NUI Responds To Credit Rating Downgrade By Moody’s
BEDMINSTER, N.J.-- NUI Corporation (NYSE:NUI) today said that it is disappointed with the decision by Moody's Investors Service to downgrade NUI Corporation's holding company ("NUI" or "the Company") credit rating to B1 and NUI Utilities ("Utilities") credit rating to Ba1. The Company noted that Moody's stated this action concludes the reviews on both NUI Corporation and NUI Utilities.
"We do not understand Moody's decision to take action at this time due to the considerable progress we have made since they took a similar action in March. As cited by Moody's, we have successfully procured the continued support of our bank lenders and senior note holders, we are in the process of implementing separate bank account structures for NUI and Utilities, which should be operational during the fourth quarter of fiscal 2003, and we have made progress in improving internal control systems. In addition, we are in the process of continuing to reduce our business risk by exiting under-performing or non-strategic businesses," stated John Kean, Jr., President and Chief Executive Officer. "Continuing the sale of non-strategic or under-performing assets, ensuring that our balance sheet remains strong and enhancing the financial performance of our remaining operations are key objectives for this year."
In February 2003, the Company and Utilities entered into new credit agreements with a syndicate of lenders for an aggregate of $180 million. NUI and Utilities have drawn an aggregate of approximately $115 million on these facilities, with approximately $115 million outstanding at Utilities and no outstanding balance at NUI. Remaining available credit under the respective facilities is approximately $27 million at Utilities and $38 million at NUI, which supplements approximately $20 million in cash currently on hand as of May 6, 2003.
Moody's action will not create any debt covenant violations or defaults under the agreements, but will increase borrowing costs at Utilities by 37.5 basis points, or 0.375 percent. The borrowing costs at NUI will not be affected.
In 2002, the Company reduced debt by more than $100 million. During fiscal 2003, the Company expects continued strong operating cash flows due to the rate increase at Elizabethtown Gas, colder-than-normal weather and the continued recovery of under-recovered gas costs. The Company expects that the strong cash flows will enable it to further reduce its outstanding short-term debt.
"We remain committed to our plan to reduce debt, improve cash flow and reduce business risk and we intend to stay the course toward its successful implementation," said Kean. "Going forward, we are committed to continue the execution of our plan in partnership with our investment banker, Berenson & Company, whom we have retained to assist us in maximizing the value of our businesses. We believe that the plan will strengthen our balance sheet and provide greater financial flexibility."
NUI Corporation, based in Bedminster, NJ, is a diversified energy company that operates four natural gas utilities, as well as businesses involved in natural gas storage and pipeline activities; wholesale energy portfolio and risk management; telecommunications; and geospatial and customer information systems and services. NUI Utilities' companies include Elizabethtown Gas Company in New Jersey, City Gas Company of Florida and Elkton Gas Company in Maryland. Visit our web site at www.nui.com.
This press release contains forward-looking statements, including statements related to strengthening the Company's balance sheet and enhancing the Company's financial performance. These statements are based on management's current expectations and information currently available and are believed to be reasonable and are made in good faith. However, the forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the statements. Factors that may make the actual results differ from anticipated results include, but are not limited to, the Company's ability to control operating expenses; the level of uncollectible receivables; the volatility of natural gas prices; the ability to reduce debt; the ability to procure buyers for asset sales; the impact of Moody's Investors Services' downgrade on the Company's operations, liquidity and natural gas trading and procurement capabilities; the impact of transactions relating to the Company's exit of the retail energy marketing business; economic conditions; the outcome of the focused audit being conducted by the New Jersey Board of Public Utilities; weather fluctuations; and other uncertainties, all of which are difficult to predict and some of which are beyond our control. For these reasons, you should not rely on these forward-looking statements when making investment decisions. The words "expect," "believe," "project," "anticipate," "intend," "should," "could," "will," and variations of such words and similar expressions, are intended to identify forward-looking statements. We do not undertake any obligation to update publicly any forward-looking statement, either as a result of new information, future events or otherwise.