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Moody’s changes PKN Orlen view to negative
Moody’s Investors Service said it affirmed the issuer rating of PKN Orlen SA at Baa2 and affirmed the baseline credit assessment at baa3. Concurrently, Moody’s affirmed at Baa2 the rating of the €500 million due 2021 and €750 million due 2023 senior unsecured bonds issued by Orlen Capital AB and guaranteed by PKN Orlen. The outlook on all ratings has been changed to negative from stable.
“Today’s outlook change reflects the uncertainty regarding PKN Orlen’s future growth strategy consisting of additional acquisitions and large capex investments, while the company’s Moody’s adjusted leverage is likely to increase to around 2.5x debt/EBITDA pro forma of the envisaged acquisitions of Energa SA and Grupa Lotos SA pro forma based on combined EBITDA of the acquired companies and the increased debt/EBITDA level, from currently 1.1x. Furthermore, we note that so far no separate financing for both acquisitions has been announced and that Energa SA still intends to build the coal power plant Ostroleka C with an installed capacity of 1000MW, while also its financing has not yet been fully secured,” said Janko Lukac, an assistant vice president and Moody’s lead analyst for PKN Orlen, in a press release.
The outlook change reflects the company’s intention to acquire 100% of the capital of Energa for about PLN 2.9 billion while being in the process of taking over the second biggest Polish refiner Grupa Lotos SA with a market cap of around PLN 16 billion.
“At the same time PKN Orlen is committed to substantial capex investments in its petrochemical operations and plans to increase its exposure to power generation and renewables. Furthermore, until there is more clarity on PKN Orlen’s strategic direction, Moody’s sees a risk of additional debt-financed acquisitions which further weaken the company’s financial profile,” Moody’s said.
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