Moody's gives AL Gulf Coast loan Ba2

Moody's Investors Service said it assigned a Ba2 rating to the $305 million senior secured term loan facility due 2016 (or possibly 2017), to be issued by AL Gulf Coast Terminals, LLC.

AL Gulf Coast is a holding company set up by ArcLight Capital Partners, LLC to hold its 100% ownership interest in Houston Fuel Oil Terminal Co., which acquired in two stages in 2007 and 2009.

The outlook is stable.

Loan proceeds will primarily be used to pay a distribution to equity in the amount of $138.9 million, repay an existing credit facility in the amount of $150 million and fund a debt service reserve account, which is sized to meet six-months of required debt service, the agency said.

The ratings reflect the highly contracted nature of the cash flows, low operating risk associated with this storage asset, credit quality of the contract counterparties and contract diversification, Moody's said.

The rating also reflects the high consolidated leverage on the combined enterprise and the structural subordination of the holding company term loan facility to the debt at the operating company level, the agency said.

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