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S&P lowers Allegheny's credit mark

May 09, 2003|by JULIE E. GREENE

Standard & Poor's Ratings Services lowered the corporate credit rating for Allegheny Energy Inc. on Thursday, but removed the utility's ratings from CreditWatch.

Allegheny's credit rating was lowered from BB- to B over concern for the company's ability to sell enough assets or raise enough cash to meet payments on recent loan agreements, according to S&P Analyst Tobias Hsieh's report.

In late February, Allegheny officials announced a $2.4 billion financing deal that allowed the utility headquartered southwest of Hagerstown to avoid filing for bankruptcy.

Allegheny and its energy trading subsidiary, Allegheny Energy Supply, have until April 18, 2005, to pay back $1.6 billion, the bulk of the loans, according to the loan summaries.

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The company's ratings' outlook remains negative because Allegheny is relying on selling assets to raise cash under challenging industry conditions, according to Hsieh's report.

However, S&P removed the company's ratings from CreditWatch.

That means S&P officials don't anticipate any specific event that would result in a more negative rating, Hsieh said.

Allegheny Energy spokeswoman Debra Beck said company officials will continue to work with S&P and other ratings agencies to help them understand the steps the company is taking to strengthen its finances.

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