DUFF & PHELPS RATES TRANSCONTINENTAL GAS PIPE LINE CORPORATION'S EXTENDIBLE NOTES 'BB+'
CHICAGO, May 3 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a rating of "BB+" (Double-B-Plus) to Transcontinental Gas Pipe Line Corporation's (TGPL) remarketed issue of $125 million of extendible notes due May 15, 2000. TGPL, a subsidiary of Transco Energy, has made progress in strengthening its financial condition. The balance sheet has been improved through a reduction in debt and a capital contribution from Transco Energy. The company continues to proceed with a strategic and financial plan adopted in 1991. Measures taken in 1992 included reductions in capital spending, working capital, and the workforce. Other 1992 accomplishments included the resolution of major longstanding take-or-pay litigation and successful refinancing of long-term debt. TGPL is in a good competitive position, having access to plentiful Gulf Coast gas supplies and serving the growing northeastern markets. TGPL also is favorably positioned to operate in the post FERC Order 636 environment. Transition costs are expected to be minimal; TGPL unbundled its services and established market-based sales services in 1991. The straight fixed variable rate design mandated by Order 636 is expected to provide TGPL with greater stability of earnings and cash flows as substantially all fixed costs will be recovered in a monthly demand charge. TGPL's financial condition should benefit from continued cost controls, more moderate levels of capital spending, reduced interest cost, and improved throughput volumes. Internally generated funds in 1993 are expected to be sufficient to cover capital spending requirements. However, to the extent that TGPL's cash flows from operations are insufficient to cover requirements, it is dependent on Transco Energy to advance the necessary funds. Transco Energy's financial condition, although improving, remains weak. -0- 5/3/93 /CONTACT: David W. Eisinger, CFA of Duff & Phelps Credit Rating Co., 312-368-3145/ (E)
CO: Transcontinental Gas Pipe Line; Transco Energy ST: Texas IN: OIL SU: RTG
TS -- NY047 -- 3720 05/03/93 11:02 EDT
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|Date:||May 3, 1993|
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