On Nov. 8, 2002, Standard&Poor's Ratings Services placed Tucson Electric Power's (TEP) ratings on CreditWatch with negative implications following parent UniSource Energy Inc.'s announcement of an agreement to purchase certain gas and electric transmission and distribution assets in Arizona from Citizens Communications for $230 million. Tucson-based UniSource Energy Inc. had $1.15 billion in debt outstanding as of Sept. 30, 2002. The CreditWatch listing reflects current uncertainty about the effect on TEP's credit quality after the transaction, including the ultimate financial structure of the acquisition, the cash generating capacity of the new properties, and decisions by the Arizona Corporation Commission (ACC) with respect to ratemaking. It is also important to note that UniSource has negotiated a walk-away provision for
