S&P may cut Wolf Hollow

Standard & Poor's said it placed the B rating on Wolf Hollow I LP's first-lien credit facilities on CreditWatch with negative implications.

The facilities consist of a $156 million first-lien term loan, a $30 million working capital facility and a $104 million synthetic LC facility. The recovery ratings on the first-lien facilities remain at 1.

The CCC+ rating on the $110 million second-lien term loan also was placed on CreditWatch negative. The recovery rating on the second-lien facilities remains at 4.

S&P said the watch follows improved fourth-quarter earnings that were augmented by cash received from a heat rate call option written by the project to Eagle Energy. The agency said it calculates that without this cash, the project would have tripped the trailing fourth-quarter debt service coverage ratio of 1.2x, a financial covenant in the credit agreement.

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