Fitch Rates MidAmerican Energy Holdings' $250MM 144A Senior Notes 'BBB'.

Business Editors

NEW YORK--(BUSINESS WIRE)--Feb. 10, 2004

Fitch Ratings has assigned a 'BBB' rating to MidAmerican Energy Holdings Co. (MEHC) expected $250 million issuance 5% senior notes due Feb. 15, 2014. The notes are being issued to qualified institutional buyers under Rule 144A of the Securities Act. Proceeds from the offering will be used to repay $136.4 million of guaranteed subsidiary senior notes and for general corporate purposes. In addition, Fitch has affirmed the ratings of MEHC as follows: senior unsecured debt at 'BBB', and preferred stock at 'BBB-'. The Rating Outlook for MEHC is Stable.

MEHC's ratings and Stable Outlook reflect the solid stand-alone credit profiles of the company's regulated subsidiaries, the considerable support provided by principle shareholder Berkshire Hathaway (senior unsecured rated 'AAA' by Fitch), and high consolidated leverage. Regulated operations, which include an electric and gas utility and two natural gas interstate pipelines in the US and two electric distribution companies in the UK, have strong operating fundamentals and provide MEHC with stable, predictable cash flows. Currently, approximately 78% of consolidated EBITDA is attributable to MEHC's regulated businesses, a trend that is expected to continue. Going forward, the company's strategy is to focus on lower risk domestic investments.

MEHC's credit profile benefits from the tangible support of Berkshire Hathaway. Berkshire has invested $3.4 billion in common stock, zero coupon convertible preferred stock and trust preferred securities into MEHC, including 100% of the cost (excluding assumed debt) of both pipeline acquisitions in 2002. The majority ownership by Berkshire Hathaway provides MEHC with access to substantial capital to fund additional acquisitions and to support existing operations.

Fitch's projections for consolidated leverage, as measured by debt-to-EBITDA and cash from operations (before working capital)-to-debt, are high for the rating category at more than 5.0 times (x) and 13%, respectively, over the next few years. The high leverage is mitigated by the use of non-recourse funding at several subsidiaries. Fitch excludes from consolidated debt approximately $2.9 billion of non-core debt at MEHC's international subsidiaries and about $850 million of domestic project debt. Although several subsidiary debt indentures include limitations on distributions to MEHC, including debt to capital and debt service coverage tests, Fitch's rating does not assume any restrictions on cash flows.

In late 2003, MEHC resolved all outstanding litigation surrounding its geothermal and hydroelectric plants in the Philippines. While the company's international investments continue to be exposed to sovereign risks, the projects are performing well and payments are made in U.S. dollars. Contracts with the Philippine National Oil Co. (PNOC) for the three Leyte plants expire in 2006-7, at which time it is expected that PNOC will acquire the plants from MEHC. MEHC unlikely to pursue any future ventures in emerging market countries.

MEHC, a majority-owned subsidiary of Berkshire Hathaway, provides electric and gas service to more than 5 million customers worldwide through its regulated subsidiaries, MidAmerican Energy Co. (MEC, senior unsecured rated 'A-', Rating Outlook Stable), Northern Natural Gas (NNG, senior unsecured rated 'BBB+', Rating Outlook Stable), Kern River Gas Transmission (KRGT, obligations issued by Kern River Funding Corp., senior unsecured rated 'A-', Rating Outlook Negative), Northern Electric Distribution Ltd (senior unsecured rated 'A', Rating Outlook Stable) and Yorkshire Electricity Distribution plc (senior unsecured rated 'A-', Rating Outlook Stable). MEHC also has a 50% interest in CE Generation LLC, a power project holding company with US geothermal and gas-fired projects.