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NERCO MINING UNIT SALE A POSITIVE FOR PACIFICORP, FITCH SAYS -- FITCH FINANCIAL WIRE --

 NEW YORK, Feb. 19 /PRNewswire/ -- Pacificorp's agreement to sell its 82 percent ownership in Nerco, a coal mining subsidiary, is a positive for bond credit quality, Fitch says. The transaction will reduce consolidated debt by about $567 million and substantially eliminate Pacificorp's investment in nonregulated businesses. The greater utility focus should result in a more predictable revenue stream. Fitch rates Pacificorp's first mortgage bonds 'A-'.
 Although Pacificorp's electric utility operations have been largely insulated from NERCO and other nonregulated operations, the sale allows the company to concentrate its management and financial resources on utility operations. The NERCO sale is expected to be completed in the second quarter. Sale proceeds of roughly $384 million, including a $154 million pretax gain, will be offset by a $225 million loan to the purchaser to finance the transaction. The remainder will be available for debt reduction and/or investment in utility operations. The gain will be recognized over the life of the financing agreement, which could extend to 2009.
 While the Nerco sale will shrink Pacificorp's assets and earnings power, this impact is offset by the debt reduction and a common stock dividend cutback that results in a pro forma payout ratio (adjusted for nonrecurring items) of about 80 percent.
 Adjusted for the NERCO sale, regulated businesses now account for about 95 percent of consolidated revenue, including 73 percent from electric operations, 22 percent from telecommunications, and 5 percent from financial services. The company expects to continue to shrink its investment in financial services.
 Pacificorp's electric operations are well positioned due to its low- cost generation, extensive transmission network, and diversified, seven- state service territory. Challenges in 1993 include rate recovery of FASB 106 costs and higher charges from Bonneville Power. In addition, capital expenditures and external financing requirements will be relatively high over the next several years.
 -0- 2/19/93
 /CONTACT: Robert Hornick of Fitch, 212-908-0564/
 (PPW)


CO: Pacificorp ST: IN: UTI SU: RTG

SH -- NY058 -- 8480 02/19/93 15:11 EST
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Publication:PR Newswire
Date:Feb 19, 1993
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