Dominion Considers Likelihood of Debt Ratings
Trigger Event "Extremely Remote"
Dominion's Strong
Credit Rating Reaffirmed May 14 by S&P, Which Issued Report Yesterday on
Companies with Agreements Containing Liquidity Claims
RICHMOND, VA. - Dominion (NYSE: D) said today
the chances are "extremely remote" that an operating or financial
problem would trigger mandatory repayment provisions contained in a $665 million
note financing its Dominion Fiber Ventures unit.
Thomas N. Chewning, executive vice
president and chief financial officer, said:
"The note represents only 2.6
percent of the company's total capitalization and has been reviewed by major
credit rating agencies, including Standard & Poor's (S&P), from the
outset. S&P reaffirmed our strong BBB+ credit rating on May 14.
"Moreover, the provision would
only require mandatory repayment in the event Dominion experienced an unlikely
two-notch downgrade in its credit rating in addition to a decline in its share
price to under $46, which would need to be sustained for 10 consecutive days.
"We consider either circumstance
remote and the combination of both to be extremely remote. In fact, the company
is operating at superior levels of efficiency, has growing cash flows, and is
successfully strengthening its balance sheet through the issuance of new equity,
equity-linked securities and creation of new credit facilities."
S&P issued a May 15 report identifying
24 companies with financing arrangements that have trigger mechanisms. In the
May 14 report, S&P said: "Dominion and its main subsidiaries…
maintain adequate access to bank facilities and capital markets to adequately
mitigate liquidity risks arising from its rating triggers."
Dominion is one of the nation's leading
energy companies.
