Moody’s rates Longview Power loans B2

Moody's Investors Service said it assigned a rating of B2 to Longview Power, LLC's proposed roughly $250 million six-year senior secured term loan and estimated $25 million five-year senior secured revolving credit facility.

The outlook is stable.

The financing is being obtained in accordance with Longview's court approved plan to emerge from Chapter 11 bankruptcy and will be used to repay about $150 million of debtor-in-possession financing and to complete repairs on the project.

Moody’s said the B2 rating reflects the significant uncertainty surrounding the project's cash flow generating ability, which stems from its position as an entirely merchant generating facility, but is also compounded by performance issues the plant has experienced stemming from its original construction completed in 2011.

The rating assumes the rehabilitation program the plant is now undergoing will be successful and that after completion, commissioning, and the initial shakeout period, Longview will be able to operate at or close to its originally designed specifications.

It also recognizes that the plant's, age, design and fuel supply arrangements make it one of the lowest cost and environmentally friendly coal-plants in PJM, so that when it is available, it almost always runs, Moody’s said. As a result, the vast majority of its revenues (about 85% over the life of the term loan), are expected to come from energy sales which are entirely dependent upon market prices and therefore expected to be highly volatile.

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