Moody's changes Semco outlook to developing

Moody's Investors Service said it changed the outlook on Semco Energy, Inc.'s Ba2 corporate family and senior unsecured ratings to developing from stable following Semco's announcement that it entered into a definitive agreement with Cap Rock Holding Corp., which will acquire Semco's common stock and preferred stock for cash.

The agency said the developing outlook reflects considerable uncertainty over the next 12 to 18 months as to the ultimate ownership, capitalization and regulatory treatment of the company. Under the terms of its agreement with Cap Rock, Semco will undergo a "go-shop" period, during which a competing bid may be accepted. The company must then get shareholder approval.

A change of control would trigger a put that would require Semco to offer to redeem $350 million of its $440 million long-term debt outstanding. It is Moody's understanding that Cap Rock has obtained sufficient capital commitments from Lindsay Goldberg & Bessemer to fund the stock purchases, the tender of the debt and retirement of Semco's $120 million credit facility, but it is unknown how Cap Rock plans to recapitalize the company.

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