Research Update: Energo-Pro Downgraded To 'B+' On Weaker Financials Despite Announcing Hydro Acquisition; Outlook Stable

On March 24, 2025, Czech Republic-based Energo-Pro a.s. (EPas) announced its intention to acquire the Baixo Iguacu hydropower plant (HPP) at Iguacu Falls, Brazil for an equity value of about €250 million for 100% ownership. We view this integration positively since EPas will generate medium- to long-term contracted revenue, enabling EPas to increase its 2025 EBITDA by €35 million-€40 million per year and improve its operating efficiency. We expect the EBITDA margin to average about 75%-80% for the entire power generation portfolio. We consider the announced acquisition aggressive because it is mainly debt funded, which increases liquidity risks. The transaction will also increase EPas' exposure to fluctuations in the foreign exchange rate and power prices, leading to increasing EBITDA volatility

...- On March 24, 2025, Czech Republic-based Energo-Pro a.s. (EPas) announced its intention to acquire the Baixo Iguacu hydropower plant (HPP) at Iguacu Falls, Brazil for an equity value of about 250 million for 100% ownership. We view this integration positively since EPas will generate medium- to long-term contracted revenue, enabling EPas to increase its 2025 EBITDA by 35 million-40 million per year and improve its operating efficiency. We expect the EBITDA margin to average about 75%-80% for the entire power generation portfolio. - We consider the announced acquisition aggressive because it is mainly debt funded, which increases liquidity risks. The transaction will also increase EPas' exposure to fluctuations in the foreign exchange rate and power prices, leading to increasing EBITDA volatility and our expectation that EBITDA will stabilize at about 320 million-350milion over 2025-2026 despite integrating the two assets. This is about 50 million below our previous expectation due to reduced...

Research Update