MOODY'S CONFIRMS CONECTIV FAMILY RATINGS
Moody's Investors Service has confirmed the debt ratings of Conectiv and its two operating utilities, Atlantic City Electric Company and Delmarva Power & Light Company to reflect the credit implications of the company's onging implementation of the strategic decision to divest its baseload generation, both nuclear and coal fired. The ratings outlook for the affected credits remains stable. Since October, the company has negotiated the sale of 708 MW of nuclear capacity and 1, 875 MW of coal fired generation. When concluded the sales are expected to result in approximately $850 million in proceeds. These proceeds are expected to be applied to finance the buyback of 5 million common shares, to support the reduction of debt capital, and to be used for new investments.
The ratings confirmed are:
Conectiv's senior unsecured debt, rated Baa1; senior unsecured MTN program, rated Baa1; senior unsecured bank credit facility, rated Baa1; senior unsecured shelf registration, rated (P)Baa1; subordinated shelf registration, rated (P)Baa2; and Prime-2 rating for short-term borrowings.
Atlantic City Electric Company's senior secured debt, rated A3; senior secured MTN program, rated A3; senior secured shelf registration, rated (P)A3; Baa1 issuer rating, senior unsecured debt, rated Baa1; senior unsecured MTN program, rated Baa1; junior subordinated debt, rated Baa2; preferred stock, rated "baa1"; and Prime-2 rating for short-term obligations.
Delmarva Power & Light Company's senior secured debt, rated A2; senior secured MTN program, rated A2; senior secured shelf registration, rated (P)A2; A3 issuer rating; senior unsecured debt, rated A3; senior unsecured MTN program, rated A3; senior unsecured shelf registration, rated (P)A3; preferred stock, rated "a3", preferred stock shelf registration, rated (P)"a3"; and Prime-1 rating for short-term obligations.
When completed, the proposed asset sales will allow the Conectiv system to mitigate the financial and operating risks associated with baseload generation, whether nuclear or coal based, in an increasingly competitive market. These sales do not completely eliminate the company's generation risk as the company will retain at least 2, 000 MW of mid-merit capacity with the expectation that additional facilities will be built. Additionally, the effect of the stock buyback and the asset write-offs associated with the company's nuclear investment is expected to introduce a greater degree of leverage than has been evidenced recently. Improvement in the ratings outlook will be dependent upon the company's ability to successfully close the sale transactions and to sustain financial performance measures in an evolving environment.
Conectiv, is a public utility holding company; headquartered in Wilmington, Delaware; whose principal subsidiaries provide electric and natural gas service in New Jersey, Delaware, Maryland, Virginia, and Pennsylvania.
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