PrefBlog

Canadian Utilities (CU) and Canadian Utilities Inc. (CIU) have announced:

that their Boards of Directors have approved the transfer of Alberta Power (2000) Ltd. from CU Inc. to ATCO Power Ltd., a wholly-owned subsidiary of Canadian Utilities Limited.

Alberta Power (2000) Ltd. owns the 670 MW Battle River Generating Station and has a 50 per cent stake in the 760 MW Sheerness Generating Station. The transfer allows Canadian Utilities Limited to align its ownership of its power generation assets under ATCO Power Ltd. and its rate regulated utility assets under CU Inc. ATCO Electric, ATCO Gas and ATCO Pipelines will continue to be owned and financed by CU Inc.
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CU Inc., a wholly owned subsidiary of Canadian Utilities Limited, is an Alberta-based corporation with assets of approximately $6.7 billion and more than 4,100 employees. As a result of this transfer, CU Inc. will be comprised of rate regulated utility operations in pipelines, natural gas and electricity transmission and distribution.

DBRS has announced that it:

today confirmed the ratings of CU Inc. (CUI) as follows: Unsecured Debentures & Medium-Term Notes at A (high), Commercial Paper at R-1 (low) and Cumulative Preferred Shares at Pfd-2 (high), all with Stable trends.
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DBRS expects the transfer to result in a modest reduction in CUI’s level of business risk as a result of exiting the power generation business.
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DBRS also views the transfer as resulting in a modest increase in CUI’s level of financial risk. With the loss of APL2000’s EBITDA contribution, DBRS would expect the transfer to result in a modest weakening of CUI’s adjusted credit coverage metrics (i.e., on a pro forma basis for 2009, EBITDA-to-interest would be approximately 0.3 times lower).

Overall, the increase in financial risk is offset by the reduction in business risk, and as such, there is no impact on CUI’s ratings.

CIU has two issues of preferreds outstanding: CIU.PR.A (a PerpetualDiscount) and CIU.PR.B (a FixedReset). Both are tracked by HIMIPref™.

This entry was posted on Wednesday, September 8th, 2010 at 10:00 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.