Analysts believe it will take at least six months for companies to meet the more stringent requirements being set by the credit rating agencies in the wake of the Enron debacle, and that investors will not be able to assess properly the final outcome until then. Energy companies Dynegy, Calpine and El Paso have already taken steps to strengthen their balance sheets, mainly selling assets and reducing capital expenditure plans. Other companies are known to be working on similar plans. Calpine, one of the worst affected by the fallout, has put 34 projects representing 15 000 MW on hold and cut its 2002 capital spending by nearly $2 billion as part of a ‘disciplined capital spending plan’. It will, however, continue with 27 other projects currently under construction, more than doubling he company’s present generating capacity from 11 000 MW to 23 200 MW.
El Paso Corp has indicated that it will sell $2.25 billion in assets as it tries to improve its credit rating and calm investors. Most of the sales are to be completed this quarter, according to chief executive William Wise. The sale will include the Eagle Point refinery in New Jersey. Proceeds will be used to buy power plants and pay off part of an estimated $16 billion debt. The company is also hoping to raise $750 million from a share offering this year.
Dynegy has decided on a $1.25 billion capital restructuring programme to strengthen its balance sheet following a downgrade of its debt ratings. The programme includes the sale of assets such as the UK based BG Storage, which it bought in November, and capital expense reductions amounting to $750 million.
