The 'BB' corporate credit rating on Tucson Electric Power Co. (TEP) reflects a weak overall financial profile that is principally the result of high debt levels. However, TEP has made slow but steady progress to pay down its debt burden, and its strong cash flows and stable, regulated retail electric operations have made UniSource Energy Corp., TEP's parent, an acquisition target. In November 2003, Saguaro Utility Group LP, an Arizona limited partnership whose limited partners include Kohlberg Kravis Roberts&Co. LP (KKR), J.P. Morgan Partners LLC, and Wachovia Capital Partners, entered into an agreement to purchase UniSource for $3 billion, including the assumption of about $1.9 billion of debt and capital lease obligations. The outcome of the proposed acquisition
