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Allegheny Energy stock downgraded again

July 03, 2003|by LAURA ERNDE

laurae@herald-mail.com

Moody's Investors Services has further downgraded Allegheny Energy's stock, which was already at junk bond status.

The national rating services reduced the Hagerstown-based utility's stock rating from B1 to B2. Allegheny Energy Supply, its energy trading subsidiary, was downgraded from B1 to B3, according to a U.S. Securities and Exchange filing on Wednesday.

The ratings remain under review for possible further downgrade because the company has still not released its year-end and first-quarter financial statements, according to Moody's.

Moody's said its action reflected:

  • Concerns about whether Allegheny has enough cash, particularly when it comes to meeting debt repayment schedules in 2003 and 2004.

  • Weak operating cash flow compared to its debt.

  • Pressures on cash flow due to an increase in purchased power costs.

  • Risk associated with Allegheny's plan to meet the debt repayment schedule and strengthen the company's balance sheet through asset sales and/or public or private funding.


In October, Moody's downgraded Allegheny's stock to B1, or junk bond status.

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Allegheny spokesman Guy Fletcher said Wednesday the company will continue to work with Moody's and other rating agencies to make sure they understand the steps being taken to improve financial performance.

In recent months, Allegheny has refocused on its fundamental strengths, cut costs, suspended dividends, sold assets and reduced its reliance on wholesale trading, he said.

Despite the downgrade, Allegheny's stock price increased a slight 4.34 percent by the end of the day Wednesday, to $8.65 per share.

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