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DUFF & PHELPS LOWERS RATINGS OF ARKLA DEBT AND PREFERRED STOCK

 DUFF & PHELPS LOWERS RATINGS OF ARKLA DEBT AND PREFERRED STOCK
 CHICAGO, Feb. 28 /PRNewswire/ -- Duff & Phelps Credit Rating Co. today lowered the rating of Arkla, Inc.'s senior debt to "BBB" (Triple-B) from "A-" (Single-A-Minus). The rating on the company's convertible exchangeable preferred stock was lowered to "BBB-" (Triple-B-Minus) from "BBB+" (Triple-B-Plus). The commercial paper rating is maintained at Duff 2.
 Low natural gas wellhead prices and depressed pipeline margins are pressuring credit protection measures. Given our expectation of continued low prices and intense interpipeline competition, Arkla's earnings and coverages are likely to remain low. Balance sheet leverage is high with fixed obligations accounting for over 65 percent of total capitalization. Although Arkla's management intends to dramatically pare back capital spending and the sale of nonstrategic assets remains a possibility, substantial balance sheet improvement will be slow.
 Providing support for the rating are Arkla's natural gas distribution operations which continue to provide good cash flow and earnings. The strengths of these operations, however, are substantially offset by low wellhead revenues and eroding pipeline margins. Take-or-pay liabilities appear to have been almost entirely resolved on a permanent basis with net take-or-pay recoupments likely to be a positive contributor to cash flow within the next several years.
 -0- 2/28/92
 /CONTACT: David W. Eisinger, CFA of Duff and Phelps, 312-368-3145/
 (ALG) CO: Arkla Inc. ST: Louisiana IN: OIL SU: RTG


TS -- NY032 -- 3700 02/28/92 12:04 EST
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Publication:PR Newswire
Date:Feb 28, 1992
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