by Daniel J. Graeber
London (UPI) Dec 4, 2015
Creating a new subsidiary to manage renewable energy for German energy company RWE adds a lay of uncertainty to creditors, Fitch Ratings warned.
"RWE will transfer its renewables, grids and retail operations in Germany and abroad to a new subsidiary and list it on the stock market," the company announced Tuesday. "In so doing, the company will create a platform for growth with its own access to the capital market."
For the first three quarters of the year, earnings before interest, taxes, depreciation and amortization -- the income the company has free for interest payments -- was down 6 percent from the same period last year to $4.7 billion. Operating results for RWE were down 9 percent to $2.8 billion.
The company, along with its peers focused on oil and natural gas, attributed the decline to slumping energy prices.
Fitch Ratings, from London, said it placed the company on "Rating Watch Negative" in response to the move to spin some RWE entities into a subsidiary. The new company "will remain majority owned by RWE, but will create an extra layer of complexity and uncertainty for RWE's creditors," the ratings agency said.
RWE said the new subsidiary will be listed by late 2016 and use proceeds from share sales to finance future growth. It will be a new entity under the same roof with a strong wind-centric renewables portfolio, more than 23 million retail customers and a efficient grid network spread out over much of Central Europe.
Fitch adds the "exact details" of the move have yet to materialize.
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