21 December 2007
Attached is a statement from Standard & Poor’s in relation to AGL’s long term credit rating.
AGL Energy ‘BBB’ Rating Affirmed; Outlook Revised To Negative On Weaker
Melbourne, Dec. 21, 2007—
Standard & Poor’s Ratings Services said today that it had affirmed its ‘BBB’
long-term corporate credit ratings on AGL Energy (AGLE) and AGLE’s 100%-owned subsidiaries AGL Hydro Partnership and Powerdirect Australia Pty Ltd. At the same time, we revised the outlook on AGLE and AGLE’s subsidiaries to negative, from stable, because of AGLE’s expected underperformance in the group’s credit metrics.
“AGLE’s credit metrics are below those acceptable for a ‘BBB’ credit,” Standard & Poor’s credit analyst Andrew Palmer said. “However, we expect AGLE to implement capital-management strategies in the next six months to return the company’s credit metrics to its stated public policy of maintaining funds from operations to interest cover of 5x.”
AGLE’s credit profile has been weakened by its aggressive growth strategy and downgrade of its profit forecasts. Standard & Poor’s expects AGLE’s management to demonstrate a consistent track record in its growth strategy, capital structure, and recent management changes.
Mr. Palmer added: “Any further deterioration in AGLE’s earnings outlook, or a delay in the recovery of AGLE’s credit metrics, will likely result in a rating downgrade.”