Fitch might lower Envision Energy

Fitch Ratings said it placed the BBB- long-term foreign currency issuer default rating of Envision Energy International Ltd. on rating watch negative.

The agency also placed the company's BBB- senior unsecured rating and the BBB- rating on its $300 million 7½% senior notes due 2021 issued by Envision Energy Overseas Capital Co., Ltd. on rating watch negative.

The action reflects the expected deterioration of Envision Energy's leverage in the medium term if the planned loans of about $180 million equivalent are disbursed to affiliated companies owned by the major shareholder of Envision Energy, Fitch said.

The loans will be used by the affiliates to finance the acquisition of Nissan Motor Co., Ltd.'s (BBB+) battery business, Automotive Energy Supply Corp.

Under the proposed plan, Envision Energy will have no direct economic interest over Automotive Energy Supply.

If disbursed, the proposed loan would raise the company's 2018 funds from operations adjusted net leverage to 2.3x by end-2019, and Fitch said it expects this metric to remain above 1.5x, the level at which it would consider negative action.

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