IPPs and Merchant Energy Co.s Message Board

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Strategies & Market Trends : IPPs and Merchant Energy Co.s

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To: Larry S. who started this subject	12/13/2002 6:08:46 AM
From: KyrosL	of 3358

AES bank refinancing completed! This is of far greater importance to RRI than the California settlement. In particular, the terms of the refinancing bode well for RRI. biz.yahoo.com It's a three year $1.6 billion facility at LIBOR+6.5%. This is around 3.5% more than RRI got back in October. Given that AES has 8 times more debt relative to its equity than RRI, and given that RRI's most profitable asset, its retail division, hardly shows on its balance sheet, I believe that RRI will get a much better interest rate than AES, perhaps a couple of percent above its October rate. However, even in the absolute worst case of getting a rate like AES, the earnings hit for 2003 will be about 20 cents. I intend to commit half of the funds allocated for additional RRI shares today. The other half will wait till after refinancing. Kyros

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