(The following was released by the rating agency)
HONG KONG (Standard & Poor's) July 26, 2012--Standard &
Poor's Ratings Services said today that its ratings on Hutchison
Whampoa Ltd. (HWL: A-/Stable/--; cnAA/--), Cheung Kong
Infrastructure Holdings Ltd. (CKI: A-/Stable/--; cnAA/--), and
Power Assets Holdings Ltd. (PAH: A+/Stable/--; cnAAA/--), are
not affected by a proposed acquisition of MGN Gas Networks (UK)
Ltd. A CKI-led consortium comprising Cheung Kong (Holdings) Ltd.
(30%), CKI (30%), PAH (30%), and Li Ka Shing Foundation Ltd.
(10%), has proposed to acquire MGN Gas Networks for GBP680
million (about Hong Kong dollar [HK$] 8.17 billion).
In our opinion, the proposed acquisition is consistent with
Cheung Kong group's stated investment strategy. We generally
view the operation of a gas distribution business in the U.K. as
having an "excellent" business profile, underpinned by a
generally supportive regulatory framework. The supportive
framework ensures a high degree of stability and predictability
of earnings and cash flows. The group has a good record of
acquiring and integrating utility assets in the U.K.
We believe the consortium will have sufficient cash and
internal sources to fund this acquisition. CKI's and PAH's
available cash balance and bank deposits are sufficient to cover
their individual financial contribution of GBP204 million (about
HK$2.45 billion). CKI issued fresh equity of about HK$2.3
billion to bolster its financial resources. This is the
company's third share placement in the past 12 months. HWL would
own 76.39% of CKI upon the completion of CKI's latest share
MGN Gas Networks owns and operates one of eight gas
distribution and transmission networks in the U.K. The proposed
transaction is subject to regulatory approvals, including that
of the European Union competition commission. It also requires
CKI and PAH to divest the majority of their stakes in Northern
Gas Networks Holdings Ltd. (BBB+/Stable/--), another U.K.-based
gas network operator.