Fortress Transportation units get $742 million of credit facilities

By Sarah Lizee

Olympia, Wash., Feb. 19 – Fortress Transportation & Infrastructure Investors LLC subsidiaries Long Ridge Energy Generation LLC, Ohio Gasco LLC and Ohio PPHoldco LLC entered into on Friday a first-lien credit agreement providing for a $445 million first-lien construction loan and a $154 million letter of credit facility, as well as a second-lien credit agreement providing for a $143 million second-lien construction loan, according to an 8-K filing with the Securities and Exchange Commission.

Interest on the first-lien construction loans will be calculated based on a fixed rate of 7.3% per annum. Interest on letters of credit will be Libor plus 250 basis points to 350 bps. Interest on the second-lien loans will be calculated by reference to an applicable treasury rate plus an applicable margin of 750 bps.

The first- and second-lien construction loans will be used to fund the development, construction and completion of a 485-megawatt natural gas fired, combined cycle power plant in Hannibal, Ohio, and the associated development, production and drilling of hydrocarbon interests. The LoC facility is available to support any collateral posting obligations of the co-borrowers under certain fixed-price power agreements related to the project.

The LoC facility may be increased up to $179 million under some circumstances.

The co-borrowers were required to borrow $71.5 million in second-lien construction loans on Friday, with the remaining second-lien loans required to be borrowed no later than Feb. 15, 2020.

As of Friday, $121 million letters of credit were provided to counterparties, leaving $33 million of remaining initial letter-of-credit capacity.

The first- and second-lien construction loans are available until the plant project is finished, which is required to occur on or prior to June 1, 2022, at which point the loans then outstanding will automatically convert to term loans.

Following term conversion, the first-lien term loans will amortize on a quarterly basis and will mature on Dec. 31, 2027. The LoC facility will mature upon the earlier of Feb. 15, 2022, the date the loans under the first-lien construction loan are accelerated or the date of term conversion.

Following term conversion, the second-lien loans will amortize on a quarterly basis and mature on June 30, 2028.

The credit agreements include financial covenants requiring the maintenance of a minimum debt service coverage ratio following term conversion of 1.10 to 1.00 in the case of the first-lien credit agreement and 1.05 to 1.00 in the case of the second-lien credit agreement.

Fortress Transportation is a New York-based owner, developer and acquirer of infrastructure and equipment in the transportation sector.

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