In addition to PEPL
's participation in SUG's cash management program and the importance of PEPL
's future cash flows to SUG, the propensity to use inter-company notes to finance activities outside of PEPL
reinforces this relationship.
Holdings, LLC, an indirect subsidiary of the Company, will guarantee payment, on a contingent recourse basis, of up to $2.
SUG's pipeline assets include PEPL
, Trunkline LNG (contractually supported by contracts with BG LNG Services), and an indirect 50% interest in Florida Gas Transmission (FGT).
The projected increased cash flow contribution and lower capital expenditures going forward at PEPL
will largely mitigate the impact of the FGT Phase VIII expansion on SUG's credit profile.
Fitch's actions were a direct result of credit metric weakness due to the company's recent capital expenditures program, the participation in the SUG cash management program and the use of borrowings to finance activities outside the PEPL
1 billion expansion plan and by increased cash flow at PEPL
due to recent capital investments.
The remaining 213 miles of REX-West to the PEPL
delivery point in Audrain County, Mo.
Whether these events are being driven primarily by transportation economics or other factors such as weather, mid-month contractual commitments or the fact that the PEPL
interconnect is not yet in service remain open questions.
refers to Panhandle Eastern Pipe Line, Tex/Ok Mid-Continent index and HSC stands for Houston Ship Channel Gulf Coast index both as quoted in Platt's Inside FERC.
SUG (Issuer Default Rating [IDR] 'BBB' by Fitch with a Stable Outlook) will use the funds to repay indebtedness under its revolving credit agreement and over time return the money to PEPL
to fund its capital expenditure program.
The affirmation also continues to recognize the low business risk profile of SUG's Missouri Gas Energy (MGE) division and the cash flow contribution from FERC regulated pipeline activities, which include PEPL
and FGT, and the midstream assets acquired in February 2006.
Credit strength continues to be derived from the low business risk profile of SUG's MGE division and cash flow contribution from FERC regulated pipeline activities, which include PEPL
and indirect investments in both Transwestern Pipeline (TWP) and Florida Gas Transmission (FGT) via SUG's 50% ownership in CrossCountry Energy Holdings (CCE).