However, a substantial capital spending program directed mostly towardpipeline expansion projects has resulted in debt leverage above historical normsuntil its new projects generate operating returns. ETP has been aggressive in maintaining a strong liquidity position throughoutits construction build-out. During 2009, ETP has so far issued nearly $580million of common units and $1 billion of capital market debt, with proceedsused to reduce bank revolver borrowings and for expansion capital spending. Thecompany’s debt to EBITDA for the 12 months ended December 2008 was approximately4.3 times (x), adjusting for joint venture debt that it guarantees. Fitchexpects debt leverage to drop to approximately 4x in 2009 as new pipelineprojects become operational and cash flows increase. In addition, ETP hasmaintained one of the most conservative distribution practices amonginvestment-grade MLPs. Fitch estimates that over the next two years ETP couldretain over $500 million of distributable cash flow that can be used for growthspending, hence minimizing its external financing.
ETE’s ratings and Stable Outlook are primarily dependent on the financial andoperating characteristics of ETP, the standalone credit profile of ETE, and thefavorable recovery prospects for its senior secured creditors under distressedconditions. Fitch considers fiscal 2008 debt-to-EBITDA of 2.9x as strong for anMLP holding company structure and should not present an inordinate amount ofrisk for ETE and ETP given the quality of its cash flow stream. Over the longterm ETP’s upstream cash distributions should increase as several ongoingexpansion projects become operational and its distribution coverage is adjustedto reflect lower operating and financial risk As a result, ETE’s cash flowratio will strengthen. However, Fitch recognizes that ETE’s outstanding $1.572billion of debt is substantial and its ability to refinance the debt in thefuture could be impaired by constrained capital market conditions. Fitch also considered recovery prospects for ETE’s senior secured lenders in adistressed situation. Based on the value-to-loan ratio definition in ETE’scredit agreement, at current market prices creditors would have recoveryvaluations in excess of 400%.
Moreover, under reasonable stress case scenariosFitch found that above-average recoveries for creditors were likely. While ETP’s track record of acquiring, building, integrating, expanding andfinancing energy infrastructure assets has been favorable, several challengesremain. Of ongoing concern is the event and integration risk inherent in ETP’sactive growth strategy. Of particular interest is the industry-wide inflation ofpipeline construction costs on major projects and their effect on projecteconomics. Most notably for ETP, estimated costs on Midcontinent ExpressPipeline (MEP), a joint venture with KMP, have continued to increase.
ETP andKMP each guarantee borrowings under MEP’s $1.3 billion fully-drawn bank creditfacility, in proportion to their 50% ownership of the project. In addition, factors also considered by Fitch in ETP’s rating analysis include:the structural subordination of the ETP notes to approximately $700 million ofcombined subsidiary debt at Transwestern Pipeline and Heritage Operating L.P.(Heritage); the financial exposure to changes in commodity prices at itsMidstream gas processing operations in southeast Texas; the financial exposureto market manipulation legal proceedings brought by FERC and the structuralrelationships between affiliated companies, including approximately $1.57billion of debt at ETE. Fitch’s rating definitions and the terms of use of such ratings are available onthe agency’s public site, Published ratings, criteria andmethodologies are available from this site, at all times. Fitch’s code ofconduct, confidentiality, conflicts of interest, affiliate firewall, complianceand other relevant policies and procedures are also available from the ‘Code ofConduct’ section of this site. Fitch Ratings, New YorkRalph Pellecchia, +1-212-908-0586Joseph Sorce, +1-312-368-3161 (Chicago)Media Relations:Cindy Stoller, +Copyright Business Wire 2009.
MINNEAPOLIS–(Business Wire)–Polaris Industries Inc. (NYSE: PII) announced today that it will present at theBaird 2009 Growth Stock Conference at the Four Seasons Hotel in Chicago,Illinois on Wednesday, May 13, 2009 at 2:30 p.m CDT. Mike Malone, VicePresident of Finance and Chief Financial Officer of Polaris, will provide abrief review of the Company`s past performance as well as an update on currentbusiness conditions. An audio webcast of the presentation will be available by accessing the Polariswebsite at http:// A replay of the webcast willbe available for one week following the event. The presentation for this eventwill also be posted on our website under “Investor Relations/Presentations”. About PolarisWith annual 2008 sales of $1.9 billion, Polaris designs, engineers, manufacturesand markets off-road vehicles (ORVs), including all-terrain vehicles (ATVs) andthe Polaris RANGER, snowmobiles and Victory motorcycles for recreational andutility use.