Fitch keeps Kleen on watch

Fitch Ratings said it maintained the Rating Watch negative on Kleen Energy Systems, LLC's $435 million term loan A due 2018 and $295 million term loan B due 2024, which are rated BBB-.

Fitch had placed the ratings on Rating Watch following the February 2010 explosion at the Kleen facility. The agency has received the independent engineer's evaluation of Kleen's restoration plan. The company expects to achieve commercial operations by mid April, nearly 11 months after the original target date of June 1.

The agency said the ratings reflect its expectation that completion delays and cost overruns should not affect Kleen's long-term financial profile. However, Fitch said that damage to the facility could negatively affect post-completion technical performance, notwithstanding Kleen's comprehensive damage assessment.

The resolution of the Rating Watch is linked to Kleen achieving substantial completion in accordance with the restoration plan, thereby avoiding contractual termination provisions, and demonstration of technical performance consistent with the sponsor's original projections, Fitch said.

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