S&P Global Ratings has affirmed “negative outlook” on the company rating of Global Power Synergy Plc (GPSC) to reflect its higher leverage following the proposed acquisition of Glow Energy Plc and investment in an energy recovery unit (ERU).
“The pace and extent of deleveraging over the next 1218 months is uncertain, in our view. However, we believe the combined business has better scale and diversity. Moreover, GPSC is likely to receive group shareholder support on an ongoing basis.
“We believe residual integration risk remains for the investments, and GPSC's leverage (ratio of debt to EBITDA) may stay above 5x over the next 1224 months.
“In our view, the large acquisitions and the significant rise in leverage reflect increased leverage tolerance, although the business position is strengthening” it said in a statement.