CHICAGO, May 25 /PRNewswire/ -- Duff & Phelps Credit Rating Co. (DCR) has
removed the credit ratings of GPU, Inc. (GPU) from Rating Watch-Up following
the announcement that GPU has declined all bids associated with the sale
process of its two Australian subsidiaries, GPU PowerNet and GPU GasNet. DCR
currently rates GPU as follows: senior unsecured debt 'BBB+' (Triple-B-Plus)
and commercial paper 'D-2' (D-Two). The Rating Outlook is now Stable.
The removal of the watch status reflects the diminished prospects for the
sale of GPU's Australian assets, which results in a perpetuating (relatively
high) consolidated leverage position. GPU's ratings were on Rating Watch-Up
pending the outcome of the sale of its Australian assets. GPU intended to use
the majority of Australian asset proceeds to repay debt, and return
consolidated debt levels below 60 percent. As of December 1999, GPU's total
debt/capitalization ratio was relatively high at approximately 67 percent.
DCR will be meeting with management of GPU shortly to review the updated
financing plans.
DCR expects the revised debt reduction plan to adhere to a credit profile
commensurate with its current rating category ('BBB+'(Triple-B-Plus)).
GPU's ratings incorporate the strong operating performance and outlook of
its key operating subsidiaries: Pennsylvania Electric (senior secured rating
'A' (Single-A)), Metropolitan Edison ('A' (Single-A)) and Jersey Central Power
& Light ('A' (Single-A)), which comprise the majority of GPU's assets and
operating income. GPU's exit from electric generation (and successful auction
process) and the constructive outcome of restructuring settlements in
Pennsylvania and New Jersey have led to improved credit fundamentals at each
domestic utility subsidiary. Positively, this recent setback related to the
Australian asset sale should not materially impact the credit quality of the
domestic operating utilities.
Meanwhile, DCR is in process of reviewing the impact of this unsuccessful
auction process on the credit ratings of Austran Holdings and GPU PowerNet Pty
Limited (rated 'A' (Single-A) on a senior unsecured basis). DCR expects to
make a rating announcement shortly. The inherent refinancing risk related to
the acquisition debt, the highly levered capital structure and upcoming tariff
reset remain key credit issues going forward. GPU PowerNet is the monopoly
provider of electric transmission service in Victoria, Australia. The
transmission grid covers about 90,000 square miles and serves a population of
4.5 million. GPU GasNet's gas transmission network serves a total base of
approximately 1.3 million customers throughout Victoria, comprising
1,105 miles of pipeline.
GPU is a utility holding company that wholly owns three electric utility
operating subsidiaries, JCPL, Met-Ed and Penelec, which serve customers in New
Jersey and Pennsylvania. GPU also owns GPU International, GPU Capital and GPU
Power, which collectively develop, own and operate power and distribution
facilities in the United States and abroad.
SOURCE Duff and Phelp's Credit Rating Co.
 back to top
Related links:
http://www.dcrco.com
CONTACT:
Douglas J. Laskowski, CFA, 312-368-2053,
laskowski@dcrco.com or Lori R. Woodland, 312-606-2309,
woodland@dcrco.com, both of DCR
|
