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Allegheny unit OK'd to borrow up to $2 billion

October 22, 2002|by JULIE E. GREENE

julieg@herald-mail.com

An Allegheny Energy Inc. spokeswoman said Monday the utility got authorization late last week from the Securities and Exchange Commission to borrow up to $2 billion on a secured basis.

The authorization allows Allegheny to continue working with banks to obtain financing needed to sustain agreements with some energy trading partners, Allegheny Energy spokeswoman Cynthia Shoop said.

Once Moody's Investor Service downgraded Allegheny's debt rating to "junk" status on Oct. 1, Allegheny became considered a greater risk to some of its energy trading partners, Shoop said.

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Under agreements with some of those partners, the downgrade kicked in higher collateral standards so more financing is needed, Shoop said.

While the SEC's move allows Allegheny to pursue borrowing up to $2 billion, the company doesn't need that much at this time, Shoop said.

Allegheny is trying to secure collateral for $1.3 billion of existing unsecured financing, Shoop said.

SEC authorization was required because Allegheny is a public utility holding company, Shoop said.

Allegheny officials announced this summer the utility would be scaling back its energy trading business, which it is doing, Shoop said. Instead of trading energy nationally, Allegheny Energy Supply Co. is focusing on trading energy regionally around the power plants the company owns, she said.

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