LONDON, May 12 /PRNewswire/ -- Duff & Phelps Credit Rating Co. ('DCR') has
placed British Energy plc ('BE') Rating Watch -- Down, following the
announcement of their preliminary FY 2000 results. The company announced a
19 percent reduction in profit before tax largely due to unplanned outages at
two of its power plants. Moreover, there was a significant drawdown in cash
and an increase in debt resulting from recent acquisitions. The company noted
that given the considerable uncertainty in the electricity market ahead of the
new electricity trading arrangements ('NETA') due to be introduced in October,
it is difficult to make firm predictions about the level of prices for the
current financial year. With a significant reduction from last year's level
likely, BE expects a deterioration in its financial performance in the current
year.
When initially assigned, BE's long-term 'A' (Single-A) rating incorporated
the industry-expected reduction in electricity prices, and factored in a
degree of the increased leverage given BE's stated acquisition strategy.
However, weaker profitability could see financial strength deteriorate beyond
previous forecasts. DCR will be meeting with BE management in the near
future. Resolution of the Rating Watch will revolve around the latest
development of wholesale electricity prices, currently falling faster than
anticipated, and the company's response to the new environment. We expect to
conclude our review and adjust our rating, if necessary, thereafter.
DCR's current ratings are:
Long-Term Rating Short-Term Rating
British Energy plc 'A' (Single-A) 'D-1' (D-One)
DCR became a subsidiary of Fitch IBCA on April 12, 2000, and it is
expected that the combined companies will merge by late May 2000. As
previously announced, the combined analytical staffs of Fitch IBCA and DCR are
working together to harmonise the ratings and rating approach for the new
company. As part of this process, analysts from Fitch IBCA participated with
analysts from DCR as part of the joint committee that determined this ratings
action. Consequently, it is not expected that any further rating action will
be taken when a single set of ratings is issued at the merger of DCR and Fitch
IBCA.
For additional research on British Energy plc, visit DCR's web site at
http://www.dcrco.com (Quick Search: British Energy). DCR's research is also
available on Bloomberg at DCR, First Call's BondCall Direct/Research
Direct at http://www.firstcall.com and Multex at http://www.multex.com, as
well as through other third-party providers.
SOURCE Duff & Phelps Credit Rating Co.
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Related links:
http://www.dcrco.com
CONTACT:
Aileen Kelly, +44-0-20-7417-7115,
kelly@dcrco.com, or Gracie Ebadan-Bola, +44-0-20-7417-7945,
ebadan-bola@dcrco.com, both of Duff & Phelps Credit Rating Co.;
or Richard Hunter of Fitch IBCA, +44-0-20-7417-4362,
RHunter@fitchibca.com
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