Moody's rates Windsor bonds Baa3, notes Ba2

Moody's Investors Service said it assigned a Baa3 rating to Windsor Financing LLC's proposed issuance of $265.6 million of senior secured bonds due 2017 and a Ba2 rating to Windsor's proposed issuance of $49.6 million of subordinated secured notes due 2016.

The outlook is stable.

Proceeds from the offering will repay $178.5 million of existing project debt (including estimated breakage costs), pay transaction costs of about $9.5 million and fund major maintenance reserve accounts totaling $2.8 million. The remaining funds will be distributed to Cogentrix Energy Inc., which indirectly owns 100% of Windsor.

Moody's said the Baa3 rating assigned to the senior secured bonds is supported by the contracted cash flow expected to be generated through existing agreements between Windsor's two wholly owned operating subsidiaries and Virginia Electric Power Co. Windsor's operating subsidiaries Spruance Genco LLC and Edgecombe Genco LLC own power projects known as Richmond and Rocky Mount, respectively, and will provide unconditional upstream guarantees of Windsor's debt on a joint and several basis.

The ratings also consider Windsor's high balance sheet leverage, the agency said. About 40% of the proposed financing, or about $134.9 million, will be distributed to Cogentrix at closing, following which Windsor's balance sheet is expected to show negative GAAP equity of $126.4 million.

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