Moody's rates MACH Gen loans B2

Moody's Investors Service said it assigned a B2 rating to the first-lien senior secured credit facilities of MACH Gen, LLC. The proposed first-lien facilities include a $580 million term loan B due 2014, a $100 million revolving credit facility due 2012 and a $60 million synthetic letter of credit facility due 2013.

The outlook is stable.

Proceeds will be used to refinance a portion of a project's existing debt, fund a six-month debt service reserve and to cover transaction costs, the agency said.

The company's rating reflects credit challenges that include an expected low consolidated cash flow to debt metrics, the company's reliance on volatile merchant energy revenues and uncertainty about the timing of improvements in transmission capacity that would enable some of its facilities to have better access to lucrative power markets, Moody's said.

However, hedges and tolling agreements with Citigroup Energy, Inc., should provide about $80 million of stable cash flow over the next three years, the agency said. Combined with increasing capacity revenue at two of its facilities, about 60% to 65% of MACH Gen's gross margins will come from stable sources, the agency said.

Other strengths include improving market fundamentals and structural protections afforded to first-lien creditors under the credit agreements, Moody's added.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.