Fitch revises Emeria outlook to negative

Fitch Ratings said it revised the outlook on Emeria SASU to negative from stable and affirmed its B issuer rating, its B+/RR3(52%) senior secured ratings and its CCC+/RR6(0%) senior unsecured ratings.

“The negative outlook reflects Emeria's continued elevated leverage, which remains high for a B rating, as a result of high M&A activity in 2022 and 2023. Fitch expects that strong free cash flow (FCF) and management's announced intention to deleverage, including a more conservative approach to acquisitions, should result in lower leverage that is within Fitch's rating sensitivities by 2026. Lower M&A activity also reduces integration costs, which Fitch includes in Emeria's EBITDA. However, debt-funded acquisitions without reducing near-term leverage would adversely affect the rating,” the agency said in a statement.

Fitch said it forecasts Emeria's 2023 EBITDA gross leverage at 11.2x (around 10.5x on an annualized basis) reflecting a part-year contribution from acquisitions (including Chestertons), around €75 million of integration expenses and 85 million of one-off deferred payments from acquisitions in previous years.

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