Moody's rates Teton Power term loan Ba3

Moody's Investors Service said it has assigned a Ba3 senior secured rating to Teton Power Funding LLC's proposed $195 million term loan B facility maturing in 2011.

On Nov. 12, affiliates of ArcLight Capital Partners LLC entered into a purchase and sale agreement pursuant to which Teton, a newly-created, wholly-owned subsidiary of ArcLight, agreed to acquire UtilCo SaleCo LLC from Aquila Merchant Services Inc., a wholly-owned subsidiary of Aquila Inc. The stated net acquisition costs of about $275 million are comprised of the term loan B facility as well as cash equity and credit support from the ArcLight.

The outlook is stable.

Moody's said the Ba3 rating reflects the relatively predictable cash flows from a portfolio of generating assets totaling about 1,365 megawatts, of which UtilCo's net interest is about 639 megawatts, diversely located in growing markets across the United States and with one located in Jamaica.

The rating also incorporates the largely investment-grade credit profile of the power off-take counterparties, all of which have signed long-term power purchase agreements with the individual projects. The contracts expire over the years 2005 through 2037, resulting in a megawatt-weighted average life of about 12 years. The bulk of distributable cash flows from these contracts are received through 2014.

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