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Fitch may up RRI Energy, Mirant Americas
Fitch Ratings said it affirmed the B+ issuer default rating of Mirant Corp., Mirant North America, LLC and Mirant Mid-Atlantic, LLC with a stable outlook following an announced stock-for-stock merger of equals with RRI Energy Inc., which has an issuer default rating of B.
Fitch also said it affirmed the B+ issuer default rating of Mirant Americas Generation, LLC and placed its B/RR5 senior unsecured rating on Rating Watch positive. The agency also said it placed RRI Energy on Rating Watch positive.
The primary credit benefit of the merger is the relative ease of achieving synergy savings projected by the management of both companies, which is estimated at $150 million per year, Fitch said.
Doubling the size of the generation portfolio by merging the two companies will result in a more efficient scale of operations, without materially altering the profile of the generating fleet, the agency said.
There will be no major change in business strategy or debt leverage as a result of the strategy, the agency added. The combined entity is expected to pursue a hedging strategy close to that of Mirant and this has a neutral affect on the companies' ratings, Fitch said.
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