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KANSAS G&E $100 MILLION FIRST MORTGAGE BONDS RATED 'A-' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Jan. 12 /PRNewswire/ -- Kansas Gas & Electric Co.'s (KGE) $100 million 6.2% first mortgage bonds due Jan. 15, 2006 are rated "A-" by Fitch. The issue is a takedown from a previously rated shelf registration. KGE's rating reflects consummation of a merger with Western Resources, Inc. (formerly Kansas Power & Light Co.), whereby KGE became a wholly owned subsidiary of Western Resources. Western Resources' senior debt is also rated "A-." The credit trend is improving.
 During the first 18 months of combined operations, KGE's capital structure and interest protection have improved substantially. The improvements reflect strong cash flow and merger-related cost savings, which exceeded original projections and are now estimated at $180 million over the first five years. Ongoing operational synergies for the combined utility should permit more gradual but steady improvement of KGE's consolidated balance sheet and coverage ratios. Debt leverage was 54% and pretax interest coverage was 2.7 times at Sept. 30, compared to debt leverage of about 60% and pretax coverage of about 1.9x when the merger was consummated on March 31, 1992. Internal generation stood at about 110% at Sept. 30 and is expected to remain above 100% over the next five years.
 Integration of both companies' operations has been largely completed, including consolidation of meter reading, dispatching, billing, service centers, personnel, and corporate headquarters' functions. The merged company now has about 5,000 employees, down from 6,000 three years ago. The stronger transmission network of the combined system also should provide off-system sales opportunities.
 On July 9, 1993, Western announced a definitive agreement to sell its Missouri gas properties to Southern Union Corp. for about $360 million. In Missouri, Western serves about 460,000 gas customers, who contribute about 19% to Western's total operating revenues but only 5% to operating income. The Missouri gas properties represent only 6% of the company's gross plant investment. The sale recently received significant regulatory approvals from the Missouri PSC and the Federal Energy Regulatory Commission; one minor regulatory approval still needs to be met. The transaction is expected to close by the end of this month. Fitch views the transaction as positive for Western as it allows the company to exit the below-average Missouri regulatory environment, as well as reduce debt and capital expenditures.
 -0- 1/12/94
 /CONTACT: Ed King of Fitch, 212-908-0574/


CO: Kansas Gas & Electric Co. ST: Kansas IN: UTI SU: RTG

PS -- NY074 -- 1509 01/12/94 15:57 EST
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Publication:PR Newswire
Date:Jan 12, 1994
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