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5 April 2004 - Fitch Ratings joined two other major corporate credit rating agencies by downgrading DPL Inc.'s debt rating to junk status, citing concerns about the company missing a Tuesday deadline to file its annual report with the Securities and Exchange Commission.
Fitch lowered the rating of DPL to BB from BBB-. BB-rated corporate bonds are considered speculative for potential investors. Standard & Poor's Ratings Services and Moody's Investors Service had already lowered DPL's debt rating to junk status.
Fitch also lowered the first mortgage bond rating of DPL's Dayton Power and Light Co. subsidiary to BBB from A-. DP&L's debt is still considered investment grade, but Fitch said all of DPL's ratings remain on negative credit watch.
Robert Hornick, a senior director for Fitch Ratings, said DPL cannot access external financing until it files its financial statements with the SEC. The missed deadline has put DPL in default of its $150m term loan and $150m revolving credit facilities. The company has also violated other debt agreements because of the missed deadline, but is not in immediate default.
Fitch might cut DPL's ratings further if it does not file certified financial results with the SEC by the end of the debt agreements' 60 to 90-day grace periods.
DPL has said the delay stemmed from an independent counsel's investigation of corporate governance concerns raised last month by DPL Controller Daniel Thobe. Thobe balked at signing the annual report and outlined his concerns about the pay and travel of top executives in a March 10 memo to audit committee chairman W. August Hillenbrand.
DPL has not specified how long the investigation will last. Hornick said Fitch downgraded DPL's ratings because of the missed deadline, not the contents of Thobe's memo.
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