PGE’s takeover of EDF assets will weaken its financial profile – Moody’s

WSE-listed power group PGE will have its financial profile deteriorated after taking over the Polish assets of EDF, ratings agency Moody’s said. “FFO (funds from operations)/net debt should stay above 50 percent in 2017, but is likely to decline further in 2018-19, below 40 percent, as the group implements its current capital expenditure program,” Moody’s said. According to Moody's, PGE faces big investments in new power generation and modernization of existing generation assets, which can mean in the medium term a negative FCF or close to zero. Analysts estimate that the results of the PGE manufacturing segment will fall due to rising CO2 prices and a reduction in free allowances. They also point to the lack of details about PGE's investment plan after the acquisition of EDF assets. Back in May, PGE agreed to buy Polish assets of French EDF for PLN 4.5 billion. The value of the transaction includes PLN 2.45 billion in equity value and PLN 2.06 billion in debt and is expected to be finalized the deal by January 2, 2018.