S&P rates Longview loan, revolver BB-

Standard & Poor’s said it assigned preliminary BB- ratings and preliminary 1 recovery ratings to Longview Power LLC’s $250 million senior secured term loan due 2021 and $25 million senior secured revolving credit facility due 2021.

The 1 recovery rating indicates 90% to 100% expected default recovery.

Longview is a limited-purpose, bankruptcy-remote entity that owns a 700 net-megawatt coal-fired power plant in West Virginia and a mining subsidiary, Mepco, that supplies coal to the plant.

The key aspect of the bankruptcy-emergence plan is the successful rehabilitation of various parts of the plant to improve availability to 90% from about 70%, S&P said.

Boiler tube leaks have been a major factor in poor operational performance since the plant began operations in 2011, contributing to lower-than-expected cash flow and the eventual bankruptcy filing in August 2013, the agency said.

One of the plan’s major goals is to repair the leaks. Most of the operational problems stem from construction phase work, S&P added.

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