its ownership interests in the project, as well as in Marquest, a marketing vehicle directly and indirectly owned equally by TransCanada and AEC. The project's ownership structure currently incorporates a check and balance between the equal economic interests of the two investment-grade owners. A key reason for the CreditWatch was Standard & Poor's conclusion that any erosion in such check and balance protection due to a sale may lead to a rating downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. . Standard & Poor's believes that predictability of timeliness of payment on the senior secured notes issued by the project could be adversely affected should AEC exercise its option to purchase TransCanada's interest. Express Pipeline Partnership, is a Delaware general partnership, and in the event that such structure is not made bankruptcy-remote and that AEC were to be placed into bankruptcy, this could result in the winding up of the general partnership. In addition AEC could voluntary file Express Pipeline Partnership into bankruptcy, triggering an automatic stay on principal and interest payments. Such stay would be of an indeterminate That which is uncertain or not particularly designated. INDETERMINATE. That which is uncertain or not particularly designated; as, if I sell you one hundred bushels of wheat, without stating what wheat. 1 Bouv. Inst. n. 950. duration. Therefore, should the acquisition proceed and there are no structural protections incorporated into the transaction, the rating on the $146.6 million senior secured notes issued by the Project would be capped by the current rating of AEC (BBB BBB A medium grade assigned to a debt obligation by a rating agency to indicate an adequate ability to pay interest and repay principal. However, adverse developments are more likely to impair this ability than would be the case for bonds rated A and above. +/Positive/--). Standard & Poor's expects resolution of the CreditWatch when the sale of the project and Marquest goes through. ---CreditWire |
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