Moody's rates Southeast PowerGen loans Ba2

Moody's Investors Service said it assigned a Ba2 rating to Southeast PowerGen, LLC’s $480 million senior secured term loan due 2021 and $70.5 million senior secured revolving credit facility due 2019 and affirmed the Baa3 rating of subsidiary Mackinaw Power, LLC. The outlook is stable.

Proceeds from the term loan will be used to repay existing debt within the Southeast PowerGen family, to partially fund Carlyle Group’s acquisition of a 75.05% stake in Southeast PowerGen, to pay a dividend to GE Capital and to fund some reserve accounts. Debt to be repaid includes $114 million outstanding under a senior secured term loan at Mackinaw Power Holdings, LLC (Ba2/stable), another subsidiary of Southeast PowerGen.

The agency said Southeast PowerGen's Ba2 rating is supported by the significant level of consolidated cash flows that are expected to be generated under existing contracts, several of which extend meaningfully beyond the term of the proposed financing.

This is balanced, however, by re-contracting risk for two of the company’s assets, structural subordination and projected consolidated financial metrics that are weak for the rating category, Moody’s said.

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