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DUFF & PHELPS: ILLINOIS POWER COMPANY PREFERRED STOCK REMOVED FROM RATING WATCH -- UNFAVORABLE

 CHICAGO, April 12 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has removed Illinois Power Company's preferred stock from Rating Watch -- Unfavorable and reaffirmed the `BB+' (Double-B-Plus) rating.
 Illinois Power received approval from the Illinois Commerce Commission (ICC) to pay declared common and preferred dividends through the second quarter of 1994 in the event that required write-offs leave the company with a negative retained earnings balance. The company's preferred stock was originally placed on Rating Watch -- Unfavorable in August 1992 following an ICC rate order which would require write-offs of approximately $200 million relating to accumulated deferred costs for the Clinton nuclear plant. If the ICC order, which has been appealed to Illinois Appellate Court, were to be upheld, a negative balance in the retained earnings account would result. Absent the ICC approval, the company's ability to pay preferred dividends, which are paid out of retained earnings, would have been impaired. A decision from the Appellate Court before the third quarter of 1993 is unlikely.
 The ICC's dividend payment approval reduces risk near term. In the interim, the company should be able to accumulate retained earnings sufficient to offset possible write-offs and enable long-term dividend stability. This assumes a continuation of strong cash flow, tight cost controls, and manageable construction expenditures to restore financial fundamentals as expected.
 Illinois Power Company is the second largest electric utility in the state of Illinois, with a service territory extending 15,000 square miles in the northern, central and southern portions of the state.
 -0- 4/12/93
 /CONTACT: William A. Abrams, CFA of Duff & Phelps Credit Rating Co., 312-368-3112/
 (IPC)


CO: Illinois Power Company ST: Illinois IN: UTI SU: RTG

WB -- NY060 -- 4817 04/12/93 13:56 EDT
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Publication:PR Newswire
Date:Apr 12, 1993
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