TEXT-S&P puts EnergySolutions ratings on watch developing

Mon Jan 7, 2013 4:09pm EST

Overview
     -- Nuclear services provider EnergySolutions Inc. announced that it
has entered into an agreement to be acquired by a subsidiary of unrated 
energy-focused private equity sponsor Energy Capital Partners.
     -- We are placing our ratings on EnergySolutions Inc. on CreditWatch with 
developing implications.
Rating Action
On Jan. 7, 2013, Standard & Poor's Ratings Services placed its ratings, 
including its 'B' corporate credit rating, on EnergySolutions Inc. on 
CreditWatch with developing implications.
Rationale
The CreditWatch placement follows Salt Lake City-based nuclear services 
provider EnergySolutions Inc.'s announcement that it has entered into a 
definitive agreement to be acquired by a subsidiary of Energy Capital Partners 
II, which is an investment fund of Energy Capital Partners (ECP). ECP is an 
energy-focused private equity sponsor with more than $7 billion in capital 
commitments. According to the terms of the agreement, EnergySolutions' 
shareholders will receive $3.75 in cash for each share of common stock, which, 
based on 90.3 million of common shares outstanding reported at Nov. 7, 2012, 
is approximately $338.5 million. The company's adjusted debt at Sept. 30, 2012 
was $583 million, or roughly 3.6x its trailing-12-months' adjusted EBITDA. The 
adjusted debt figure is calculated net of more than $300 million in restricted 
cash and includes approximately $72 million related to the capitalization of 
operating leases and asset retirement obligations. EnergySolutions is 
permitted to seek superior proposals from third parties until Feb. 6, 2013. 
The acquisition is subject to customary closing conditions, including 
regulatory approvals in the U.S. and U.K. and the approval by EnergySolutions' 
stockholders.
CreditWatch
The ratings are on CreditWatch with developing implications. Per the terms of 
the agreement, EnergySolutions is permitted to engage in discussions with 
other suitors, which may include other financial sponsors or strategic buyers. 
Depending on the final proposal, the impacts to EnergySolutions' financial 
risk profile and operating strategy could prompt us to raise, lower, or affirm 
the ratings. We plan to meet with management to discuss the acquisition and to 
resolve the CreditWatch following a review of the transaction. We expect to 
resolve the CreditWatch during the next several weeks after evaluating the new 
capital structure, the sponsor's financial policies, and management's business 
strategies.
Related Criteria And Research
     -- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, 
May 27, 2009
Ratings List
Ratings Placed On CreditWatch Developing

                                        To                 From
EnergySolutions Inc.
 Corporate Credit Rating                B/Watch Dev/--     B/Negative/--

EnergySolutions Inc.
EnergySolutions LLC
 Senior Secured                         BB-/Watch Dev      BB-   
  Recovery Rating                       1                  1
 Senior Unsecured                       B/Watch Dev        B 
  Recovery Rating                       3                  3




Complete ratings information is available to subscribers of RatingsDirect on 
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 
by this rating action can be found on Standard & Poor's public Web site at 
www.standardandpoors.com. Use the Ratings search box located in the left 
column.
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