Fitch says SUNE deal not to impact Greenko's credit profile

The acquisition of SunEdison’s (OTCMKTS:SUNEQ) solar and wind assets in India is not expected to affect the liquidity of Indian firm Greenko Energy Holdings, Fitch Ratings said Monday.

The company, a unit of Greenko Group Plc (LON:GKO), will buy 390 MW of capacity, including several wind farms and 343 MW of operational or close-to-operational solar power plants. Most of the solar parks have power purchase agreements (PPAs) of 20 to 25 years at rates of between INR 5.10 (USD 0.077/EUR 0.069)/kWh to INR 7.01/kWh. Fitch stressed that these are quite attractive terms when compared to tariffs in recent tenders, and it also noted that certain operational synergies can be expected because over 80% of the SunEdison capacity is in regions where Greenko already operates wind farms.

“Fitch expects the newly acquired assets to be able to service their debt obligations with their own cash generation, so they will not put pressure on the GEH group's liquidity.” The agency expects the Indian company’s consolidated financial leverage, as measured by debt to EBITDA, to remain around 5x in the medium term.

Greenko is paying USD 42 million (EUR 37.5m) in cash and taking on USD 350 million of project-level debt. Thus the enterprise value of the transaction reaches USD 392 million.

As part of the deal, it will also get a project pipeline of 653 MW at no additional cost. Fitch said Greenko was likely to pursue only projects from that pipeline that are economically sound.

(INR 100 = USD 1.5/EUR 1.34)

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