The shares of struggling NUI Corp. tumbled 18% Friday to $12.80 after the company suspended its dividend because of the new terms of amended credit agreements with lenders.

NUI amended the credit agreements in order to cure all previously existing defaults and to obtain the consent of the lenders to the settlement of a focused audit that was initiated by the New Jersey Board of Public Utilities (BPU).

Under the terms of the amendments, NUI is prohibited from paying cash dividends during any fiscal quarter in which its consolidated total debt represents more than 60% of its total capitalization. As a result, NUI is not likely to be able to pay dividends in the foreseeable future.

NUI also filed its 10-K Friday with the Securities and Exchange Commission, reporting a consolidated net loss of $45.1 million, or $2.82 per share, for fiscal 2003, which was much larger than the $23.5 million net loss, or $1.46 per share, that it had previously reported for fiscal 2003. NUI said the primary reasons for the difference were the $30 million settlement filed in April with the BPU and the subsequent charge of $2.6 million because of a required refunded to utility customers in Florida as a result of the investigation of subsidiary NUI Energy Brokers.

In April, NUI said it also would refund $28 million to Elizabethtown Gas customers over a five-year period and pay a $2 million penalty to the state of New Jersey as part of a settlement agreement reached with the BPU. The settlement followed a focused audit performed for the BPU on NUI and its subsidiaries, NUI Utilities and Elizabethtown Gas, that found a broad range of corporate management failures and inadequate financial insulation of the utility operations from NUI’s poorly performing nonutility businesses.

Multiple credit rating downgrades over the last few years, adverse gas market conditions, regulatory investigations and a negative operational outlook forced long-time CEO John Kean Jr. to resign last fall as the company put itself on the auction block. A sale originally was expected to take place before the end of the second quarter, but in its announcement on Friday NUI said any deal probably won’t be announced until the end of the third quarter.

Moody’s Investors Service continued the company’s negative outlook last month because it expects any sale to take significant time to complete. At the same time, Moody’s also cut the credit ratings of NUI Corp. to Caa1 from B3 and cut the ratings on subsidiary NUI Utilities’ to B1 from Ba3 in April, affecting $360 million of NUI Utilities debt and $255 million of NUI Corp. debt.

The downgrades, which were the latest in a string of negative credit actions, were in response to the company’s expectation for lower first quarter earnings. Moody’s also noted that NUI’s assets are diverse and are located in various states, including New Jersey, Florida and Virginia, necessitating multiple regulatory approvals for any sale. In the meantime, Moody’s expects NUI to incur extraordinary O&M and legal expenses while it employs an array of outside advisers and consultants to help manage operations, deal with regulatory investigations and search for a suitable buyer.

In its 10-K on Friday, the company said it believes that both the parent company and NUI Utilities have sufficient liquidity to meet their financial obligations through the remainder of fiscal 2004. Beyond fiscal 2004, however, they will have to obtain additional financing to ensure NUI Utilities’ ability to meet its operational requirements, including its gas purchase prepayment obligations, and successfully completing the sale of the company.

NUI also said it would file quarterly reports for the first and second quarters of fiscal 2004 in about a week.

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