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WESTERN RESOURCES, KANSAS GAS & ELECTRIC FIRST MORTGAGE SHELVES RATED 'A-' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Oct. 20 /PRNewswire/ -- Western Resources, Inc.'s (WR) $200 million shelf registration of first mortgage bonds and Kansas Gas & Electric Co.'s (KGE) $150 million first mortgage bond shelf are rated `A-' by Fitch. Additionally, both WR's and KGE's outstanding `A-' first mortgage bonds and WR's outstanding `A-' collateralized pollution control revenue bonds are affirmed. Also affirmed are WR's outstanding `BBB+' preferred stock and preference stock, KGE's `BBB+' secured facility bonds, and WR's `F-2' commercial paper. The credit trend is changed from stable to improving.
 Strong cash flow and operational synergies for the combined utility should permit continued gradual improvement of its highly leveraged consolidated balance sheet and relatively weak coverage ratios for its rating category. Debt leverage was 57 percent (pro-forma for recent common equity sale) and pretax interest coverage was 2.5 times (x) at June 30, compared to debt leverage of about 60 percent and pretax coverage of about 1.9x when the merger was consummated on March 31, 1992. Internal generation stood at about 110 percent at June 30, and is expected to remain above 100 percent over the next five years. During the first 18 months of combined operations, merger-related cost savings, estimated at $180 million over the first five years, have exceeded projections.
 Integration of both companies' operations is largely complete, 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 the Missouri gas properties to Southern Union Corp. for about $360 million. In Missouri, Western serves about 460,000 gas customers, who contribute about 19 percent to Western's total operating revenues but only 5 percent to operating income. The Missouri gas properties represent only 6 percent of the company's gross plant investment. The transaction remains subject to applicable regulatory approvals and is likely to close early in 1994. 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- 10/20/93
 /CONTACT: Ed King of Fitch, 212-908-0574/
 (WR)


CO: Western Resources, Inc.; Kansas Gas & Electric Co. ST: Kansas, Missouri IN: UTI SU: RTG

CK -- NY100 -- 4779 10/20/93 16:45 EDT
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Publication:PR Newswire
Date:Oct 20, 1993
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