Moody's rates Bicent loans Ba3, B1

Moody's Investors Service said it assigned Bicent Power LLC a provisional rating of Ba3 to its $480 million first-lien credit facilities and a provisional rating of B1 to its $130 million 71/2-year second-lien term loan.

The outlook is stable.

Proceeds will be used to help finance the acquisition of Centennial Power Inc. and Colorado Energy Management LLC from MDU Resources Group Inc.

The ratings are based on the highly contracted nature of the company's cash flow during the term of the loans, which provides stability and predictability to projected financial operations, Moody's said. Hedges and tolling agreements are expected to account for more than 90% of the portfolio's EBITDA on average and to provide contracted debt service of about 1.33 times through the term of the credit facilities. The company also benefits from operational and geographic diversity.

The ratings also consider the refinancing risk associated with the expected leverage at loan maturity, which could expose takeout lenders to substantial merchant risk, Moody's said, and the company could suffer from its leverage reflected in modest financial metrics.

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