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Allegheny Energy's rating is lowered by S&P

January 17, 2003|by JULIE E. GREENE

julieg@herald-mail.com

Standard & Poor's lowered Allegheny Energy's corporate rating Thursday from BB to BB- and kept the utility on a CreditWatch with negative implications.

S&P credit analyst Tobias Hsieh said one of Allegheny's key financial indicators was weaker than anticipated. The indicator analyzes how the company can pay interest based on its operating cash flow.

The CreditWatch remains negative because Allegheny has not completed a financial deal to aid the company's liquidity crisis, the rating agency reported. A negative CreditWatch means the rating could be lowered.

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S&P also lowered the rating from BB to BB- for Allegheny's energy trading subsidiary, Allegheny Energy Supply.

A BB rating by S&P means the company is less vulnerable in the near term than other lower-rated companies. The company faces major uncertainties and exposure to adverse business, financial or economic conditions that could lead to the company being unable to meet its financial commitments, according to S&P.

On Tuesday, Allegheny Energy officials announced two subsidiaries had received more extensions on waivers from bank lenders. The waivers were extended to Jan. 31.

Allegheny Energy officials announced on Oct. 8 that Allegheny Energy Supply and Allegheny Generating Co. were in technical default of credit agreements after the parent company declined to post additional collateral.

Allegheny officials are working on a debt restructuring deal to avoid filing for bankruptcy protection.

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