S&P gives Entegra loan B+

Standard & Poor's said it assigned its preliminary B+ rating and 1 recovery rating to debt issued in conjunction with Entegra TC LLC's planned recapitalization.

According to S&P, the recapitalization consists of the formation of a new holding company, Entegra Holdings LLC, which is subordinated to Entegra TC, the new intermediate holding company.

The ratings are assigned to the credit facilities at Entegra TC, which consists of a $450 million second-lien senior term loan facility due 2014 and a $30 million synthetic revolving credit facility due 2012, S&P said, adding that the loans sit behind an existing $350 million first-lien LOC facility due 2012, used exclusively for hedging purposes and ahead of a new $850 million third-lien payment-in-kind senior term facility due 2015 (both unrated).

Entegra will use the $1.33 billion of new money to refinance its existing $675 million tranche A debt plus accrued interest, pay related transaction expenses and make a one-time distribution of $545 million to members, the agency noted.

The outlook is stable.

The ratings incorporate exposure to price and quantity volatility in the merchant power market as well as weak transmission infrastructure around the Union Power facility results in discriminatory access to transmission in the Southeast markets, the agency said.

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