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ILLINOIS POWER 'BBB' PREFERRED AFFIRMED BY FITCH, OFF FITCHALERT -- FITCH FINANCIAL WIRE --

 NEW YORK, May 24 /PRNewswire/ -- Illinois Power Co.'s (NYSE: IPC) `BBB' cumulative preferred stock is affirmed and removed from FitchAlert, where it was placed with negative implications on Aug. 6, 1992. This action reflects specific steps taken by IPC and a supportive Illinois Commerce Commission (ICC) order to insure preferred and common stock dividend payments through May 1, 1994. The payments will be permitted even if IPC incurs a writeoff that results in negative retained earnings. Further, if IPC receives an adverse court ruling and incurs a $200 million provision, retained earnings of $40 million should be available to meet the regular Aug. 1, 1994 preferred dividend of approximately $6.0 million.
 IPC's preferred stock was originally placed on FitchAlert after an ICC rehearing ordered IPC to lower rates by $21.5 million and disallowed from rate base certain Clinton nuclear unit costs recorded between April 1987 and March 1989. IPC's retained earnings at the time approximated $66.5 million and the possible $200 million writeoff would have resulted in negative retained earnings that would preclude declaration of preferred dividends. IPC appealed the ICC rehearing order to the Third District Appellate Court of Illinois and no writeoff of Clinton costs will be taken pending the judicial outcome, which is not likely before third-quarter 1993.
 In October 1992, IPC's board of directors declared four quarterly common and preferred stock dividends for the period through Nov. 1, 1993. Subsequently, $44 million in dividends were declared for periods up to May 1, 1994. Retained earnings were $46.8 million as of March 31, 1993.
 On March 24, 1993, the ICC ordered that payment of quarterly dividends through May 1, 1994 "are required by the public interest" and can be paid, even if retained earnings on payment date is negative, as long as IPC meets certain financial tests. The tests include cash flow and income coverage of dividends and a capitalization test. Presently, IPC is conserving cash balances to insure compliance with its most stringent test, which considers operating cash flow after construction and investing activities.
 IPC's ability to build retained earnings is strongly affected by the seasonal air conditioning factor in June through September and by successful operations at the Clinton nuclear unit. Fitch will closely monitor IPC's summer earnings with regard to meeting the projected $40 million in retained earnings by June 1994, inclusive of writedown. Since IPC does not expect another ICC order authorizing dividends beyond May 1, 1994, Fitch will assess IPC's objective of maintaining dividend continuity.
 -0- 5/24/93
 /CONTACT: John Watt of Fitch, 212-908-0523/
 (IPC)


CO: Illinois Power Co. ST: Illinois IN: UTI SU: RTG

TM -- NY085 -- 1843 05/24/93 16:17 EDT
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Date:May 24, 1993
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