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?BUSINESS EDITOR:

 DUFF & PHELPS ASSIGNS INDICATIVE RATING
 TO CHILGENER'S U.S. DOLLAR-DENOMINATED DEBT
 CHICAGO, June 4 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a preliminary investment-grade rating of `BBB' (Triple-B) to Chilgener's contemplated U.S. dollar denominated senior debt issue. Chilgener is the second largest electric generating company in Chile.
 "We assigned this Triple-B rating to Chilgener conditioned on the final maturities of the securities not exceeding 10 years," said John C. Dell, Duff & Phelps' group vice president.
 The rating also assumes that the aggregate outstanding principal amount of such securities not exceed US$100 million.
 Approximately two-thirds of the company's capacity is thermal with the remainder being run-of-the-river hydro. Chilgener's principal market area covers the central region of Chile, which includes over 90 percent of the country's population and its capital, Santiago, which is the largest city and commerce center. About 86 percent of volume sales are to electric distribution utilities at regulated rates; these companies resell and deliver power to ultimate users. Most of the remainder of Chilgener's sales are made to large industrial customers at unregulated prices. Over time, the company expects to somewhat reduce its sales to distribution utilities so that it can accommodate a greater volume of both unregulated, higher margin sales to large industrials, and opportunistic sales to the other, competing generating companies.
 Chile has a progressive, soundly administered electric utility regulatory system. Regulated rates (common to all generating companies in a region) for sales to distribution utilities are periodically reset based on projected marginal capacity and energy costs. Sales between competing generating companies are made at prices established by the regulators based on projected short-run energy costs. Approvals to build generating capacity additions are awarded by the regulators based on forecasted reserve, capacity mix and least cost criteria; this approach tends to reduce the risk of additions being deemed excess capacity and potentially turning into stranded assets.
 The distribution utilities determine both how much overall purchased capacity to contract for and the mix of purchases between Chilgener and its hydro based competitors. During periods of favorable hydro conditions, Chilgener reduces its reliance on its owned thermal capacity and instead serves its customers using purchases of very inexpensive hydro energy from its competitors. In dry periods, it serves its customers mainly with its owned capacity and also sells power to its hydro competitors at attractive rates.
 Driven by strong economic growth the demand for power in both the central region and nationally has been growing at an annual rate of approximately 5.5 percent; forecasts suggest that similar growth will persist for the foreseeable future. Chilgener's sales growth has paralleled that of the central region; its forecasts indicate that this rate of growth will continue for the next several years. Since privatization of the company in 1988, its operating margin (revenues less operating costs) and net income have shown consistently strong growth, reflecting both sales increases and effective cost control efforts. Revenues have varied year to year reflective of changing hydro conditions and the attendant effects on retail and wholesale rates. For 1992, revenues decreased 8.7 percent to US$164.6 million, while the operating margin for the same period increased 12.8 percent to US$73.9 million reflecting favorable hydro conditions and a strong 6 percent increase in volume sales. Net income increased 29.4 percent to US$40.9 million.
 In reaction to management's conservative approach, credit fundamentals have shown strong improvement since privatization; at yearend 1992, total debt to capital was a low 27 percent with pretax interest coverage for the year having run at 3.9 times. Total assets increased by US$98 million to US$870.2 million during 1992, largely driven by the US$83 million in capital expenditures and investments in the construction of a new 132.5 MW thermal power plant (to serve unregulated customers in a northern region) and in the equity capital of two new affiliate, joint venture generating companies. One of these companies is building a 150 MW coal-fired power plant in a northern industrial area. The other, in which Chilgener purchased a 30 percent interest in 1992, owns an operating, privatized 1,009 MW thermal power plant in Argentina; Chilgener was appointed operator of this plant and has already strongly increased reliability and significantly reduced operating costs. The 1992 capital expenditure and investment program was financed through the sale of common equity shares.
 The company has an interest in making additional cross-border investments in generating assets, especially where it can advantageously employ its project management and operating expertise. We would expect such investments to be largely funded with equity capital and non- recourse financings.
 Chilgener's strong business and financial fundamentals and its favorable prospects are tempered by the inherent potential for economic and political instability to occur in Chile and other countries where the company has or will have business exposures. The potential for the imposition of monetary exchange controls poses an additional risk.
 -0- 6/4/93
 /CONTACT: John C. Dell of Duff & Phelps Credit Rating Co., 312-368-3161/


CO: Chilgener's ST: IN: SU: RTG

WB -- NY044 -- 5514 06/04/93 14:44 EDT
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Date:Jun 4, 1993
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