DBRS Maintains VSN on Review-Negative

DBRS has announced that it:

has today maintained its status of Under Review with Negative Implications on the BBB Issuer Rating and Senior Unsecured Notes rating and the Pfd-3 Preferred Share rating of Veresen Inc. (Veresen or the Company). The ratings were placed Under Review with Negative Implications on August 4, 2016, following the Company’s announcement that it will sell its power generation business, suspend its Premium Dividend and Dividend Reinvestment Plan (DRIP) from August 2016 and maintain its current dividend payout. Proceeds from the sale of the power business will be invested to develop Veresen’s midstream projects in the core natural gas and natural gas liquids infrastructure business.

Overall, DBRS believes that the weakness in Veresen’s business risk profile will not be mitigated by any meaningful improvement in the Company’s financial risk profile and will likely result in lower ratings. DBRS recognizes that there are execution risks related to the sale of the power business, and any delays in the execution and change in market conditions could affect the Company’s financial risk profile. Consequently, DBRS has placed Veresen’s ratings Under Review with Negative Implications. DBRS expects any downgrade of the Company’s ratings to be limited to one notch. DBRS will further review the details relating to the sale of the power business as they become available and aims to resolve the Under Review with Negative Implications status after the sale transactions have closed. Veresen expects to enter into binding sale agreements in Q1 2017, with closing in the first half of 2017.

I previously reported the placement on Review-Negative in early August, 2016.

Affected issues are VSN.PR.A, VSN.PR.C and VSN.PR.E.

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