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S&P: AGL on watch
Standard & Poor's placed its A-/A-2 corporate credit rating on AGL Resources Inc. and its A- corporate credit rating on subsidiary Atlanta Gas Light Co. on CreditWatch negative following AGL's announcement that it is acquiring NUI Utilities Inc. (BB/Watch Developing/--)
S&P said the CreditWatch listing on AGL reflects the significant differential between the A- corporate credit rating on AGL Resources and the speculative-grade rating on NUI.
The BB corporate credit rating on NUI remains on CreditWatch with developing implications. S&P said the rating on NUI reflects its weak financial profile, strained liquidity position and uncertainty concerning legal liabilities.
The resolution of the CreditWatch on AGL will depend on S&P's assessment of AGL's exposure, if any, to the contingent liabilities facing NUI, a reevaluation of the business risk profile of the acquired assets under new management and the effect of the acquisition financing on AGL's consolidated financial profile.
The economics of the acquisition are supported by a favorable purchase price of about 1x book value and 8x EBITDA.
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