{"id":26349,"date":"2014-09-23T22:15:43","date_gmt":"2014-09-24T03:15:43","guid":{"rendered":"http:\/\/prefblog.com\/?p=26349"},"modified":"2014-09-23T22:15:43","modified_gmt":"2014-09-24T03:15:43","slug":"dbrs-places-vsn-on-review-negative","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=26349","title":{"rendered":"DBRS Places VSN On Review-Negative"},"content":{"rendered":"<p>DBRS <a href=\"http:\/\/dbrs.com\/research\/272094\/dbrs-places-veresen-inc-under-review-with-negative-implications-following-ruby-pipeline-acquisition-announcement.html\">has announced<\/a> that it:<\/p>\n<blockquote><p>has today placed Veresen Inc.\u0081&#8217;s (Veresen or the Company) Issuer Rating and Senior Unsecured Notes rating of BBB (high) and its Preferred Shares rating of Pfd-3 (high) Under Review with Negative Implications. If the planned acquisition of 50% convertible preferred interest in Ruby pipeline system (Ruby) proceeds as expected, Veresen\u0081&#8217;s overall business risk profile is expected to weaken and its financial risk profile is expected to deteriorate modestly. As a result, Veresen\u0081&#8217;s ratings will likely be downgraded by one notch following the completion of the acquisition.<br \/><b>&#8230;<\/b><br \/>DBRS notes that the Acquisition could add a potential layer of uncertainty around re-contracting to the Company\u0081&#8217;s business risk profile. The average physical throughput on Ruby in the past three years indicates that only 55% of the pipeline capacity is utilized, largely reflecting the weak natural gas pricing environment and competitive landscape. DBRS is of the opinion that Ruby is exposed to re-contracting risk when the majority of contracts (approximately 65%) expire in 2021, as the pipeline\u0081&#8217;s capacity may not be re-contracted at current tolls, volumes or duration.<br \/><b>&#8230;<\/b><br \/>Veresen plans to initially finance the Acquisition with approximately: 1) $800 million in equity (with a 15% over allotment option), 2) $750 million in debt from new credit facilities and 3) the balance from an existing revolving credit facility. Veresen intends to refinance the acquisition-related borrowings over the course of the next 12 months through various capital market instruments as well as with ongoing proceeds received from equity issued in connection with Veresen\u0081&#8217;s Premium Dividend and Dividend Reinvestment Plan.<br \/><b>&#8230;<\/b><br \/>Based on a pro forma of the Acquisition, DBRS estimates that the credit metrics will weaken for Veresen (non-consolidated) with cash flow-to-interest at 5.3 times (x) (7.9x in the last 12 months (LTM) Q2 2014), higher debt-to-capital at 38.2% (35.2% at Q2 2014) and weaker cash flow-to-total debt at 26.0% (34.7% LTM Q2 2014). The significant increase in debt also reduces the Company\u0081&#8217;s financial flexibility and could affect its ability to meet large capital expenditure needs in the future.<\/p><\/blockquote>\n<p>Veresen is the proud issuer of VSN.PR.A and VSN.PR.C, both FixedResets currently rated Pfd-3(high). <\/p>\n","protected":false},"excerpt":{"rendered":"<p>DBRS has announced that it: has today placed Veresen Inc.\u0081&#8217;s (Veresen or the Company) Issuer Rating and Senior Unsecured Notes rating of BBB (high) and its Preferred Shares rating of Pfd-3 (high) Under Review with &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-26349","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/26349","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=26349"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/26349\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=26349"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=26349"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=26349"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}