Fitch: TECO Energy on watch

Fitch Ratings said it placed the BBB issuer default rating of TECO Energy Inc. on Rating Watch negative following news of its definitive purchase agreement to acquire New Mexico Gas Intermediate, Inc. and its subsidiary, New Mexico Gas Co., from Continental Energy Systems LLC for $950 million, including the assumption of $200 million of New Mexico Gas's debt.

Fitch also said it placed the BBB+ issuer default rating of subsidiary Tampa Electric Co. and the BBB issuer default rating of TECO's guaranteed finance subsidiary, TECO Finance, Inc., on Rating Watch negative.

The company has obtained a $1.075 billion fully committed bridge loan facility from Morgan Stanley to support financing for the transaction,, Fitch said.

However, the agency said it expects that the permanent financing, expected to be completed in 2014, will consist of cash on hand, long-term debt at New Mexico Gas and parent common equity.

The transaction does not require shareholder approval. Management expects the transaction to close in the first quarter of 2014, Fitch said.

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