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S&P downgrades EnerCare
Standard & Poor's said it lowered the long-term corporate credit rating on EnerCare Inc. and subsidiary EnerCare Solutions Inc. to BBB from BBB+.
The outlook is stable.
The agency also said it lowered the rating on EnerCare Solutions’ senior unsecured notes to BBB from BBB+.
The downgrade reflects an expectation that EnerCare's adjusted debt-to-EBITDA will remain at more than 3x over the next couple of years, which is commensurate with a significant financial risk profile, S&P said.
Pro forma for the acquisition, the agency said it estimated that adjusted debt-to-EBITDA should be about 3.5x at the end of 2016 and gradually improve to about 3.0x in 2018 as positive discretionary cash flow could facilitate debt reduction, the agency said.
Through the proposed acquisition of Service Experts, EnerCare will gain access to the HVAC service and repair market in the United States, thereby diversifying EnerCare's earnings geographically and by service offering, S&P said.
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