DBRS cuts Enmax

DBRS said it downgraded the issuer rating and unsecured debentures rating of Enmax Corp to BBB (high) from A (low). All trends are stable. This action follows the closing of the acquisition of Emera Maine, the regulated electric transmission and distribution company previously owned by Emera Inc., for a purchase price of $959 million. Including assumed debt, the aggregate enterprise value is about $1.3 billion. This action removes the ratings from under review with negative implications, where they were placed on March 25, 2019, following the acquisition announcement.

The downgrades reflect DBRS’ view the significant increase in leverage as a result of the mostly debt-financed acquisition more than offsets the modest improvement in Enmax’s business risk profile resulting from the acquisition of relatively low-risk, regulated operations.

The stable trend reflects the expectation of modest deleveraging of Enmax’s balance sheet and improvement in credit metrics over the next two to three years in order to support the current ratings.

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