Fitch Rates AEP Texas Central's Senior Notes 'A-'.Business Editors NEW YORK--(BUSINESS WIRE)--Feb. 13, 2003 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has assigned an 'A-' rating to AEP AEP - Application Environment Profile Texas Central Company's (Texas Central), formerly Central Power and Light Co., $800 million offering of senior notes to be issued in three fixed-rate tranches of 3, 10 and 30 years, respectively and one variable-rate tranche of 3 years. The notes are unsecured obligations and rank pari passu [Latin, By an equal progress; equably; ratably; without preference.] Used especially to describe creditors who, in marshalling assets, are entitled to receive out of the same fund without any precedence over each other. PARI PASSU. By the same gradation. with Texas Central's other unsecured debt. Proceeds will be used to pay down short-term debt and refinance maturing debt. The Rating Outlook remains Stable. The ratings take into consideration Texas Central's moderate leverage and strong cash flow as well as its slow growth service territory. The risk profile of Texas Central has decreased through the sale of its retail electric provider business to Centrica and will decline further if it successfully completes its plans to sell all of its generating assets. Texas Central's credit profile is further enhanced by it affiliation with its parent, American Electric Power American Electric Power (NYSE: AEP) is a major investor-owner electric utility in various parts of the United States. It is headquartered in Columbus, Ohio. It serves parts of 11 states, and is currently the largest electricity generating utility in the United States. Co, Inc. (AEP) which enables the company to participate currently in the AEP power pool and to benefit from its financial expertise. Texas Central's leverage in terms of debt to total capitalization is moderately high for the ratings category at 58.7% as of Sept. 30, 2002, however Fitch deems Debt to EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become to be a more accurate measure of leverage and at 2.99 times (x) is commensurate with the ratings category. Also interest protection is strong with the ratio of EBITDA to interest at 4.84x for the twelve months ending Sept. 30, 2002. Texas Central is 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 the American Electric Power Co., Inc. and is engaged in the generation, transmission and distribution of electric power to 680,000 retail customers in south central Texas. |
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