DBRS Places AltaLink, L.P., and AltaLink Investments, L.P. Under Review with Developing Implications

DBRS has today placed AltaLink, L.P.’s (ALP) Commercial Paper and Senior Secured Bonds and Medium-Term Notes,* and AltaLink Investments, L.P.’s Issuer Rating and Senior Unsecured Bonds (collectively, AltaLink or the Companies) Under Review with Developing Implications. The placement of the ratings Under Review with Developing Implications follows the announcement that SNC-Lavalin Group Inc. (rated BBB, Negative trend) has agreed to sell AltaLink to Berkshire Hathaway Energy (BHE) for approximately $3.2 billion (the Transaction). The Transaction is subject to regulatory approvals, including by the Alberta Utilities Commission, and is expected to close in late 2014 to early 2015.

(1) BUSINESS RISK PROFILE – Neutral
DBRS views the proposed Transaction as neutral with respect to AltaLink’s business risk profile. DBRS expects the legal structure of the Companies’ operations to remain unchanged and to continue to operate exclusively as a 100% electricity transmission company on a stand-alone basis within the BHE umbrella.

(2) FINANCIAL RISK PROFILE – Neutral
DBRS expects the funding strategy at AltaLink to remain unchanged following the Transaction. As a result, the key financial metrics, including ALP’s debt-to-capital ratio (approximately 60% for 2013), to remain within the current rating category. The premium over the rate base is expected to be funded by BHE in order to maintain the current capital structure at the Companies. DBRS acknowledges that AltaLink will benefit from being a part of the BHE family, which has strong financial flexibility to contribute necessary equity injections in a timely manner during this period of heavy capital requirements. DBRS will continue to monitor developments and reassess whether the Transaction will be aligned with current expectations. Should the Transaction be executed as planned, the ratings of AltaLink will likely be removed from Under Review with Developing Implications. However, any significant deviations could result in negative rating actions.

Notes:

• As of May 26, 2014, the Senior Secured Bonds and Medium-Term Notes (Secured) of AltaLink, L.P. will be referred to as the Medium-Term Notes (Secured).

All figures are in Canadian dollars unless otherwise noted.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodology is Rating Companies in the Regulated Electric, Natural Gas and Water Utilities Industry, which can be found on our website under Methodologies.