EDITORS: Please do not use
"Pacific Gas and Electric" or "PG&E" when
referring to PG&E Corporation or its National Energy Group.
The PG&E National Energy Group is not the same company as Pacific
Gas and Electric Company, the utility, and is not regulated by the
California Public Utilities Commission. Customers of Pacific Gas
and Electric Company do not have to buy products or services from
the National Energy Group in order to continue to receive quality
regulated services from Pacific Gas and Electric Company.
ENERGY GROUP REMOVES RATINGS TRIGGERS FROM FINANCING AGREEMENTS
BETHESDA, Md., - PG&E Corporation's
(NYSE: PCG) PG&E National Energy Group (PG&E NEG) today announced
that it has eliminated credit ratings triggers with respect to $889
million in financial commitments.
Ratings triggers are clauses
in financing agreements that require a company to maintain a certain
level of investment grade credit ratings. Failure to maintain the
specified ratings trigger a requirement for the company to post
collateral, take other action, or pay back the debt. Such obligations
have come under increasing scrutiny by the financial community because
they can exacerbate a company's liquidity position and actually
contribute to the inability to meet financial obligations.
Working with lenders, PG&E
NEG restructured financing arrangements including $609 million in
equity commitments for the Lake Road and La Paloma power plants
and a $280 million guarantee backing the equipment revolving credit
facility. Ratings triggers had been removed earlier from PG&E NEG's
guarantee backing its remaining $701 million equity commitment from
the GenHoldings I, LLC portfolio financing.
In place of the ratings
triggers in these facilities, the lenders have agreed to substitute
specific financial covenants that are consistent with those contained
in PG&E NEG's revolving credit and other loan facilities.
"We have worked carefully
with the lenders to develop this package of covenants and reporting
requirements to replace ratings triggers," said John Cooper, PG&E
NEG's senior vice president for finance. "We remain committed to
maintaining credit quality, preserving liquidity and strengthening
our balance sheet."
Lake Road Generating is
an 840-megawatt natural gas-fired combined-cycle plant located in
Killingly, Conn. that recently went operational. La Paloma Generating
is an approximately 1,121-megawatt natural gas-fired combined-cycle
generating facility currently under construction in Kern County,
California. It is expected to begin operations in late 2002.
PG&E National Energy Group
is rated BBB by Standard & Poor's with a stable outlook and Baa2
by Moody's with a negative outlook.
Headquartered in Bethesda,
Md., PG&E National Energy Group develops, builds, owns and operates
electric generating and natural pipeline facilities and provides
energy trading, marketing and risk-management services.