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Credit Crisis Promises to Delay Entergy Nuclear Spinoff

Associated Press
By MARK PETERS and CYNTHIA KOONS
A freeze-up in the risky debt markets threatens to delay Entergy Corp.'s planned creation of the first, stand-alone nuclear-power company in the U.S.

The electricity company's plan to spin off five nuclear-power plants into a new, publicly traded company requires the issuance of an estimated $4.5 billion in new debt by year end. But the market for high-yield debt has deteriorated amid wider economic upheaval. The debt Entergy would issue for the spinoff is expected to be below investment grade and would cost the company substantially more than it would have before the credit crisis began.

An Entergy power company crew works to restore power in Baton Rouge, La., on Sept. 4.

"With the bond markets in disarray, the ability to consummate the spin under this scenario is questionable," Citigroup analyst Greg Gordon wrote in a recent note to clients.
An Entergy spokesman said the company remains committed to completing the spinoff in the fourth quarter, but acknowledged that "the unprecedented situation in the financial markets" could affect the timing of any company transaction.

The company, based in New Orleans, still awaits approvals from regulators in New York and Vermont. It received approval earlier this year from federal nuclear regulators for the spinoff of the company, to be called Enexus Energy Corp.

The purpose of Enexus is to boost shareholder value by separating Entergy's profitable nuclear plants in deregulated power markets from its slower-growing regulated utilities. As part of the spinoff, Entergy holders would receive shares in Enexus.

Write to Mark Peters at mark.peters@dowjones.com and Cynthia Koons at cynthia.koons@wsj.com