S&P: Sierra Pacific liquidity improves

Standard & Poor's said Wednesday that the consent of Nevada Power Co.'s (B+/negative/--) series Z first mortgage bondholders to modify the dividend restriction in the 1953 mortgage indenture improves Sierra Pacific Resources' (B+/negative/--) liquidity position.

The modified indenture, however, will not affect the ratings on Sierra Pacific Resources or its utility subsidiaries, Nevada Power and Sierra Pacific Power Co. (B+/negative/--).

S&P said the dividend restriction originally limited cumulative dividends from March 1, 1953 to the cumulative earnings since that date, subject to sale of capital stock. Following the Public Utility Commission of Nevada's $434 million disallowance in March 2002, Nevada Power was precluded from paying dividends by this restriction.

The modification changes the reference date to July 28, 1999, the date of Nevada Power's merger with Sierra Pacific Power, and also includes capital contributions made by Sierra Pacific Resources, which total more than $500 million since that date.

The indenture modification will enable Nevada Power to begin making dividend payments to Sierra Pacific Resources.

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