DBRS Morningstar Places Cameco Corporation Under Review with Developing Implications Following the Announcement of a Strategic Partnership to Acquire Westinghouse Electric Company LLC

DBRS Limited (DBRS Morningstar) placed the Issuer Rating and Senior Debt rating of BBB and Commercial Paper rating of R-2 (middle) of Cameco Corporation (Cameco or the Company) Under Review with Developing Implications. Cameco’s ratings have been placed Under Review as a result of Cameco’s October 11, 2022, announcement to form a strategic partnership and consortium with Brookfield Renewable Partners L.P. (Brookfield Renewable; rated BBB (high) with a Stable trend by DBRS Morningstar) and its institutional partners to acquire Westinghouse Electric Company LLC (Westinghouse) from Brookfield Business Partners L.P.

The total transaction value is approximately $7.875 billion, which includes Westinghouse’s debt of approximately $3.4 billion that will remain in place. This leaves approximately $4.5 billion to be funded by the consortium. Cameco is to acquire a 49% interest in the consortium, and Brookfield Renewable and its partners are to acquire the remaining 51%. As such, Cameco’s proportionate share will be approximately $2.2 billion. In conjunction with the transaction, the Company announced a $650 million bought-deal equity financing. However, the actual combination of cash, debt, and equity to fund Cameco’s interest has yet to be finalized. Cameco had CAD 1.426 billion in cash and cash equivalents as at June 30, 2022, and did indicate in the announcement that the financing mix will be designed to preserve the Company’s balance sheet and ratings strength while maintaining liquidity. When finalized, DBRS Morningstar will assess the implications on the Company’s credit profile and credit ratings.

The proposed transaction is subject to approval by Cameco’s shareholders, regulatory approvals, and customary closing conditions; and is expected to close in the second half of 2023. DBRS Morningstar anticipates to resolve the Under Review status following finalization of the financing terms.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929 (May 17, 2022).

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodologies are Global Methodology for Rating Companies in the Mining Industry (August 30, 2022; https://www.dbrsmorningstar.com/research/402159), DBRS Morningstar Criteria: Commercial Paper Liquidity Support for Nonbank Issuers (March 1, 2022; https://www.dbrsmorningstar.com/research/393065), and DBRS Morningstar Criteria: Guarantees and Other Forms of Support (April 4, 2022; https://www.dbrsmorningstar.com/research/394683), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

A description of how DBRS Morningstar analyzes corporate finance transactions and how the methodologies are collectively applied can be found at: https://www.dbrsmorningstar.com/research/397223/interplay-of-global-corporate-finance-rating-methodologies-when-analyzing-corporate-finance-transactions.

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 under Related Documents or by contacting us at [email protected].

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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