DUFF & PHELPS DOWNGRADES EQUITABLE RESOURCES INC.'s SENIOR DEBT TO 'A+'
CHICAGO, June 16 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has lowered the ratings of Equitable Resources Inc.'s debentures and medium- term notes to `A+' (Single-A-Plus) from `AA-' (Double-A-Minus) and convertible subordinated debentures to `A' (Single-A) from `A+' (Single-A-Plus). The action affects approximately $350 million of securities. Duff & Phelps recognizes that while Equitable Resources has maintained solid operations and high financial integrity, the company's business risks are increasing. The new ratings appropriately balance the expectation for continued strong credit protection measures with the perceived increase in Equitable Resources' business risk and apparently more aggressive acquisition strategy. While the company's participation in all facets of the energy business enhance its position in the changing gas marketplace, competitive pressures will be high and could impact the earnings potential of the Energy Resource Segment. The current and expanding businesses are sensitive to oil and gas commodity prices, gas marketing margins and volumes, and gas transportation competitiveness and margins. Acquisitions are expected to assume a greater role in new business growth than has been the case historically. Importantly, Equitable Resources plans to issue additional equity to maintain a 60 percent equity component. Equitable Resources is in the process of acquiring Louisiana Intrastate Gas Corporation; this move is expected to provide synergies with the company's energy and pipeline businesses. The rating assumes that management will retain its commitment to a strong balance sheet. Equitable Resources' Utility Service Segment, which includes a local distribution company and two pipelines, has provided a stable earnings base. Exploration and production properties have been selective and continue to focus primarily on the rich Appalachian Basin. The company intends to maintain a balance between the Utility Service and Energy Resource segments. -0- 6/16/93 /CONTACT: David W. Eisinger, CFA of Duff & Phelps Credit Rating Co., 312-368-3145/ (EQT)
CO: Equitable Resources Inc. ST: Pennsylvania IN: OIL SU: RTG
SH -- NY030 -- 2560 06/16/93 11:03 EDT
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|Date:||Jun 16, 1993|
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