Recipient email addresses will not be used in mailing lists or redistributed.
Use semicolon to separate each address, limit to 20 addresses.
characters you see
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
Don't want to see this again?
Accept our to continue to Moodys.com:
PLEASE READ AND SCROLL DOWN!
By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s information that becomes accessible to you [after clicking “I AGREE”] (the “Information”). References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.
Terms of One-Time Website Use
1. Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.
2. You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities. Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision. No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.
3. To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.
4. You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.
5. You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.
28 Feb 2000
MOODY'S REVIEWS DEBT RATINGS OF POWERGEN UK PLC, POWERGEN ENERGY PLC, LOUISVILLE GAS & ELECTRIC, KENTUCKY UTILITIES, LG&E ENERGY CORP. AND LG&E CAPITAL CORP FOR POSSIBLE DOWNGRADE
Moody's Investors Service has placed the A2 long-term and Prime-1 short-term ratings of PowerGen UK plc and the guaranteed A2 rating of PowerGen (East Midlands) Investments on review for possible downgrade as well as Louisville Gas & Electric, Kentucky Utilities, LG&E Energy Corp. and LG&E Capital Corp. The ratings action follows today's announcement that PowerGen intends to acquire the US utility LG&E Energy Corp, for approximately $3.2 billion (GBP 2.0 billion) in a debt-funded transaction. Moody's review will focus on the weakened debt protection that bondholders of PowerGen UK plc now face in light of the higher leverage and reduced interest coverage of the Group on completion. Bondholders of PowerGen (East Midlands) Investments (formerly DR Investments) are guaranteed by PowerGen UK plc. For the LG&E system, the review will focus primarily on the pressure to pay dividends out of the system in order to service acquisition related debt and the amount of such debt. Moody's will also examine to what extent regulatory "ring fencing" may come into play and how much comfort bondholders of the various issuers in the LG&E system may derive from said regulatory protection.
Moody's has also placed the A1/Prime-1 ratings of PowerGen Energy plc ("PowerGen Energy", formerly East Midlands Electricity plc) under review for possible downgrade. Although PowerGen Energy's credit profile is not directly affected by the acquisition of LG&E Energy Corp, Moody's will review the extent to which PowerGen Energy may be expected to pay increased dividends to help service the additional debt. Moody's will also consider whether there are additional protections offered by the regulatory ring-fence mechanism surrounding the regulated distribution business.
At the same time as announcing the acquisition of LG&E Energy, PowerGen has also announced the intention to pursue selected asset disposals both in the UK and overseas. Moody's believes that the sale of international assets will significantly improve PowerGen's business risk and quality of cashflow, and to some extent mitigates the effect of the increased debt.
PowerGen plc, the ultimate 100% shareholder of PowerGen UK plc, intends to raise approximately $4 billion through a syndicated bank loan to fund this proposed acquisition. The debt will be held at a new UK subsidiary - PowerGen US Holdings Limited, a fully owned and guaranteed by PowerGen plc - which will become the parent of the LG&E Energy group of companies. PowerGen plc is currently unrated, but it is likely that Moody's will assign a rating as part of our credit assessment of the group. It is likely that PowerGen plc would be rated one notch lower than the rating for PowerGen UK plc. It is expected that a sizeable portion of the term bank debt will be refinanced through disposals or in the bond markets. The dividends LG&E would have paid its shareholders will now be used to service the acquisition debt, whereby Moody's does not expect to see substantial calls on the cashflow of the existing PowerGen business to service the acquisition. The acquisition of LG&E is subject to US regulatory approvals and shareholder approvals and is expected to complete by early 2001.
For some time PowerGen has made clear the strategic aim of a significant acquisition in the United States. While smaller than PowerGen's existing UK operations, Moody's believes that the operations of LG&E Energy are in many ways complementary to PowerGen's assets. LG&E Energy is based in Kentucky and has approximately 8 GW of mainly coal-fired plant with 840,000 electricity customers and 290,000 gas customers. By way of comparison, PowerGen's UK operations have generating capacity of 10.5 GW with 2.6 million electricity and gas customers. Moody's believes the strengths of LG&E Energy lie in its traditional well-managed low-cost electricity production as well as its distribution system - which is held in high regard for its customer satisfaction oriented focus. The company has recently completed a regulatory review which has diminished regulatory price risk for the next three years, and LG&E Energy has neither nuclear production nor stranded assets.
On 11th February 2000, Moody's downgraded the long-term credit ratings of LG&E Energy by two notches from A1 to A3. This downgrade was as a result of the revenue cuts which LG&E Energy faces following the regulatory review. Moody's other concerns with LG&E Energy have centred on trading activities and a contract dispute with Oglethorpe Power Corp ("Oglethorpe"). The dispute with Oglethorpe related to a 15-year $4.5 billion largely fixed-price agreement between Oglethorpe and LG&E Energy Marketing. Under the agreement, LG&E Energy is obligated to supply around half of Oglethorpe's power needs, and due to higher than expected power prices and load factors, the contract is now unprofitable for LG&E Energy. The contract with Oglethorpe is voidable in 2004. In December 1999, LG&E Energy made an after-tax provision of $175 million to cover potential losses on the Oglethorpe contract. Furthermore, in the summer of 1998, the company made a $225 million provision to exit its electricity-trading book, the majority of which was attributed to the Oglethorpe contract. Moody's understands that PowerGen has carried out extensive due diligence in relation to both LG&E Energy's trading activities and the Oglethorpe contract before making its offer for LG&E Energy.
PowerGen has announced the intention to pursue selected asset disposals both in the UK and overseas. PowerGen believes that the sale proceeds of these assets could meet a substantial part of the cost of acquiring LG&E Energy. Although PowerGen has an attractive portfolio of international power assets, the exposure to developing markets inevitably increased the business risk of the group. Moody's believes that the disposal of assets, together with the acquisition of LG&E Energy, will enhance the business risk and cashflow stability of the PowerGen Group and this mitigates some of the effect of increased debt and reduced interest cover. For this reason, Moody's believes that the effect of any potential downgrade of PowerGen's ratings should be no more than one notch.
The following ratings are subject to review:
PowerGen UK plc
Senior unsecured long-term A2
Commercial Paper and other short-term P-1
PowerGen (East Midlands) Investments
Senior unsecured long-term A2
PowerGen Energy plc
Senior unsecured long-term A1
Commercial Paper P-1
Louisville Gas & Electric
Senior secured First Mortgage Bonds A1
Issuer rating and senior unsecured debt A2
Preferred stock "a2"
Commercial paper and other short term P-1
Senior secured First Mortgage Bonds A1
Issuer rating A2
Preferred stock "a2"
Commercial paper and other short term P-1
LG&E Energy Corp.
Issuer rating A3
LG&E Capital Corp.
Senior unsecured debt A3
Commercial paper and other short term P-2
PowerGen plc is the holding company for an international power generation business headquartered in London, which reported turnover of approximately œ2.3 billion for the nine months ended 31 December 1998. Its principal operating subsidiary is PowerGen UK plc.
LG&E Energy Corp. is the holding company for Louisville Gas & Electric Company, Kentucky Utilities Company and LG&E Capital Corp. LG&E Energy Corp., along with its subsidiaries, is headquartered in Louisville, KY.
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.
Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com
under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.