ML20306A378
| ML20306A378 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 11/01/2020 |
| From: | TMI Alert |
| To: | NRC/OGC |
| SECY RAS | |
| References | |
| 50-320-LT, General Proceeding, RAS 55845 | |
| Download: ML20306A378 (3) | |
Text
11/1/2020 FirstEnergy debtratings downgraded after CEOfired i
NEWS i
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i iii JimMackinnon Akron Beacon Journal Published 12:28 p.m.ETOct.31.2020lUpdated 12:35 p.m. ETOct.31,2020 FirstEnergy's billions ofdollars indebtwas downgraded following thefiring ofCEOChuck Jonesoverconcerns ofpossible illicit activity tied tothe$61million Larry Householder bribery investigation.
Fitch Ratings late Friday afternoon downgraded FirstEnergy debt toitsBBB-classificati fromBBB,meaning itthinks theAkronutility's debt isnow riskier followingthefirings of Jonesandtwoother executives onThursday.
Theratingsoutlook wasrevised downward fromStable toNegative aswell.
Theprominent credit ratings agency said itcannotrule outthat FirstEnergy orasubsidiary will becharged withcriminal activity andifthat
- happens, that could hurt the utility's financial performance.
"Therating actions reflect thetermination ofthree senior executives includingformer FirstEnergy CEOCharles E.Jonesandtwoother senior executives andongoing credit concerns regarding potential illicit activity atFirstEnergy inconnection with anongoing federal bribery/racketeering investigation,"
Fitch said inarelease.
Fitch noted that theDepartment ofJustice investigation ledtocriminal charges against former OhioHouseSpeaker Householder, fourother men,andnon-profit Generation Now overbribes connected tothepassage ofHouseBill 6that provides morethan$1billion in subsidies totwoformer FirstEnergy nuclear plants inOhio.
"While theindictment does notexplicitly nameFirstEnergy oritsaffiliates, pseudonyms referred tointheaffidavit arewidely-believed torefer toFirstEnergy, its corporate services subsidiary, FirstEnergy Service
- Company, andformer subsidiary, Energy Harbor,"
Fitch said.
https://www.dispatch.com/story/news/2020/10/31/firstenergy-debt-ratings-downgraded-after-ceo-f source=dispatch-News 1/3
11/1/2020 FirstEnergy debtratings downgraded after CEOfired Energy Harbor istheformer FirstEnergy Solutions, thegeneration armoftheutility that was spun off ofFirstEnergy inFebruary attheconclusion ofalengthy Chapter 11bankruptcy process.
Energy Harbor ownstheDavis-Besse andPerry nuclear plants that benefit fromthe HouseBill6subsidiaries.
"While FirstEnergy and its subsidiaries havenotbeennamedintheDOJinvestigation, future criminal charges against FirstEnergy andits corporate service subsidiary, FirstEnergy Service
- Company, cannot be ruled outinlight ofpay-to-play allegations contained inthe affidavit,"
Fitch said.
"If FirstEnergy orFirstEnergy Service Companybecome targets ofthe criminal investigation andareultimately convicted, FirstEnergy could besubject tofines and penalties, civil litigation andresulting financial pressure,reputational
- risk, regulatory and political challenges, higher costofcapital and erosion ofconfidence inmanagementandthe effectiveness ofits corporate governance and internal controls."
More:FirstEnergy fires CEOChuckJones after 2 plead guilty inHouseholder bribery scheme Fitch said itbelieves ongoing uncertainty regarding theutility's internal controls isakey sourceofcredit concern.
Ifthat uncertainty isnoteffectively and quickly
- reversed, itcould lead tofuture adverse credit rating
- actions, theagency said.
"Fitch believes thelapse ininternal controls meaningfully increasesrisk offurther adverse developments atFirstEnergy, weakening itsbusiness risk profile,"
it said in itsrelease.
HouseBill 6also appears tobeinplay aspartofthefederal investigation, Fitch said.
More:FirstEnergy shareholder suestogetAkronutility's documents, records tied to Householder investigation IfHouseBill 6isoverturned, that could hurtthebusiness risk profiles ofFirstEnergy subsidiaries OhioEdison, Cleveland Electric Illuminating andToledo
- Edison, Fitch said.
FirstEnergy hadatotal of$22.2 billion indebtforallofitsoperations asofJune30, including
$7.8 billion ofparent-only
- debt, Fitch said.
FirstEnergy hasahigher debtloadthan manyofits peerutilities, including American Electric PowerandExelon, theagency said.
FirstEnergy's debtpreviously hasbeenrated BBB-byFitch.
Fitch inNovember 2019 upgraded FirstEnergy debtfromBBB-toBBBandchanged theoutlook frompositive to stable following initial courtapproval ofFirstEnergy Solutions' reorganization plan inthe Chapter 11bankruptcy proceedings.
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11/1/2020 FirstEnergy debtratings downgraded after CEOfired Jim Mackinnon coversbusiness.
Hecanbereached at330-996-3544 or imackinnon@thebeaconjournal.com.
Follow him@JimMackinnonABJ onTwitter or www.facebook.com/JimMackinnonABJ.
https://www.dispatch.com/story/news/2020/10/31/firstenergy-debt-ratings-downgraded-after-ceo-f source=dispatch-News 3/3