Moody's downgrades financial outlook for PGW buyer
Please note: This article is published as an archive copy from Philadelphia City Paper. My City Paper is not affiliated with Philadelphia City Paper. Philadelphia City Paper was an alternative weekly newspaper in Philadelphia, Pennsylvania. The last edition was published on October 8, 2015.
Ironically, the change was dictated by the assumption that the sale will go through.
photo by Matt Hotz, via Flickr @wavingatyou
Credit rating agency Moody's Investor Services has downgraded its financial outlook for the private energy firm UIL Holdings, hot on the heels of Mayor Michael Nutter's announcement that UIL was interested in buying the city's debt-ridden public utility, the Philadelphia Gas Works.
Ironically, the change was dictated by the assumption that UIL would successfully complete the $1.86 billion purchase PGW.
Moody's announced in a press release on Tuesday it was downgrading UIL's financial outlook from "stable" to "negative," following "expectation that UIL will close on its announced acquisition of [PGW]," which would massively increase the company's debt load. If the energy company closed on PGW, Moody's predicts the company "will materially increase the level of holding company debt to roughly 30% of total consolidated debt." According to Moody's, the future for the company post-takeover was not a bright one.
"Given the negative outlook and expectations... it is unlikely that UIL will be upgraded over the near-term," the press release concluded.
The proposed sale has already drawn fire from councilmembers and city unions who are fearful a private owner could offer less comprehensive safety nets for the poor or seek to dismantle labor contracts over time. Markets appear to be equally cold to the deal as UIL's stock has dropped four points since the announcement.
