Research Update: Czech-Based Energo-Pro a.s. Affirmed At 'BB-' After Acquiring Brazilian Hydro Assets; Outlook Stable

On Sept. 30, 2024, Energo-Pro a.s. (EPas) announced that it will acquire seven Brazilian hydro power plants (HPPs) with a combined capacity of 90 megawatts (MW). The acquisition will mostly be financed via an equity injection from EPas' parent, DK Holding Investments (DKHI). Despite the limited scope of the acquisition (about 5% of consolidated EBITDA), we anticipate that it will weigh on credit metrics at DKHI, causing S&P Global Ratings-adjusted funds from operations (FFO) to debt to dip below 20% in 2024 and then hover at around 20% through 2025 and 2026. We affirmed our 'BB-' rating on EPas. The stable outlook indicates that we expect only a temporary dip in adjusted FFO to debt following the acquisition, with a

...- On Sept. 30, 2024, Energo-Pro a.s. (EPas) announced that it will acquire seven Brazilian hydro power plants (HPPs) with a combined capacity of 90 megawatts (MW). The acquisition will mostly be financed via an equity injection from EPas' parent, DK Holding Investments (DKHI). - Despite the limited scope of the acquisition (about 5% of consolidated EBITDA), we anticipate that it will weigh on credit metrics at DKHI, causing S&P Global Ratings-adjusted funds from operations (FFO) to debt to dip below 20% in 2024 and then hover at around 20% through 2025 and 2026. - We affirmed our '##-' rating on EPas. - The stable outlook indicates that we expect only a temporary dip in adjusted FFO to debt following the acquisition, with a recovery to about 20% over 2025-2026. We do not anticipate further additional inorganic growth at the DKHI or EPas level within the next two years....

Research Update