Moody’s affirms Birka Energi’s rating following purchase announcement

LONDON, Feb. 16, 2001 à‚– Moodys has today affirmed the long term senior unsecured rating of Birka Energi AB at Baa1 with a stable outlook following the announcement that Fortum Corporation, who own 50% of Birka, want to initiate discussions with Birka’s co-owner, the City of Stockholm to buy out their 50% stake.

Moody’s will continue to monitor developments and should a sale proceed, consider Fortum’s business and financial strategy for the company and how the transaction is structured and funded in the context of Fortum’s own operating and financial profile. However it is not expected that there should be any immediate change to Birka’s current strategy.

Birka continues its strategic focus on its stable and low risk distribution and district heating businesses which contribute some 70% of EBITDA and EBIT and revenues from district heating are expected to grow over time. Despite a difficult first three quarters in 2000 due primarily to low prices for generation which has put pressure on operating profitability, Birka’s results for the fourth quarter and 2001 are expected to reflect an improvement in operating conditions.

Acquisitions made in district heating and distribution made in 2000 are expected to be financed by asset disposals to bring debt back to pre-2000 levels. Birka Energi AB is based in Stockholm, Sweden and is active in electricity generation and supply, distribution and district heating.

Its turnover as at FYE 1999 was approximately eq EUR 1billion. Fortum Corporation is a majority state-owned utility based in Helsinki, Finland and is active in diversified utility activities including electricity generation and distribution, district heating and oil and gas. Its turnover at FYE 1999 was equal to Euro 8.2 billion.

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