$175,000,000 IN DEBT AFFECTED. LETTERS OF CREDIT PROVIDED BY JPMORGAN CHASE BANK, N.A.
Hunt Refining Company
NEW YORK, Dec 20, 2010 -- Moody's Investors Service has affirmed the Aa1/VMIG 1 rating assigned to the
Tuscaloosa County Industrial Development Authority Gulf Opportunity Zone Bonds
(Hunt Refining Project), Series 2008B and 2009A (the Bonds) in conjunction with
the conversion of the interest rate on the Bonds to the tax exempt rate mode
from the taxable rate mode and the issuance of new direct-pay letters of credit
(LOCs) securing the Bonds provided by JPMorgan Chase Bank, N.A. (the Bank)
effective December 21, 2010.
Moody's currently rates JPMorgan Chase Bank, N.A., Aa1 for its long-term
obligations and Prime-1 for its short-term obligations.
Interest Rate Modes and Payment
Upon conversion the Bonds will bear interest at the tax exempt rate
mode (adjusted weekly) and pay interest on the first business day of each
month. The Bonds may be converted in part to bear interest at a taxable
rate mode (also adjusts weekly and pays interest on the first business day of
each month). Prior to conversion to the taxable rate mode the applicable letter
of credit must be increased to cover the maximum taxable interest rate (12%).
The Bonds are subject to mandatory tender at a price of par plus accrued
interest upon conversion. The rating covers the Bonds in both the tax exempt and
taxable rate modes.
The indenture does not permit the issuance of additional Bonds.
Flow of Funds
The trustee is instructed to draw under the applicable letter of credit for
principal and/or interest on the business day preceding each interest and
principal payment date. The trustee is also instructed to draw under the
applicable letter of credit on each purchase date, for purchase price, to the
extent remarketing proceeds received are insufficient. Bonds which are purchased
by the Bank due to a failed remarketing are held by the trustee and will not be
released until the trustee has received written confirmation from the Bank
stating that the applicable letter of credit has been reinstated in the amount
of the purchase price drawn for such Bonds.
Letters of Credit
Each letter of credit is sized for full principal plus 36 days of interest at
the maximum rate applicable to the Bonds (10%) and will provide coverage for the
Bonds while they bear interest in the taxable or tax exempt rate modes. The
letters of credit provided by JPMorgan Chase Bank N.A. governed by the
International Standby Practices (ISP98).
Draws on the Letter of Credit
Conforming principal and interest draft draws, and draws for purchase price,
received by the Bank by 11:00 a.m. New York Time on a business day, will be
honored by 3:00 p.m. New York Time on the same business day.
Reinstatement of Interest Draws
The interest component will be automatically reinstated on the day of the Bank's
honoring of such draw.
Reimbursement Agreement Defaults
The Bank may send written notice to the trustee stating that an event of default
under the applicable credit agreement has occurred and direct an acceleration.
Upon receipt of such notice, the trustee shall immediately declare the
applicable Bonds due and payable, and interest will cease to accrue upon
declaration of acceleration. The applicable letter of credit expires on the date
on which the Bank honors an acceleration drawing.
Expiration / Termination of the Letters of Credit
Each letter of credit terminates upon the earliest to occur of: (i) December 21,
2011, the stated expiration date of the letter of credit, unless extended; (ii)
the date on which the Bank honors an acceleration drawing; or (iii) upon the
Bank's receipt of notice from the trustee that a substitute letter of credit has
been delivered for the applicable series of Bonds.
Substitution of each applicable letter of credit is permitted and requires a
mandatory tender fifteen days prior to the date of substitution if the trustee
has not received written confirmation from the rating agency then rating the
Bonds that the rating will not be reduced or withdrawn as a result of the
Bondholders may optionally tender their Bonds during the taxable and tax exempt
rate modes on any business day with seven days prior written notice to the
The applicable Bonds are subject to mandatory tender upon the following: (i)
thirty days prior to the termination date of the applicable letter of credit,
(ii) each conversion date, and (iii) fifteen days prior to any date of
substitution of the applicable letter of credit if the trustee has not received
written confirmation from the rating agency then rating the Bonds that the
rating will not be reduced or withdrawn as a result of the substitution.
The Bonds are subject to mandatory excess proceeds redemption prior to maturity.
What Could Change the Rating-Up
Long-Term: The long-term rating on the Bonds would be raised if the long-term
other senior obligation (OSO) rating on the Bank was upgraded.
Short-Term: Not applicable.
What Could Change the Rating-Down
Long-Term: The long-term rating on the Bonds would be lowered if the long-term
OSO rating on the Bank was downgraded.
Short-Term: The short-term rating on the Bonds would be lowered if the
short-term OSO rating on the Bank was downgraded.
Underwriter: Frazer Lanier Company
Trustee: Wells Fargo Bank, N.A.
Remarketing Agent: Frazer Lanier Company
The principal methodology used in this rating were Moody's Rating
Methodology for Letter of Credit Supported Transactions published in August
Please see ratings tab on the issuer/entity page on Moodys.com for the last
rating action and the rating history.
Moody's adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.
Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.
Public Finance Group
Moody's Investors Service
David A. Parsons
Senior Credit Officer
Public Finance Group
Moody's Investors Service
Journalists: (212) 553-0376
Research Clients: (212) 553-1653
MOODY'S INVESTORS SERVICE AFFIRMS Aa1/VMIG 1 RATING ASSIGNED TO LETTER OF CREDIT-BACKED TUSCALOOSA COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY GULF OPPORTUNITY ZONE BONDS (HUNT REFINING PROJECT), SERIES 2008B AND 2009A
Moody's Investors Service
250 Greenwich Street
New York, NY 10007