New York, August 30, 2002 — Moody’s Investors Service upgraded Green Mountain Power Corp.’s (GMP) senior secured debt rating to Baa1 from Baa2 and its preferred stock rating to Ba1 from Ba2, with a stable outlook.
The rating action reflects ongoing improvement in the company’s financial profile following the 2001 settlement agreement and the reduced risk profile as a result of the Vermont Yankee (VY) nuclear plant sale to Entergy. The Baa1 rating and stable outlook also takes into account GMP’s small size and customer concentration.
Furthermore, Moody’s assumes that management will maintain a conservative capital structure and continue to effectively manage its supply risks. Financial results for 2001 and through the first half of 2002 show solid performance and an improving trend in key credit measures, signifying sustainability of the rate relief and other benefits provided for in the January 2001 rate agreement.
The return of the company’s financial indicators to healthier levels along with a supportive regulatory environment and more efficient supply planning remove a significant amount of uncertainty regarding the stability of cash flows going forward.
The recently completed sale of the VY nuclear plant eliminates nuclear operating and decommissioning risk, which significantly enhances GMP’s business and financial profile. Included in the transaction is a power contract for the company’s pro-rata share of the output through 2012 at prices substantially lower than the forecasted cost of continued ownership and operation of VY.
A market adjuster also provides for a downward price adjustment should market prices for electricity fall by defined amounts beginning no later than November 2005. If market prices rise, the contract price is not adjusted. Proceeds from the sale will provide additional cash and reduce the need for external funding resources.
Moody’s also notes that the company has renegotiated its bank lines. The new lines have more favorable terms and have been increased to $35 million from $15 million, further enhancing the overall liquidity profile.
Green Mountain Power Corp. is an investor-owned electric utility headquartered in Colchester, Vermont.
Source: Moody’s Investors Service