Fitch: Westar Energy on watch

Fitch Ratings said it placed the BBB+ issuer default ratings of Westar Energy, Inc. and Kansas Gas & Electric Co. on Rating Watch negative following news about a proposed acquisition by Great Plains Energy Inc. for $12.2 billion, including $3.6 billion of assumed debt.

Westar will become a direct wholly owned subsidiary of Great Plains upon deal closing, which is expected to occur by spring 2017, Fitch said.

The primary concern is the level of Great Plains consolidated leverage following the acquisition, inclusive of $4.4 billion of parent-level debt, plus an undetermined amount of hybrid securities, the agency said.

The elevated leverage will negatively weigh on Westar's and Kansas Gas's ratings and could result in a one- or two-notch downgrade, Fitch said.

The combined companies bring together similar business models likely to generate synergy savings, the agency said, while presenting low integration risk.

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