Fitch Rates KGE's Secured PCRRBs 'BBB+'; 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 -- Fitch Ratings has assigned a 'BBB+' rating to the $50 million issuance of 5% secured pollution control refunding revenue bonds (PCRRBs) due June 1, 2031 issued by the City of Burlington, Kansas on behalf of Kansas Gas and Electric (KGE KGE Keller Ground Engineering
KGE Knights of the Golden Eagles ). The issuance is expected to close on Oct. 15, 2009. The Rating Outlook is Stable.
Proceeds from the issuance will be used to refund $50 million of the City of Burlington's existing PCRRBs, series 2004C, issued on behalf of KGE. The original issuance of PCRRBs was used to refinance the cost of pollution control, sewage treatment, and solid waste disposal facilities at the Wolf Creek Generating Station located near the City of Burlington in Coffey County, Kansas Coffey County (county code CF) is a county located in East Central Kansas, in the Central United States. The population was estimated to be 8,701 in the year 2006. Its county seat and most populous city is Burlington. Geography
According to the U.S. .
KGE's ratings and Stable Outlook primarily reflect an improved regulatory environment in Kansas, parent Westar Energy, Inc.'s (Westar) conservative management style, strategic focus on its utility operations, high debt leverage, and a moderately large capital spending program. Rate increases effective earlier this year support improving cash flows and provide the utility the opportunity to earn a timely and reasonable return on its transmission and environmental investments.
Recovery mechanisms approved in recent years by the Kansas Corporation Commission The Kansas Corporation Commission is a Kansas government agency that regulates public utilities, common carriers, oil and gas production, telecommunications companies, and motor carriers. provide some stability to the financial profile, mitigating regulatory lag associated with its capital expenditure program and the negative effects of fuel and purchased power cost price volatility. Financial performance for 2009 will be constrained by abnormally cool weather in the third quarter of 2009 and lower off-system sales. However, going forward Fitch expects continued improvement in Westar's credit metrics. Fitch estimates that 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 interest will remain above 3.5 times (x), and FFO FFO
See: Funds from operations to debt will trend up toward 18% through 2010.
KGE and Westar's credit ratings are the same, reflecting centralized operations and treasury functions. KGE provides regulated electric service under the Westar brand name and is functionally integrated with the parent's utility operations. KGE relies on Westar for its short-term cash needs, and Westar's revolving credit facility is secured by KGE's first mortgage bonds. In addition, no regulatory or corporate structures are currently in place to restrict the migration of cash between parent and subsidiary.
KGE is a regulated utility that provides electric generation, transmission, and distribution services to 313,000 customers in south-central and southeastern Kansas, including the city of Wichita. The utility owns or leases nearly 2,600 megawatts of net generation capacity, which is fueled primarily by a balanced mix of coal and natural gas. KGE is a wholly owned subsidiary Wholly Owned Subsidiary
A subsidiary whose parent company owns 100% of its common stock.
In other words, the parent company owns the company outright and there are no minority owners. of Westar, which also provides electric generation, transmission, and distribution services to more than 370,000 customers in central and northeastern Kansas.
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