Fitch Ratings Places Nicor & Nicor Gas On Rating Watch Neg.Business Editors CHICAGO--(BUSINESS WIRE)--July 19, 2002 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 placed Nicor Inc (Nicor) and it subsidiary Nicor Gas, on Rating Watch Negative following today's announcement of losses and accounting irregularities associated with Nicor Energy LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . Nicor Energy LLC is a 50/50 joint retail marketing venture between Nicor with Dynegy Inc. Fitch currently rates both Dynegy Inc. and Dynegy Holdings at 'BB+' senior unsecured, Rating Watch Negative. The Negative Rating Watch for Nicor Gas further takes into consideration the current investigation of the company's performance-based rate (PBR PBR Pre-Budget Report PBR Pabst Blue Ribbon PBR Policy Based Routing PBR Payment by Results (UK hospital funding) PBR Permit by Rule PBR Plant Breeder's Rights PBR Performance Based Ratemaking PBR Partition Boot Record ) program by the Illinois Commerce Commission (ICC ICC See: International Chamber of Commerce ) and other government agencies. The rating actions taken on Nicor and Nicor Gas are based on information issued by Nicor and the subsequent negative reaction to these announcements by the capital markets. Fitch intends to initiate a review of Nicor and Nicor Gas to evaluate concerns facing the companies. A full description of the ratings is shown below. Nicor recently released its preliminary second quarter 2002 financial results stating net income fell by 36% and that 2002 earnings will be lower than the company expected. Additionally, Nicor disclosed that accounting irregularities were found at Nicor Energy LLC after a year-end 2001 independent audit. The accounting problems resulted in a $1.6 million pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern adjustment for the second quarter and a $4.3 million pretax adjustment for the first half of the year. The second quarter also includes a $3.7 million pretax adjustment for a revision of Nicor Energy LLC's accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. revenue in the first quarter and a charge of $2.6 million for previously unrecorded liabilities. The company has announced that the owners of the venture and new Nicor Energy management commenced a review of the joint venture's strategy, accounting practices, controls and financial results in the second quarter, and more adjustments may be required. Earnings at Nicor Gas, Nicor's gas distribution segment, were negatively impacted in the second quarter due to a reversal of $2.9 million of estimated revenue in the first quarter. Previously announced allegations that Nicor Gas acted improperly im·prop·er adj. 1. Not suited to circumstances or needs; unsuitable: improper shoes for a hike; improper medical treatment. 2. in connection with its PBR program are being investigated by the ICC and other government agencies; and could require Nicor to restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state past results or take a charge against future earnings. Nicor has established a special committee to conduct an inquiry into issues surrounding natural gas purchases, sales, transportation, and storage. Ratings placed on Rating Watch Negative Nicor Inc. --Preferred stock 'A+'; --Commercial paper 'F1+'. Nicor Gas --Senior secured debt 'AA+'; --Commercial paper 'F1+'. |
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