Fitch: Empire District Electric view negative

Fitch Ratings said it revised Empire District Electric Co.'s outlook to negative from stable and affirmed its issuer default rating and trust preferred securities at BBB-, its senior secured debt at BBB+, its senior unsecured debt at BBB and its short-term debt at F2.

The agency said the negative outlook reflects uncertainty surrounding the outcome of Empire District Electric's current rate filing and weakness in the company's projected financial measures relative to Fitch guidelines for the ratings category. Recent events leading to the outlook revision were storm damage in December and the extended outage of the Asbury baseload coal plant following a failed generator inspection.

Consolidated cash flow coverage metrics have slightly declined and are relatively weak for the ratings category as a result of Empire District Electric's ongoing capital expenditure program, Fitch said. The debt-to-EBITDA ratio was up to 4 times for the current period from 3.8 times for the year ended Dec. 31, 2006.

More positively, the agency said the BBB- rating reflects Empire District Electric's regulated business strategy in a small but healthy service territory with little industrial concentration and the balanced outcome to the company's 2006 base rate settlement in Missouri, where it receives 88% of electric revenues.

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