Fitch Revises NorthWestern Corp.'s Outlook to Stable; Ratings Affirmed.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 -- NorthWestern Corp.'s (NWEC NWEC Northwest Energy Coalition NWEC Northwest Environmental Conference (Portland, Oregon) NWEC National Wireless Engineering Conference ) outstanding credit ratings have been affirmed by 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. as follows: --Senior secured debt 'BBB'; --Issuer default rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) 'BBB-'; --Senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. 'BBB-'; The Rating Outlook is revised to Stable from Evolving. The rating action follows Fitch's initial assessment of NWEC's definitive agreement to be acquired by Babcock & Brown Infrastructure (BBI BBI Blockbuster Inc. (stock symbol) BBI Berlin Brandenburg International (Airport) BBI Broadband-Interactive BBI Browser-Based Interface BBI Best Brains Inc. ) in a transaction valued at approximately $2.2 billion, including the assumption of around $700 million of outstanding NWEC debt. Based on BBI's preliminary financing plans, the approximate $1.5 billion cash portion will be funded with a $987 million capital contribution from BBI and $505 million of acquisition debt raised at a new U.S. domiciled holding company to be established to hold BBI's interests in NWEC. BBI is a utility infrastructure investment company based in Sydney, Australia. The affirmation of NWEC's ratings reflect the expectation that NWEC's standalone business and financial profile will remain largely unchanged following completion of the acquisition. Importantly, BBI's financing plans do not contemplate the incurrence of incremental debt leverage at NWEC to support the acquisition price and/or ongoing dividends paid to BBI. At the same time, Fitch recognizes that the proposed $505 million of holding company debt obligations represent an indirect financial obligation for NWEC as the sole source of debt service for these obligations will be upstream cash dividends from NWEC. Based on discussions with the management of both BBI and NWEC, Fitch does not expect NWEC's ongoing cash dividends to exceed its free cash flow (i.e. operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. less capital expenditures) under the new ownership structure. The revision of NWEC's Rating Outlook to Stable from Evolving reflects Fitch's initial evaluation of the definitive acquisition agreement and the concomitant reduction in event risk which had been overhanging NWEC's credit profile since the launching of its review of strategic alternatives in late 2005. Still, hurdles remain including a lengthy regulatory process which may take 12 to 18 months to complete. The Outlook incorporates Fitch's expectation that the ultimate transaction structure will not result in a non-investment grade credit profile at NWEC. Underscoring this opinion is the intense scrutiny and review the BBI acquisition will receive from the Montana Public Service Commission (MPSC MPSC Michigan Public Service Commission MPSC Missouri Public Service Commission MPSC Mississippi Public Service Commission MPSC Maryland Public Service Commission MPSC Maharashtra Public Service Commission MPSC Microsoft Partner Solution Center ) which retains ultimate approval authority over any proposed sale or transfer of NWEC's Montana based utility assets. In particular, MPSC has stated in public filings that any potential transactions involving NWEC should comply with the ring fencing provisions established as part of NWEC's bankruptcy settlement. NWEC's ratings were recently upgraded to the current levels reflecting the continued stable performance of NWEC's core electric and gas utility business, the company's substantially reduced debt burden and improved financial flexibility, the conclusion of NWEC's non-core asset sale program, and the expectation that pending regulatory proceedings in Montana will not adversely affect NWEC's earnings and cash flow profile. For further background information please refer to the Fitch press release dated March 30, 2006. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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