Tennessee Energy begins consent solicitation for series 2006 bonds

By Angela McDaniels

Tacoma, Wash., Dec. 12 - Tennessee Energy Acquisition Corp. is soliciting consents from the holders of its series 2006A and series 2006B gas project revenue bonds, according to a company news release.

The company wants consents to proposed amendments that would allow it to

• Amend its gas purchase agreement with gas supplier J. Aron & Co. to eliminate a seller default if Goldman Sachs Group, Inc. fails to maintain a credit rating of BBB- or higher by Standard & Poor's or Baa3 or higher by Moody's Investors Service, or otherwise post credit support; and

• Enter into a receivables purchase agreement with the gas supplier to provide credit support for project participants and reduce the reliance on the investment agreements in the senior and reserve subaccounts of the debt service reserve account. The existing guaranty from Goldman Sachs will be amended to include the gas supplier's payment obligations under the receivables purchase agreement. The receivables purchase agreement will allow Moody's and S&P to assign ratings to the series 2006A bonds unconstrained by the ratings of MBIA, Depfa or any of the project participants.

The consent solicitation will expire at 5 p.m. ET on Jan. 6. Holders of record as of 5 p.m. ET on Dec. 2 are eligible to participate.

Consents are needed from the holders of a majority of the two series of bonds, voting separately.

The effectiveness of the proposed amendments are subject to some conditions that include the series 2006A bonds receiving ratings of at least A3 from Moody's, A- from S&P and A from Fitch Ratings and the series 2006B bonds maintaining a rating of at least BBB from Fitch.

The holders of a majority of the series 2006B bonds have given their oral agreement to deliver their consents, and the holders of $34.79 million of the series 2006A bonds have done likewise.

The solicitation agent is Wells Fargo Securities, LLC (866 309-6316 or 704 715-8341). The information agent and tabulation agent is D.F. King & Co., Inc. (800 431-9645 or 212 269-5550).

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