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S&P may lift MACH Gen
Standard & Poor's said it placed on CreditWatch positive the B+ rating on MACH Gen LLC's $580 million senior secured first-lien term loan B due 2014 and $100 million first-lien working-capital facility due 2012.
The possible upgrade reflects the company's decision to sell its Covert generating plant to Tenaska Capital Management LLC and to use a portion of the proceeds to reduce its first-lien debt, according to the agency.
Ratings reflect high consolidated leverage, the agency said.
Financial leverage covenants are relatively tight and could lead to a technical default, particularly if market conditions deteriorate after hedging agreements expire at the end of 2009, S&P added.
Partially offset the project's weaknesses is a 100% excess cash sweep designed to repay debt when cash flow is strong, and financial and physical hedge contracts with investment-grade counterparties, the agency noted.
As of June 30, 2007, the issuer had an EBITDA leverage ratio of 6.22x.
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