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On 2013-12-31, DBRS placed BRF on Review-Developing:

DBRS has today placed Brookfield Renewable Energy Partners LP’s (BREP or the Company) Issuer Rating and related ratings Under Review with Developing Implications. This rating action follows the announcement of the Company’s acquisition of White Pine Hydro Investments, LLC (White Pine or the Portfolio) from a subsidiary of NextEra Energy Resources, LLC (the Acquisition). The total enterprise value of the Acquisition is approximately $760 million (including $700 million of non-recourse debt) and is expected to close in the first quarter of 2013, subject to various regulatory approvals. The rating action largely reflects some uncertainties associated with a timely and prudent financing strategy.
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The Company intends to initially finance the total acquisition price with cash on hand ($252 million as at September 30, 2012) and credit facilities ($854 million available as at September 30, 2012). DBRS expects the Company to refinance the holding company-level credit facility with a prudent mix of non-recourse project level debt, equity from BREP and contributions from institutional partners in the first half of 2013. The Company has a deconsolidated debt-to-capital ratio of 19% as of June 30, 2012. Should BREP’s expected financing strategy deviate from the aforementioned timeframe and deconsolidated leverage increase to above 20%, there could be negative credit implications.

Today, the review was resolved and the company confirmed with a stable trend:

DBRS has today removed Brookfield Renewable Energy Partners LP’s (BREP or the Company) ratings from Under Review with Developing Implications. DBRS has also confirmed the Issuer Rating and Senior Unsecured Debentures and Notes at BBB (high) and the Class A Preference Shares at Pfd-3 (high), all with Stable trends. With the establishment of non-recourse bridge financing for the acquisition of White Pine Hydro Investments, LLC (the Acquisition; White Pine), the planned issuance of preferred shares on a bought deal basis and expected equity injection from institutional partners, DBRS is comfortable with the Company’s funding strategy, which includes appropriate measures to maintain a reasonable financial profile while executing its growth strategy.
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Following the completion of the Acquisition, the Company has committed to tendering the $700 million of existing debt at White Pine with $350 million of non-recourse bridge financing and $350 million of drawings from BREP’s credit facility and available cash. Concurrently, the Company plans to issue an additional $125 million (up to $175 million) of preferred equity to repay drawings on BREP’s credit facility. The Company also expects to receive equity funding from its institutional partners such that there will be no material incremental drawings on BREP’s credit facility relating to the tendering of the existing debt at White Pine.

Based on BREP’s financing plan, DBRS conducted a pro forma analysis with a financing plan of $350 million non-recourse bridge financing, equity from institutional partners and $125 million of preferred equity issuance.

Based on DBRS’s pro forma calculations, the Company’s credit metrics would be in line with its current rating category with (1) deconsolidated debt-to-capital ratio at approximately 20%, (2) deconsolidated cash flow-to-deconsolidated debt ratio at approximately 18% and (3) deconsolidated cash flow-to-deconsolidated interest coverage at approximately 4.9 times.

BRF is the proud issuer of BRF.PR.A, BRF.PR.C and BRF.PR.E; another issue was announced earlier today. Due to the corporate structure, BAM, BPO, BPP, BNA, BRN and BRF should be considered as the same name for issuer concentration calculation purposes.

This entry was posted on Tuesday, April 23rd, 2013 at 10:05 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.