ML20306A378
| ML20306A378 | |
| Person / Time | |
|---|---|
| Site: | Three Mile Island  |
| Issue date: | 11/01/2020 |
| From: | TMI Alert |
| To: | NRC/OGC |
| SECY RAS | |
| References | |
| 50-320-LT, General Proceeding, RAS 55845 | |
| Download: ML20306A378 (3) | |
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11/1/2020 FirstEnergy ratings debt downgraded CEOfired after i
NEWS i i i ii, i i iii JimMackinnon Akron Beacon Journal Published 12:28 p.m. 31.2020lUpdated ETOct. 12:35 p.m. ETOct. 31,2020 FirstEnergy's billionsofdollars indebtwas downgraded following the firing ofCEOChuck Jones overconcerns ofpossible illicit activity tied tothe $61 million Larry Householder bribery investigation.
Fitch Ratings lateFriday afternoon downgraded FirstEnergy debt toits BBB-classificati from BBB,meaning itthinks the Akron utility's debt isnow riskier following the firingsof Jones andtwoother executives onThursday. Theratingsoutlook wasrevised downward from StabletoNegative aswell.
Theprominent creditratings agency said itcannot rule outthat FirstEnergy ora subsidiary will becharged withcriminal activity andif that happens, that could hurt the utility's financial performance.
"The ratingactionsreflect thetermination ofthree senior executives includingformer FirstEnergy CEOCharles E.Jones andtwoother senior executives andongoing credit concerns regardingpotential illicit activity atFirstEnergy inconnection with anongoing federal bribery/racketeering investigation," Fitch said ina release.
Fitch noted that theDepartment ofJustice investigation led tocriminal charges against former Ohio HouseSpeaker Householder, four other men,andnon-profit Generation Now over bribesconnected tothe passage ofHouseBill 6that provides morethan $1billion in subsidies totwoformer FirstEnergy nuclear plants inOhio.
"While theindictment does notexplicitly nameFirstEnergy orits affiliates, pseudonyms referred tointhe affidavit arewidely-believed torefer toFirstEnergy, its corporate services subsidiary, FirstEnergy Service Company, andformer subsidiary, Energy Harbor," Fitchsaid.
https://www.dispatch.com/story/news/2020/10/31/firstenergy-debt-ratings-downgraded-after-ceo-f 1/3 source=dispatch-News
11/1/2020 FirstEnergyratings debt downgraded CEOfired after Energy Harbor isthe former FirstEnergy Solutions, the generation armofthe utility thatwas spun off of FirstEnergy inFebruary atthe conclusion ofalengthy Chapter 11bankruptcy process. Energy Harbor ownsthe Davis-Besse andPerry nuclear plants that benefit from the House Bill 6subsidiaries.
"While FirstEnergy and its subsidiaries have notbeen named inthe DOJinvestigation, 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 Company become targets ofthe criminal investigation andareultimately convicted, FirstEnergy could besubject tofines and penalties, civil litigation andresulting financial pressure, reputational risk,regulatory and political challenges, higher cost ofcapital and erosion ofconfidence inmanagement andthe effectiveness ofits corporate governance and internal controls."
More:FirstEnergy fires CEOChuck Jones after 2 plead guilty inHouseholder bribery scheme Fitch said it believes ongoing uncertainty regarding theutility's internal controls isakey source ofcredit concern. Ifthat uncertainty isnoteffectively and quickly reversed, it could lead tofuture adverse credit rating actions,the agency said.
"Fitch believes the lapse ininternal controls meaningfully increasesrisk of further adverse developments atFirstEnergy, weakening its business risk profile," itsaid in its release.
House Bill 6also appears tobeinplay aspart ofthe federal investigation, Fitch said.
More:FirstEnergy shareholder sues toget Akron utility's documents, records tied to Householder investigation IfHouseBill 6 isoverturned, that could hurt the business risk profiles ofFirstEnergy subsidiaries Ohio Edison, Cleveland ElectricIlluminating andToledo Edison, Fitch said.
FirstEnergy hadatotal of$22.2 billion indebt for allofits operations asofJune30, including $7.8 billion ofparent-only debt, Fitch said. FirstEnergy hasahigher debt load than manyofits peer utilities, including American Electric Power andExelon, the agency said.
FirstEnergy's debt previously hasbeen rated BBB-byFitch. Fitch inNovember 2019 upgraded FirstEnergy debt from BBB-toBBBandchanged the outlook from positive to stable following initial court approval ofFirstEnergy Solutions' reorganization plan inthe Chapter 11bankruptcy proceedings.
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11/1/2020 FirstEnergy ratings debt downgraded CEOfired after Jim Mackinnon covers business.
He canbereached at330-996-3544 or imackinnon@thebeaconjournal.com. Follow him@JimMackinnonABJ on Twitter or www.facebook.com/JimMackinnonABJ.
https://www.dispatch.com/story/news/2020/10/31/firstenergy-debt-ratings-downgraded-after-ceo-f 3/3 source=dispatch-News
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