S&P cuts Wolf Hollow view to negative

Standard & Poor's said it affirmed Wolf Hollow I LP's BB- $240 million first-lien senior secured term loan facility due 2012 and $50 million working-capital facility due 2010 and its B second-lien $110 million term loan due 2012.

At the same time, S&P revised the outlook on the facilities to negative following outages related to a likely fuel contamination issue. The agency believes the two outages will materially affect Wolf Hollow's financial performance and significantly raise the risk that the project will be unable to meet the 1.2x debt service coverage ratio financial covenant in the credit agreement in December, even if it were to recover part of its losses from the summer outage. If the project were unable to attain waivers and were to breach the covenant, it would be an event of default.

S&P said that in the second half of the year, in order to avoid breeching this covenant, Wolf Hollow will need to perform on average better than its best month so far this year (including months like January and April, which were not affected by outages) and recover costs relating to the fuel-contamination outage. While this scenario is certainly possible, the negative outlook reflects the real risk that it will not materialize, the agency said.

© 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.