DBRS Comments on Veresen’s Sale of Power Business

DBRS Limited (DBRS) today notes that Veresen Inc. (Veresen or the Company) has announced that it has entered into a suite of separate agreements to sell its power generation business for $1.18 billion, including the Company’s share of estimated asset level debt of $402 million at December 31, 2016. The sale transactions are expected to close during Q2 2017, subject to necessary approvals and other closing conditions.

DBRS had placed Veresen’s ratings Under Review with Negative Implications on August 4, 2016, following the Company’s announcement that it would sell its power generation business, suspend its Premium Dividend and Dividend Reinvestment Plan (DRIP) and maintain its current dividend payout. Proceeds from the sale of the power business will be invested to develop Veresen’s midstream projects in the core natural gas and natural gas liquids infrastructure business. DBRS believes that this announcement negatively affects Veresen’s business risk profile. Please refer to the DBRS press releases “DBRS Places Veresen Inc.’s Ratings Under Review with Negative Implications,” dated August 4, 2016, and “DBRS Maintains Veresen Inc.’s Ratings Under Review with Negative Implications Status,” dated November 18, 2016. DBRS notes that today’s announcement by the Company is consistent with its announcement on August 4, 2016. Consequently, DBRS is maintaining the Under Review with Negative Implications status on Veresen’s ratings. DBRS will further review the details relating to the sale transactions as they become available and aims to resolve the Under Review with Negative Implications status after the sale transactions have closed in Q2 2017.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodologies are Rating Companies in the Pipeline and Diversified Energy Industry, DBRS Criteria: Rating Corporate Holding Companies and Their Subsidiaries and DBRS Criteria: Preferred Share and Hybrid Security Criteria for Corporate Issuers, which can be found on our website under Methodologies.

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