Moody's lowered the senior unsecured and issuer ratings of Fortum Oyj to Baa2 from Baa1, with a negative outlook, on account of an expected increase in the company's financial leverage following the acquisition of a 47.12% stake in Uniper SE.
Fortum said Feb. 7 that shares representing 47.12% of Uniper were tendered under Fortum's voluntary public takeover offer launched in November 2017. The transaction, valued at around €3.8 billion, or €22 per share, is expected to close in mid-2018, subject to regulatory approvals.
The rating agency said that Fortum's credit ratios will significantly decline from current levels, with funds from operations/net debt dropping below 20% upon completion of the transaction. "Whilst with a 47.12% shareholding, Fortum will become Uniper's largest shareholder, it will not be able to exercise control over the Uniper's strategy and any positive contribution to Fortum's cash flows will be through dividends received," Moody's said.
Moody's also expressed uncertainty with regards to Fortum's strategy with regards to its ownership in Uniper. The two companies have entered into discussions regarding the potential for any future cooperation but the timing and the extent to which the parties will be able to realize synergies are uncertain, according to the rating agency.
Given that Fortum is 50.8% owned by the government of Finland, Moody's considers the company to be a government-related issuer.