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ILLINOIS POWER $1.6 BILLION 'BBB-' DEBT ON FITCHALERT POSITIVE -- FITCH FINANCIAL WIRE --

 ILLINOIS POWER $1.6 BILLION 'BBB-' DEBT ON FITCHALERT POSITIVE
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Jan. 10 /PRNewswire/ -- Illinois Power Co's. (IPC) $1.64 billion "BBB-" first mortgage bonds, $100 million "BB+" notes, and $413 million "BB" preferred stock are placed on FitchAlert positive in anticipation of reasonably constructive rate treatment in a pending rate case, Fitch announced today.
 The Illinois Commerce Commission (ICC) hearing examiner yesterday proposed a $127 million annual rate increase for IPC. The recommendation is premised on a 12.7 percent return on equity, with rates being phased in over three years. If accepted by the commission, the recommendation would not require IPC to take a write-off other than a possible $23 million (net of tax) related to deferred nuclear fuel expense. A writeoff of this size would not impair the company's ability to pay dividends.
 The recommended rate increase, together with an earlier staff recommendation of $136.4 million, is expected to result in a reasonably constructive final rate order. Also, uncertainty about the pending case has been reduced due to the acceptance by major intervenors, the hearing examiner, and the ICC staff, that the Clinton Nuclear Station is 100 percent used and useful.
 An increase within the range proposed by the hearing examiner and the staff would result in a significant improvement in IPC's credit quality. IPC's credit quality measures would rise over the next three to five years to those comparable to companies rated in the "BBB+/A" range. However, ratings potential is somewhat limited by IPC's significant reliance on the Clinton Nuclear Station, representing 73.5 percent of 1990 assets and 18.4 percent of generation. A final order by the ICC is expected by February 14.
 If the hearing examiner's proposed order is accepted by the commission, IPC should continue to have internal cash flow as a percentage of construction expenditures in excess of 100 percent for the next five years. Pre-tax interest coverage is estimated to improve to over 3.0x from the 1.73x as of September 1991, and debt leverage of 54.2 percent is expected to fall below 50 percent over this time frame. IPC provides electric and gas service in parts of northern, central, and southern Illinois. Headquarters are located in Decatur, Ill.
 -0- 1/10/92
 /CONTACT: Craig M. Lucas of Fitch, 212-908-0576/
 (IPC) CO: Illinois Power Co. ST: Illinois IN: UTI SU: RTG


TS -- NY030 -- 8590 01/10/92 11:22 EST
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Publication:PR Newswire
Date:Jan 10, 1992
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