S&P drops Dynegy's credit rating to BBB-Standard
Standr & Poor's Tuesday lowered
its long-term corporate credit ratings of Houston, Texas-based Dynegy and its
sub-sidiaries to BBB-. The ratings remain on CreditWatch with negative
implications. The ratings action reflects S&P analysis
of the company's new capital
plan announced Monday and the related impact to credit. S&P, a McGraw-Hill
Companies
unit, said the plan could
bolster Dynegy's liquidity position, but implementation will likely weaken the
company's capital structure and business profile. Dynegy's plan entails enhancing
liquidity by $2-bil and includes removing $301-mil in ratings triggers, a
partial sale or joint venture of Northern Natural Gas Pipeline and the UK gas-storage
processing facilities that were acquired at the end of 2001. The plan also includes
the initial public offering of the recently formed Dynegy Energy Partners, a
$100-mil reduction in capital expenditures, $50-mil in expense cuts, a 50%
reduction in the common stock dividend, $250-mil interim financing, and
$400-mil in senior secured debt at Illinois Power.