Standard & Poor’s Ratings Services on Monday raised its outlook for Duke Energy Corp. from negative to stable, saying the Charlotte-based company had effectively handled issues that arose in its merger with Progress Energy last year.
In July the ratings agency lowered Duke’s corporate credit rating from A- to BBB+ with a negative outlook, saying the company faced higher regulatory risk amid investigations into its merger with Raleigh-based Progress. It cited the ouster of Bill Johnson as CEO by Duke’s board hours after closing the merger July 2.
In a statement late Monday, the ratings agency affirmed Duke’s BBB+ rating but raised the outlook to stable.
“The stable outlook on Duke Energy and its subsidiaries reflects the benefits of the company’s efforts to effectively address a number of challenges that arose after the close of its merger with Progress Energy, which have helped stabilize its credit profile at the current rating,” wrote Standard & Poor’s credit analyst Dimitri Nikas. “While Duke Energy needs to address incremental challenges, we no longer see any downside risk over the next two years.”
Following the closing of the $32 billion merger and Johnson’s swift ouster, the N.C. Utilities Commission opened an investigation into whether it was misled about the management of the combined companies. Duke settled the investigation in December, along with a separate investigation by N.C. Attorney General Roy Cooper.
Under the settlement terms with the Utilities Commission, Duke CEO Jim Rogers will retire at the end of 2013, when his contract expires. Duke agreed to replace two other executives and add $25 million to the $650 million in merger savings it has guaranteed Carolinas customers.
Stephen De May, vice president and treasurer at Duke Energy, said in a statement Monday evening: “We’re pleased with S&P’s action to return our ratings outlook to ‘stable’ and S&P’s assessment that the company has effectively handled the business, management and regulatory challenges that arose subsequent to the merger with Progress Energy.”
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