S&P puts Hawkeye Renewables loan on positive watch

Standard & Poor's said it placed its B rating on Hawkeye Renewables LLC's $185 million senior secured term loan due 2012 on CreditWatch with positive implications following a strong first full-year of operations, nearing completion of construction of the new 100 million gallon per year Fairbank, Iowa, facility and expected deleveraging due to the debt structure.

The agency said Hawkeye's $185 million term B loan debt structure requires a minimum 40% cash sweep, increasing to a possible 100% sweep, in order to reach a yearly threshold requirement to pay down debt.

The rating on Hawkeye reflects risks that include exposure to volatile commodity prices on the revenue and cost sides of the margin equation, the agency noted, adding that on the revenue side, ethanol prices are highly correlated with gasoline prices.

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