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NorthWestern to Emerge Nov. 1 from Bankruptcy; S&P Raises Rating

NorthWestern to Emerge Nov. 1 from Bankruptcy; S&P Raises Rating

A federal bankruptcy court judge Wednesday confirmed a second amended reorganization plan for South Dakota-based NorthWestern Corp., and the energy holding company said Nov. 1 would be the likely date for emerging from Chapter 11 bankruptcy proceedings. Standard & Poor's Ratings Services Thursday raised NorthWestern's credit rating to "BB-" from "D," effective with the reorganization plan's start.

With the prospect of $850 million of debt following the emergence from Chapter 11, NorthWestern received a "positive outlook" from S&P. NorthWestern indicated that it would seek senior secured debt totaling about $450 million in three separate offerings, and S&P said those offerings would be rated "BB-."

S&P said it looked at the reorganized company as "largely a stand-alone electric/gas utility with about 80% of its utility assets in Montana, and the rest in South Dakota and Nebraska. The company will also emerge with various non-utility assets, including a 260 MW generation plant that has been under development." S&P indicated that Northwestern intends to sell the plant in the near future.

The newly increased credit rating, S&P said, reflects "the low-risk nature of the company's predominately transmission/distribution business, which is strong. The rating also reflects the electric operations' above-average reliability factors that are 30% to 40% higher than the national average."

Separately on Thursday, NorthWestern announced that is utility unit, NorthWestern Energy was given a ServiceOne Award for "exceptional customer care" from the PA Consulting Group, a national utility benchmarking and management consulting firm. The company was cited as having "exceptional service" as determined by a set of 18 objective measures used by the consulting/measurement firm.

On the cautionary side, S&P Analyst Gerrit Jepsen said that NorthWestern's senior management still has not "established a reliable track record. The management team must complete the transition from bankruptcy and achieve projected operational and financial results before credibility can be fully established," Jepsen said. He said another area the company must continue to work on is improved regulatory relationships, which have been a sore point for the company in recent years in Montana particularly.

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