Tennessee Energy solicits consents from holders of 2006C revenue bonds

By Marisa Wong

Madison, Wis., Oct. 24 - Tennessee Energy Acquisition Corp. announced a consent solicitation relating to its series 2006C gas project revenue bonds.

Specifically, the company is asking bondholders to approve proposed amendments that are intended to do the following:

• Amend the prepaid gas purchase agreement between Tennessee Energy Acquisition and J. Aron & Co. to eliminate a seller default if Goldman Sachs Group, Inc. fails to maintain an investment-grade credit rating from Standard & Poor's or Moody's or otherwise provide specified credit support;

• Provide credit support for payments due from Depfa Bank plc, the investment agreement provider for the working capital account, the debt service account and the early termination reserve subaccount by amending and restating the receivables purchase agreement and amending a guaranty of Goldman Sachs;

• Provide additional credit support for payments due from five of the project participants (City of Cartersville, Ga., City of Cordele, Ga., Harriman Utility Board of the City of Harriman, Tenn., City of LaGrange, Ga., and Patriots Energy Group) by amending and restating the receivables purchase agreement and a guaranty of Goldman Sachs; and

• Create a custodial agreement with respect to the commodity swaps in order to mitigate Tennessee Energy Acquisition's credit exposure to the commodity swap counterparties.

Adoption of the amendments requires consents from holders of a majority in principal amount of the 2006C bonds. As of Oct. 23, $736,245,000 principal amount of the bonds was outstanding.

Only holders of record as of 5 p.m. ET on Oct. 23 are eligible to participate.

The consent solicitation will expire at 5 p.m. ET on Nov. 20.

The company said it will make a cash payment to consenting holders. The consent payment amounts are listed in the table below.

The proposed changes are conditioned upon an increase in the ratings of the 2006C bonds to at least Baa1 from Moody's and A- from Fitch Ratings while preserving a rating of at least A- from S&P.

Wells Fargo Securities, LLC (866 309-6316 or 704 410-4760) is the solicitation agent. D.F. King & Co., Inc. (800 431-9645 or 212 269-5550 or by email to: teac@dfking.com) is the information agent and tabulation agent.

Based in Clarksville, Tenn., Tennessee Energy Acquisition provides natural gas supply transportation and management services on a nonprofit basis to its associated municipalities.

Consent fee for 2006C bonds

Maturity Consent payment

Feb. 1, 2015 $2.50

Feb. 1, 2016 $5.00

Feb. 1, 2017 $7.50

Feb. 1, 2018 $9.50

Feb. 1, 2019 $10.00

Feb. 1, 2020 $10.00

Feb. 1, 2021 $10.00

Feb. 1, 2022 $10.00

Feb. 1, 2023 $10.00

Feb. 1, 2024 $10.00

Feb. 1, 2025 $10.00

Feb. 1, 2027 $10.00

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