The ratings of Tucson Electric Power Co. (TEP) are on CreditWatch with negative implications to reflect the decision by TEP's parent, UniSource Energy Corp. (unrated), to sell 100% of the company to a private equity firm. While the proposed sale will result in the retirement of roughly $260 million in obligations at TEP, the transaction overall is expected to add an estimated $400 million in additional acquisition-related debt to UniSource at the holding company level. UniSource is currently highly leveraged, with a debt-to-total capitalization ratio of more than 80% on a consolidated basis. Standard&Poor's Ratings Services' prior stable outlook on TEP was based on the expectation that UniSource would continue to work toward reducing its overall debt burden.
