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Moody's affirms Great Plains
Moody's Investors Service said it affirmed Great Plains Energy Inc.'s senior unsecured rating at Baa2 following the announcement that Great Plains has entered into a definitive agreement to acquire Aquila Inc. for a total cash and stock consideration of approximately $1.7 billion.
The outlook is stable.
The transaction is predicated upon the execution of the announced sale of Aquila's remaining non-Missouri regulated utility assets to Black Hills Corp. and the use of the $940 million agreed upon sale proceeds to fund the cash portion of the acquisition consideration. Moody's expects Aquila to operate as a separate subsidiary of Great Plains.
The agency said the affirmation reflects the benefits of the transaction, which will increase the size and scale of Great Plain's Missouri utility operations, reduce the overall business risk of the company and further shift its cash flow mix toward stable regulated utility cash flows.
These benefits are somewhat offset by the increase in consolidated debt at Great Plains due to Aquila's sizable debt load and the weakening of its consolidated credit metrics, Moody's said, adding that it expects Great Plains will use a portion of the proceeds from the sale of Aquila's non-Missouri assets to reduce a portion of Aquila's debt load after closing.
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