S&P might lower Eesti Energia

S&P said it placed its BBB issuer credit rating on Eesti Energia AS on CreditWatch with negative implications.

The agency also placed on CreditWatch negative the BBB issue rating on Eesti Energia's senior unsecured debt.

S&P said the CreditWatch placement follows Eesti Energia's announced intentions to acquire 100% of Nelja Energia AS.

Eesti Energia intends to fund the acquisition with cash available on the balance sheet and existing loan facilities. Part of Nelja Energia's debt is potentially subject to acceleration with the change of control.

“Although we expect Eesti Energia's credit metrics to weaken following the acquisition, with funds from operations (FFO) to debt of about 19% in 2018, we assume management will implement credit-supportive measures, particularly to reduce debt to FFO to debt of about 25%, which is commensurate with the current rating,” the agency said in a news release.

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