Research Update: ENCE Energia y Celulosa Outlook Revised To Negative On Pontevedra Mill Concession Uncertainty; 'BB-' Rating Affirmed

Spain-based pulp producer ENCE Energia y Celulosa (ENCE) could face the permanent shutdown of its Pontevedra pulp mill in the coming two to three years, should its concession be withdrawn following a legal challenge. We anticipate that the closure of the mill could result in a material deterioration of the company's credit metrics and potentially of its business risk profile. We revised our outlook on ENCE to negative from stable and affirmed our 'BB-' issuer credit rating on the company. The negative outlook reflects the increased risk of a potential multi-notch downgrade if we become certain that ENCE's concession to operate the pulp mill in Pontevedra will be annulled. We think such an event could result in the weakening of

...- Spain-based pulp producer ENCE Energia y Celulosa (ENCE) could face the permanent shutdown of its Pontevedra pulp mill in the coming two to three years, should its concession be withdrawn following a legal challenge. - We anticipate that the closure of the mill could result in a material deterioration of the company's credit metrics and potentially of its business risk profile. - We revised our outlook on ENCE to negative from stable and affirmed our '##-' issuer credit rating on the company. - The negative outlook reflects the increased risk of a potential multi-notch downgrade if we become certain that ENCE's concession to operate the pulp mill in Pontevedra will be annulled. We think such an event could result in the weakening of ENCE's credit metrics, as well as the likely deterioration of its business risk profile....

Research Update