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KANSAS P&L SENIOR DEBT RATED 'A-' AFTER MERGER; OFF FITCHALERT --FITCH FINANCIAL WIRE--

 KANSAS P&L SENIOR DEBT RATED 'A-' AFTER MERGER; OFF FITCHALERT
 --FITCH FINANCIAL WIRE--
 NEW YORK, March 31 /PRNewswire/ -- Kansas Power & Light Co.'s ("KPL") senior debt is lowered to 'A-' from AA-' by Fitch after the completion of its merger with Kansas Gas & Electric Co. The merger was consummated today. Kansas Gas's senior debt, which will be assumed by KPL, is raised to 'A-' from 'BBB'. All KPL and Kansas Gas ratings are removed from FitchAlert. The credit trend is stable.
 Ratings are also lowered on KPL's outstanding preferred and preference stock to 'BBB+' from 'AA-' and 'A+', respectively. KPL's commercial paper is lowered to 'F-2' from 'F-1+. Kansas Gas's preferred stock will be refunded and its rating is withdrawn. Senior debt of Gas Service Co. (gas distribution operations acquired by KPL in 1983) is lowered to 'A-' from 'AA-'.
 The lower ratings reflect the large amount of additional debt that will be incurred to finance the merger and the impact of acquiring a lower rated company, with nuclear operations and an off-balance sheet lease, at a sizable premium to book value. The acquisition is a cash and stock transaction valued at over $1 billion, or $32-$35 per share. The cash portion of approximately $434 million was financed initially with a bank term loan and will be refinanced with long-term debt. The actual price was determined by the value of KPL stock on the effective date of the acquisition.
 Due to the considerable increase in KPL's stock price since the merger announcement, it appears the acquisition premium will approximate $448 million, compared to the $346 million originally forecast. The Kansas Corporation Commission (KCC) ruled the acquisition premium will be amortized over 40 years, without carrying charges, and will be recovered from ratepayers only to the extent it is matched by merger- generated savings. Moreover, the KCC determined that reasonably anticipated cost savings from the merger will total only $312 million. Savings above the annual amortization level of $12.7 million will be shared 50/50 between ratepayers and shareholders. However, the sharing will not commence before 1995, giving KPL an opportunity to retain some of the $180 million in estimated cost savings that the merger is expected to generate over the next five years.
 Initial credit quality measures for the combined entity will be weak relative to the rating category. Fitch estimates that the debt ratio immediately after the merger will be slightly over 60 percent, compared with a 48 percent at year-end 1991. Adjustment for the sale leaseback of the La Cygne generating plant would add approximately 4 percent to the debt ratio. Pretax interest coverage would be 2.34 times (x) at year-end 1992 (1.90x adjusted for sale-leaseback financing), down from 2.91x for 1991.
 The new entity will benefit from stronger cash flow and sizable cost savings that the company estimates will allow for recovery of the acquisition premium. In addition, management is committed to strengthening the balance sheet. The combined utility also possesses an excellent fuel supply, strong transmission system, efficient plant operations, and minimal acid rain exposure, all of which help offset the weakened financial profile.
 /CONTACT: Ed King of Fitch, 212-908-0574/
 (KAN) CO: Kansas Power & Light Co. ST: Kansas IN: UTI SU: RTG


TQ -- NY065 -- 3415 03/31/92 12:28 EST
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Date:Mar 31, 1992
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