CKI rejects S&P call on Australian units
Cheung Kong Infrastructure Holdings, controlled by billionaire Li Ka-shing, has rejected a Standard & Poor's Ratings Services suggestion that it has reduced its support for three Australia-based utility associates.
The dispute came after the credit ratings agency said it considered cutting its 'A minus' long-term credit ratings on CitiPower, Powercor Australia and ETSA Utilities - three electricity distributors in South Australia and Victoria states - as it had reassessed the support provided by major shareholders CKI and its associate Hongkong Electric Holdings.
'CKI rejects the proposition that its support for the majority-owned Australian electricity distribution companies has been reduced in any manner since the floating of Spark Infrastructure in December 2005 and confirms that it has and will continue to have the same commitment to CitiPower, Powercor and ETSA as was demonstrated prior to that date,' CKI said in a statement.
The company also disputed Standard & Poor's view that 'the benefit of majority ownership may have weakened as the shareholders' appetite for support evolves'.
Standard & Poor's primary credit analyst Colin Atkin said placing the trio under credit watch reflected the heightened prospect for reduced support from their parents. A conclusion on the rating revision is expected in the next three months, he added.
'Although this may lead to lower ratings for these three companies, any negative rating action is likely to be limited to one notch as a consequence of assessed reduced shareholder benefit,' Mr Atkin said.
CKI and its associate Hongkong Electric hold a combined 51 per cent of CitiPower, Powercor and ETSA.
In 2005, CKI sold a 49 per cent stake in the companies to create Spark and floated it on the Sydney stock exchange. It holds about 10 per cent of Spark.