Substantial contribution to earnings of the regulated French gas transmission and distribution operations; Diversified gas import portfolio, and competitive supply position thanks to its access to import and storage, LNG fleet, and large share of residential clients; Robust free cash flow generation ability; and Very strong financial profile. Dilutive credit impact of proposed all-share merger with Suez; Insufficient increases in French regulated supply tariffs to offset hike in gas prices; and Increasing competitive pressures expected on gas supply margins as liberalization progresses. The 'AA-/A-1+' corporate credit ratings on French gas utility Gaz de France S.A. (GDF) were placed on CreditWatch with negative implications on Feb. 27, 2006, following the announcement of a proposed all-share merger between GDF and Franco-Belgian multi-utility
