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ECNZ Seeks Withdrawal Of Credit Ratings

MEDIACOM-RELEASE-ECNZ

ECNZ SEEKS WITHDRAWAL OF CREDIT RATINGS

The Electricity Corporation of New Zealand Limited (ECNZ) has requested that Standard and Poor's withdraw its credit rating of the company effective from 15 August 2000.

The platform was set for ECNZ to seek the withdrawal of its credit ratings when ECNZ was split into 3 separate State Owned Enterprises (SOEs) on 1 April 1999. As part of the split process the New Zealand Government unconditionally and irrevocably guaranteed ECNZ's outstanding debt obligations.

ECNZ Chief Executive Chris McGeown has advised that the maintenance of its credit ratings, until the expiry of all the outstanding ECNZ debt in 2009, is a significant cost to the company. Given the irrevocable Crown Guarantee supporting ECNZ's obligations there is marginal value in ECNZ continuing to maintain credit ratings in its own name.

Investors in all ECNZ debt instruments are now effectively assuming " sovereign risk" and, as such, will not be adversely affected by ECNZ's decision to withdraw its credit rating.

ECNZ's assets were transferred into three new State Owned Enterprises (SOEs) - Mighty River Power Ltd., Genesis Power Ltd., and Meridian Energy Ltd. - on April 1, 1999. Since then ECNZ's role has been to manage some residual functions, including the administration of its existing debt obligations.

While ECNZ continues to be the principal debtor under its debt obligations, the new SOEs have entered into identically matched back-to-back arrangements and effectively service the debt.

ECNZ hopes to conclude discussions with Moody's Investor Services to similarly withdraw the rating given by that organisation in the very near future.

ENDS

MEDIA RELEASE FROM THE ELECTRICITY CORPORATION OF NEW ZEALAND

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