DBRS Comments on ECN Capital’s Substantial Issuer Bid

DBRS, Inc. (DBRS) notes that its ratings for ECN Capital Corp. (ECN or the Company), including ECN’s Long-Term Issuer Rating of BBB (low), are unaffected following the announcement of the preliminary results of the Company’s Substantial Issuer Bid (SIB), which closed on January 10, 2019. The trend on all ratings is Stable.

The SIB to repurchase for cancellation up to C$265 million of ECN’s common shares, which was filed on December 5, 2018, was oversubscribed. The shares expected to be repurchased under the SIB represent approximately 23.04% of ECN’s shares issued and outstanding as of January 9, 2019.

DBRS notes that current liquidity levels were more than sufficient to allow for share repurchases, while maintaining sound contingent available liquidity. DBRS considers the impact on leverage as acceptable with pro-forma leverage still supportive of the ratings. DBRS estimates that financial leverage (debt-to-equity), pro-forma for the share repurchase, at September 30, 2018, would be approximately 1.1x, up from the reported 0.75x.

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

The applicable methodology is the Global Methodology for Rating Non-Bank Financial Institutions, which can be found on our website under Methodologies & Criteria.

The primary sources of information used for this rating include company documents and SNL Financial. DBRS considers the information available to it for the purposes of providing this rating was of satisfactory quality.

For more information on this credit or on this industry, visit www.dbrs.com.

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