Moody’s gives Texas Competitive DIP facilities Baa3

Moody's Investors Service said it assigned a Baa3 rating to $4.25 billion of senior secured super-priority debtor-in-possession (DIP) credit facilities of Texas Competitive Electric Holdings Co. LLC consisting of: (a) a $2.85 billion term loan; (b) a $750 million revolving credit facility; and (c) a $650 million funded letter of credit facility.

Proceeds from the term loan will be used to refinance a similar amount of outstanding Texas Competitive DIP credit facilities that were put in place in May 2014.

Absent the conversion discussed below, the facilities will terminate on Oct. 31, 2017.

The rating on the DIP facility is being assigned on a "point-in-time" basis and will not be monitored going forward and therefore no outlook is assigned to the issuer. The ratings will be withdrawn subsequent to issuance.

The facilities contain an exit feature that will allow them to convert to permanent financing (with a lesser security and covenant package) upon Texas Competitive’s exit from bankruptcy, which is currently anticipated by September 2016. The converted term loans would mature seven years from conversion, and the revolving credit facility would terminate in five years.

Assuming no material changes in its understanding of the transaction, Moody’s said Texas Competitive’s emergence schedule, market conditions or the financial and operating profile and prospects of the company, the agency anticipates that upon exit, it would likely assign a corporate family rating in the range of Ba2 to the new company.

As it expects the facilities to represent the entirety of Texas Competitive’s funded debt obligations, the ratings assigned to the secured exit facilities would likely be the same as the corporate family rating, Moody’s added.

Moody’s said the Baa3 rating assigned to the DIP facilities reflects the super priority status (subject to a carve out of up to $975 million for amounts required to be paid to the Railroad Commission of Texas for mining reclamation) and structural protections of the DIP facility, its modest size relative to pre-petition claims, and the collateral coverage available to the DIP lenders.

© 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.