DUFF & PHELPS: CLEVELAND ELECTRIC ILLUMINATING COMPANY $100 MILLION FIRST MORTGAGE BONDS RATED 'BBB-'
CHICAGO, June 17 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a rating of BBB-' (Triple-B-Minus) to Cleveland Electric Illuminating Company's issuance of $100 million of 7 3/8 percent first mortgage bonds, due June 1, 2003. Proceeds will be used for construction, repayment of short and long-term debt, and other general purposes. The rate stabilization plan implemented in October 1992 established rate increase limitations through 1998. As a result, future improvement in credit fundamentals will be a function of sales growth and cost control efforts. Parent Centerior Energy Corp. recently announced actions to cut annual costs at subsidiaries Cleveland Electric and Toledo Edison by $64 million starting in 1994. The plan includes workforce reductions and mothballing two older plants. Sales growth will be a challenge due to continued sluggishness in the regional economy. The threat of municipalization continues to pressure the company to control costs to maintain sales. A recent agreement with the City of Brook Park, the previous leader in support of municipally-owned electric systems, is encouraging for Cleveland Electric. The agreement is expected to result in retention of all 8,500 customers in that area and runs through the year 2000. Expenditures for construction and acid rain provisions are expected to be manageable, but will require additional rate relief. Leverage is relatively high when adjusted for sale-leaseback debt. Cleveland Electric, a subsidiary of Centerior Energy Corporation (NYSE: CX), provides electric service to 746,000 customers in northeastern Ohio. Although Cleveland is the principal city in the service area, the company derives approximately three-fourths of its revenues from customers outside the city. -0- 6/17/93 /CONTACT: John C. Dell of Duff & Phelps Credit Rating Co., 312-368-3161/ (CX)
CO: Cleveland Electric Illuminating Company ST: Ohio IN: UTI SU: RTG
TM -- NY092 -- 3278 06/17/93 16:45 EDT
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|Date:||Jun 17, 1993|
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