MOODY'S CONFIRMS A3 SR. SECURED OF COLONIAL GAS AND ASSIGNS POSITIVE OUTLOOK; CONFIRMS BOSTON GAS A2 SR. UNSECURED AND MIDLAND ENTERPRISES A3 SECURED
Moody's confirmed the A3 rating of Colonial Gas Company's secured MTN's and said that the rating outlook is positive, reflecting our expectation that the announced merger into Eastern Enterprises will ultimately allow efficiencies of scale for Colonial and Eastern's two other gas distribution subsidiaries, resulting in improved bondholder protection. In related actions, Moody's also confirmed, with stable outlooks, the A2 sr. unsecured ratings of Boston Gas Company and the A3 sr. secured ratings of Midland Enterprises, Inc.(an inland barge transportation subsidiary of Eastern).
Ratings confirmed are:
Colonial Gas Company - A3 senior secured medium term notes.
Boston Gas Company - A2 senior unsecured medium term notes; A2 senior unsecured revolving credit agreement; "a3" sinking fund preferred stock; Prime-1 rating for commercial paper.
Midland Enterprises, Inc. - A3 First Preferred Ship Mortgage Bonds.
Colonial is a small but rapidly growing gas distribution company which operates in areas either near or adjacent to service areas of Boston Gas and Essex Gas(another Eastern gas distribution subsidiary). Colonial's customer base is growing at about 3% per year, well above the national average for gas distribution companies. Moody's expects that the merger of Colonial into Eastern Enterprises, if successful, will ultimately allow Colonial and its sister companies, Boston Gas and Essex Gas, to achieve economies which will benefit debtholders and customers. As a stand-alone subsidiary, Moody's expects that Colonial will continue to generate solid earnings and cash flows. Colonial's unregulated subsidiary, Transgas Inc., a US truck transporter of liquefied natural gas, will become a separate subsidiary of Eastern, leaving Colonial as a totally regulated company.
Moody's confirmation of the ratings of Boston Gas and Midland Enterprises reflects our expectation that the merger will not deteriorate Eastern Enterprises' financial position, and that Eastern will not be required to look to those subsidiaries for cash flows to support the acquisition.
Colonial Gas Company, a natural gas distribution company, is headquartered in Lowell, Massachusetts. Eastern Enterprises is headquartered in Weston, MA; Boston Gas Company is headquartered in Boston, MA; Essex Gas is headquartered in Amesbury, MA; and Midland Enterprises Inc. is headquartered in Cinncinnati, Ohio.
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