Moody’s affirms Inkia on acquisition news

Moody’s Investors Service said it affirmed the Ba3 corporate family rating of Inkia Energy Ltd., as well as the Ba3 global senior unsecured rating on its 8 3/8% notes due April 2021.

The outlook is stable.

The affirmation of the ratings was prompted by news that the group agreed to acquire the Energuate businesses, Moody’s said.

This proposed transaction consists of acquiring majority ownership stakes in two fully regulated electric distribution companies, Moody’s said, as well as 100% ownership interests in a small retail subsidiary and a small transmission subsidiary that operate in Guatemala.

The agency said it understands that the Energuate businesses will become a subsidiary of Inkia upon completion of the transaction.

The deal is worth about $299.5 million in cash and the assumption of about $289 million of local bank debt, Moody’s said.

To fund the acquisition, Inkia will use a $120 million bridge loan, as well as cash on hand that includes the remaining balance of the cash proceeds generated from the disposal in 2014 of its 21.14% indirect stake in Edegel, the agency said.

The ratings consider that this acquisition will slightly shift Inkia’s business risk profile from a pure-play parent company to a mixed business that includes lower-risk regulated distribution utility operations, Moody’s said.

The ratings also acknowledge that the bulk of Energuate’s operations are subject to the Guatemalan regulatory environment, the agency said.

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