Powerco S&P rating cut to BBB-plus

By NZPA

Wednesday 13th November 2002

Credit rating agency Standard & Poor's has lowered its rating on New Plymouth based energy distributor Powerco to BBB+, as predicted.

Powerco said last month the company's long term rating would drop from A-minus following its purchase of UnitedNetworks' electricity networks and gas assets.

S&P's said in a statement today it had removed Powerco from CreditWatch, where it was placed in September, and also lowered its long term rating on the company's capital bonds to BBB-minus from BBB, with a stable outlook.

"The $810 million acquisition improves the geographic and business diversity of Powerco's already strong business profile, as it becomes a major gas network owner," S&P's corporate and infrastructure ratings associate director Colin Atkin said.

"Although the acquisition raises moderate financial and operational risks, Powerco has become New Zealand's second-largest network operator, raising benefits of scale as well as diversity."

Powerco has also become the owner of the largest gas distribution network.

Powerco has strengthened its position in recent years by expanding its service territory, particularly as a result of the merger with neighbouring electricity network operator CentralPower in 2000.

In the latest acquisition, Powerco is buying UnitedNetworks' Eastern Region electricity network with Hawke's Bay Networks, and UnitedNetworks' gas networks in Hawke's Bay, Manawatu and Wellington.

As a result Powerco's total asset base will increase by up to $1.7 billion.

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