Research Update: Fortum Oyj And Uniper SE Ratings On CreditWatch Negative Following Fortum's Purchase Of Additional Stake In Uniper

On Oct. 8, 2019, Fortum Oyj agreed to acquire an additional stake in excess of 20.5% in Uniper SE from Elliot and Knight Vinke, increasing its total shareholding to over 70%. Closing Fortum expects by the end of first-quarter 2020 and is subject to regulatory approvals in Russia and the U.S. The transaction weakens Fortum's business risk profile to some degree (but still within the satisfactory category), assuming no change in Uniper's sizable exposure to carbon-intensive thermal power generation and commodities trading activities. It also delays Fortum's deleveraging, with adjusted debt to EBITDA expected to remain above 3.0x in 2020 compared to below 3.0x before the deal was announced. We understand Fortum's direct influence over Uniper is intended to increase

...- On Oct. 8, 2019, Fortum Oyj agreed to acquire an additional stake in excess of 20.5% in Uniper SE from Elliot and Knight Vinke, increasing its total shareholding to over 70%. Closing Fortum expects by the end of first-quarter 2020 and is subject to regulatory approvals in Russia and the U.S. - The transaction weakens Fortum's business risk profile to some degree (but still within the satisfactory category), assuming no change in Uniper's sizable exposure to carbon-intensive thermal power generation and commodities trading activities. It also delays Fortum's deleveraging, with adjusted debt to EBITDA expected to remain above 3.0x in 2020 compared to below 3.0x before the deal was announced. - We understand Fortum's direct influence over Uniper is intended to increase significantly. As such, we will likely fully consolidate Uniper into Fortum and link the issuer credit rating on Uniper to that on Fortum upon antitrust approval. - We placed our '###' long-term ratings on Fortum and Uniper...

Research Update