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| FE |
31.01 |
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| 8/14/03 4:00:00 PM ET |
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TEXT-Moody's may cut FirstEnergy Corp snr unsec
rating
Reuters, 08.14.03, 1:51 PM ET
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| (The following statement was
released by the rating agency)
MOODY'S PLACES FIRSTENERGY CORP. AND ITS
SUBSIDIARIES UNDER REVIEW FOR POSSIBLE DOWNGRADE
Approximately $14 Billion of Debt
Affected
NEW YORK, Aug 14 -
Moody's Investors Service has placed the debt ratings of FirstEnergy
Corp. (nyse: FE
- news
- people)
(FE: senior unsecured Baa2) and all of its subsidiaries under review
for possible downgrade. The review is prompted by: 1) Weaker than
expected operating performance and cash flow generation; 2) Less
progress than expected in reducing debt; 3) Continuing high leverage
relative to its peer group; 4) Negative impact on cash flow and
earnings from the continuing nuclear plant outage at Davis-Besse.
The company's results have been weaker than expected due partly to
higher operating and maintenance expenses and costs to replace power
during the extended outage at the Davis Bessie (D-B) nuclear
facility. Mild weather in FE's service territory has also affected
financial results. Poor market conditions for divestiture of
wholesale generating assets has contributed to the slower than
expected pace of delevering. Additionally, the longer than expected
scheduled outages at the Beaver Valley and the Perry nuclear units
dampened results for the second quarter due to higher costs for
purchased power. The review of FE's subsidiaries reflects the
potential for greater claims on cash by FE to meet its own financing
needs. There are also challenges at the subsidiary level, including
D-B and regulatory issues. Moody's review will consider the
potential for improved performance when current operating issues are
resolved, the prospects for continued debt reduction, and the likely
impact of regulatory developments in Ohio and Pennsylvania. There is
potential for the ratings differential between the FE operating
utilities to narrow, reflecting the degree to which FE operates the
regulated businesses as a single system, more closely linking the
resources of the various member companies, including the active use
of a money pool. Anticipating that D-B will be returned to service
in the near future and that the company will continue to
significantly reduce debt and improve its financial profile, Moody's
does not expect that the outcome of the review will result in FE's
senior unsecured debt rating falling below investment-grade. Ratings
under review include the following: FirstEnergy Corp -- Senior
Unsecured Baa2, Issuer Rating Baa2 Cleveland Electric Illuminating
Company -- Senior Secured Baa2, Issuer Rating Baa3, Preferred Stock
Ba2 Jersey Central Power & Light Company -- Senior Secured A2,
Issuer Rating A3, Preferred Stock Baa2 Metropolitan Edison Company
-- Senior Secured A2, Senior Secured Shelf (P)A2, Issuer Rating A3,
Backed Preferred Shelf (P) Baa1, Preferred Shelf (P)Baa2
Pennsylvania Electric Company -- Senior Secured A2, Senior Unsecured
A2, Issuer Rating A3 Ohio Edison Company -- Senior Secured Baa1,
Senior Secured Shelf (P)Baa1, Issuer Rating Baa2, Preferred Stock
Ba1 Pennsylvania Power Company -- Senior Secured Baa1, Senior
Secured Shelf (P)Baa1, Issuer Rating Baa2, Preferred Stock Ba1 PNPP
II Funding Corp. -- Backed Senior Secured Baa2 BVPS II Funding Corp.
-- Backed Senior Secured Baa2 Toledo Edison Company -- Senior
Secured Baa2, Issuer Rating Baa3, Preferred Stock Ba2 CTC Beaver
Valley Funding Corp. -- Backed Senior Secured Baa3 CTC Mansfield
Funding Corp. -- Backed Senior Secured Baa3 Beaver Valley II Funding
Corp. -- Backed Senior Secured Baa3 FirstEnergy Corp. is a utility
holding company headquartered in Akron, Ohio. Its seven electric
utility operating companies comprise the nation's 4th largest
investor-owned electric system, serving over 4 million customers in
Ohio, Pennsylvania and New Jersey.
Copyright 2003, Reuters News
Service
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