Gas Week

EWN Publishing

SP AusNet’s subsidiaries remain on CreditWatch with negative implications

Posted by gasweek on 11 October, 2007

Standard & Poor’s Ratings Services said that its ratings on SP AusNet Group (SP AusNet; A/Watch Neg/–) and SP AusNet’s subsidiaries remain on CreditWatch with negative implications, where they were initially placed on March 30, 2007. This update comes after SP AusNet’s board agreed to acquire assets formerly owned by Alinta Ltd. (BBB/Watch Neg/–) from parent Singapore Power Ltd. (AA/Watch Neg/–) for more than A$8.1 billion.

Financing structure questioned: The proposed acquisition will be funded by a mix of debt and equity, and is subject to security-holder approval, expected by the end of 2007. “Despite the strong business profile and regulated nature of the assets being acquired, the financing structure and approach will be critical in determining the impact of this transaction on SP AusNet’s credit quality,” said Standard & Poor’s credit analyst Parvathy Iyer.

Singapore Power’s future strategy the key: “As Singapore Power has stated that it will retain a 51 per cent holding in SP AusNet, Singapore Power’s future strategy and financial policies for its Australian assets, including its commitment to equity investors, will also have a bearing on the SP AusNet ratings. Furthermore, any potential dilution in the credit quality of Singapore Power itself as a consequence of this transaction could affect the rating uplift factored into the SP AusNet rating.”

Reference: Standard & Poor’s Press Release; 19 September 2007

Erisk Net, 6/10/2007

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