TEXT-S&P affirms FirstEnergy BBB corporate
credit rtg
Reuters, 04.14.03, 3:30 PM ET
(The following statement was
released by the ratings agency) NEW YORK (Standard & Poor's)
April 14, 2003--Standard & Poor's Ratings Services said today
that it affirmed its 'BBB' corporate credit rating on FirstEnergy
Corp. and its subsidiaries. The outlook remains
negative.
Akron, Ohio-based
FirstEnergy had $14.5 billion of debt (including off-balance-sheet
debt) as of Dec. 31, 2002.
The
ratings on FirstEnergy reflect above average regulatory support in
Ohio and adequate regulatory support in Pennsylvania and New Jersey,
power generation that is contracted to its transmission and
distribution subsidiaries through 2005, and hedging of its short
power position arising from the Pennsylvania provider-of-last-resort
obligation.
"We maintain a
negative outlook on the company because of FirstEnergy's aggressive
financial profile and the extended outage at the Davis Besse nuclear
facility. Although the company generates free cash flows, in the
absence of any significant asset sales, FirstEnergy relies on its
free cash flows to implement a deleveraging plan, which has annual
targets," said Standard & Poor's credit analyst Aneesh
Prabhu.
"We expect FirstEnergy
to achieve a debt to capital ratio of about 60% in 2003 and improve
to about 50% by 2005. If the outage at Davis Besse is further
extended and causes further delays to FirstEnergy's deleveraging
plans, ratings may be lowered," added Mr. Prabhu. "On the other
hand, the outlook can be revised to stable if Davis Besse restarts
and FirstEnergy is able to execute its deleveraging plan
successfully."
Standard &
Poor's also said that key issues being monitored for FirstEnergy
include the restart of Davis Besse, the New Jersey rate case,
capture of merger synergies, and controlling capital expenditure at
estimated levels. Complete ratings information is available to
subscribers of RatingsDirect, Standard & Poor's Web-based credit
analysis system, at www.ratingsdirect.com. All ratings affected by
this rating action can be found on Standard & Poor's public Web
site at www.standardandpoors.com; under Fixed Income in the left
navigation bar, select Credit Ratings Actions.
Copyright 2003, Reuters News
Service
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