Moodys.com
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

 

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

Terms of One-Time Website Use

 

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

 

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

 

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

 

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

 

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Related Research
Rating Action:

Moody's assigns (P)Ba3 to Georgia Renewable Power, LLC; outlook stable

26 Jun 2015

Approximately $225 million in rated debt affected

New York, June 26, 2015 --

Moody's Investors Service today has assigned a first-time provisional (P)Ba3 rating to $225 million in Senior Secured Notes due 2022. The Notes will be co-issued by Georgia Renewable Power, LLC (GRP) and Georgia Power Finance Corp. (GRP Finance) on a joint and several basis. The outlook is stable.

Proceeds from the Notes issuance along with sponsor equity of $60 million will go toward completing construction costs of two biomass-generating facilities in Lumberton, North Carolina and Franklin, Georgia; to repay outstanding borrowings under a sponsor-provided loan; to cash-fund reserve accounts and pay transaction fees. The Lumberton facility will be a 35 megawatt (MW) poultry-litter fueled power station at construction completion with 50MW of thermal capacity. The Franklin facility will be a 79MW wood-biomass generating facility at construction completion.

RATINGS RATIONALE

The provisional (P)Ba3 rating recognizes the credit strengths of long-term contract arrangements with Progress Energy Carolinas (d/b/a Duke Energy Progress: A1, Negative) for the Lumberton facility and Georgia Power (A3, stable) for the Franklin for terms of 20 and 30 years, respectively, which provides long-term contracted cash flow for note holders. This key credit strength is balanced by operational, construction-related and contractual shortcomings that together result in the speculative grade rating for this project.

From an operations standpoint, the Lumberton facility is expected to generate roughly 70% of GRP's EBITDA, yet it will be designed to produce power that is 100% derived from poultry litter by the second quarter of 2017 when it is fully converted from its existing configuration. The operating history of poultry litter-fuel power plants is extremely limited and of mixed operational performance and a key risk factor in the rating. The remaining 30% of EBITDA is expected to be derived through cash flows derived from the wood-biomass power generation at the Franklin plant. Franklin will require however the full disassembly from its present location in West Virginia to its relocation and re-assembly in Franklin Georgia, a key construction risk. We understand the BL Harbert International (Harbert), through its sub-contractors, will be performing various phases of construction at both Lumberton and Franklin. Based on our internal, point-in-time evaluation and knowledge of the contractor, we believe they are capable and have the liquidity to complete these projects. However, the multi-stage facet of the Lumberton Project and the relocation of an existing plant introduces heightened execution risk, notwithstanding Harbert's own technical capabilities.

We further understand several permits remain to be obtained for full operation including interconnection and final air permits at the Franklin facility. While these appear to be straightforward given the permitting process in the respective states of North Carolina and Georgia, they add to the execution risk. We note there is no long-term water supply agreement with the respective local municipalities but understand that the plants are already connected to the municipal systems and expect to utilize their water or drill their own wells if needed. Fuel supply, while regionally abundant, is highly fragmented with a large number of suppliers having either unknown and highly speculative grade credit quality.

Lumberton will be operated by NRG Energy Services (NRGES), a subsidiary of NRG Energy, Inc. (Ba3, stable) and we expect Franklin and the other facilities will be operated by NRGES as well. NRGES has meaningful experience in the power generation industry operating green and biomass-fueled generation, a credit positive.

Contractual Analysis

While GRP benefits from long-term, contracted cash-flows under power purchase agreements (PPAs) with two investment-grade off-takers, the design of the long-term contracts are on an energy-only basis and provide no fuel cost pass-through provisions. This introduces substantial uncertainty concerning revenue generation, especially given the limited track record of the facilities particularly in terms of sustaining high capacity factors at poultry-litter fueled power generation and at biomass facilities, particularly during the shake-out period. While fuel is abundant today, the lack of a fuel cost adjuster is problematic for a long-term financing is likely to lead to margin compression during periods of time over the life of the PPAs.

GRP will enjoy environmental support in the form of a legislatively approved renewable portfolio standard (RPS) in North Carolina, whereby Duke Energy Progress must purchase a substantial amount of renewable energy credits (RECs) in the state. These RECs will be both electricity generation-based RECs (poultry-derived generation) and thermal-based RECs. As such, GRP's cash flow will benefit from poultry and thermal REC sales on top of its energy sales assuming consistent and sustained operating performance. We note however that the thermal RECs are expected to constitute a meaningful portion of revenue but final terms of the RECs have not been completed with Duke Progress Energy. As such, this remains an uncertain rating factor. We understand GRP is in final negotiation with Duke Progress Energy at this time and expect resolution to occur in the next several weeks. Finally, as an additional source of meaningful revenue, the Lumberton facility has a long-term contract to provide wood-chips as the fuel-supplier to a biomass facility in Ireland for the benefit of Veolia Ireland Plc.

Expected Financial Performance

Financial metrics appear robust based on sensitivities considered by Moody's that seek to capture contractual imperfections, fuel supply risk and limited operating track record, GRP's key financial metrics result in a three-year average debt service coverage ratio (DSCR) of 3.5x and funds from operations to debt (FFO/Debt) ratio of nearly 18%. These financial metrics, while strong for the Ba rating category, are based on run-rate cash flow after construction is completed at both plants, which is currently anticipated to occur by mid-2017, and considers only a 1% amortization when calculating DSCR. Debt amortization is anticipated to occur through a 75% cash sweep. Any delays in completing construction, including those associated with plant re-location, along with delays in securing permits will weaken cash flows during mid-2017 and further heighten refinancing risk at the maturity of the notes. That said, the presence of long-term contracts meaningfully mitigates refinancing risk.

Structural Considerations

Lenders benefit from certain project finance features including separateness provisions, a trustee administered cash flow of accounts and a cash-funded debt service reserve initially funded at twelve-months interest during construction and a $2 million operating and maintenance reserve. This will step-up to 12 months principal and interest at construction completion. The sponsor has committed to providing an additional $10 million in equity support and has further personally backstopped a $25 million revolving credit facility that will be subordinate to the Notes. Finally, the project benefits from a $10 million initial revolver that is senior to the notes. In aggregate, the project will have $45 million in additional liquidity that can be drawn during construction to ensure project completion. This liquidity support meaningfully mitigates the execution risk noted earlier.

In addition, GRP has pledged additional assets to the collateral package. While not yet operating, the prospective 58MW Madison facility, also a biomass facility, has a long-term PPA nearing execution with Georgia Power and provides incremental collateral value to noteholders.

The project incorporates a debt incurrence test subject to a 2.5x fixed charge coverage ratio (FCCR). Some of the terms of the financing are covenant light for a project financing as GRP may also sell and acquire assets with no requirement to use sale proceeds to pay down debt until after 360 days and may acquire assets with additional debt, subject to the 2.5x FCCR test. The terms of the financing require the project to sweep 75% of excess cash flow. Also, the project must achieve a 2.5x FCCR, not be in default, and fully fund all reserve accounts in order to pay a dividend.

The rating also considers the knowledge and expertise of the ultimate sponsor, Raymon Bean, who owns GRP through his wholly owned companies in which he owns 100% of the equity interests. Mr. Bean has extensive experience in the energy sector including, oil drilling, oil field services, and various coal operations. GRP, through its 100% owner, GreenFuels Energy, which is 100% owned by Mr. Bean, has already provided $60 million in equity support for GRP, a positive. At the same time, we recognize his affiliate companies have a limited track record building and owning power plants of this type.

The stable outlook considers our view that GRP will receive the necessary permits in a timely fashion such that the existing PPAs remain in force, that the plants will be constructed on time and on-budget and that steady state operations will commence by May 2017 for both facilities.

Upward pressure on the rating is unlikely during construction given the level of execution required to arrive at steady state operations. Achieving timely commercial operations; demonstrating DSCRs above 3.5x; or FFO/Debt metrics above 20% on a sustained basis would warrant upward rating pressure.

The rating could face downward rating pressure if construction and or permitting delays impact the plants ability to achieve commercial operation by May 2017. Once operational, the rating could face downward pressure if operational problems lowers capacity levels or raises operating costs such that DSCRs are consistently below 2.0x or FFO/Debt metrics are below 12%. Failure to timely receive required permits for either facility could also result in negative rating pressure.

We issue provisional ratings in advance of the executed final documentation and these ratings reflect our preliminary credit opinion regarding the proposed transaction. Upon a conclusive review of the final documentation, we will assign definitive ratings. A definitive rating may differ from a provisional rating if there are material changes to the information and documents reviewed to date.

GRP LLC owns four generating assets, all of which will be contributed as collateral to lenders under this note issuance, consisting of the 35MW Lumberton facility, 79MW Franklin facility, the 58MW Madison facility and the 35MW Elizabethtown facility. The Lumberton and Franklin facilities currently have long-term PPAs with investment grade off-takers and GRP currently owns and controls an additional 58 MWs of electric generation capacity under contract with the Georgia Power Company at the proxy unit price via three separate PPAs. GRP is awaiting consolidation approval of these three PPAs into one PPA by the Georgia PSC, which will be deployed at the Madison plant. GRP LLC is owned by GreenFuels Energy which in turn is 100% owned by Raymon Bean.

The principal methodology used in this rating was Power Generation Projects published in December 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The following information supplements Disclosure 10 ("Information Relating to Conflicts of Interest as required by Paragraph (a)(1)(ii)(J) of SEC Rule 17g-7") in the regulatory disclosures made at the ratings tab on the issuer/entity page on www.moodys.com for each credit rating:

Moody's was not paid for services other than determining a credit rating in the most recently ended fiscal year by the person that paid Moody's to determine this credit rating.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Charles Berckmann
Asst Vice President - Analyst
Project Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Chee Mee Hu
MD - Project Finance
Project Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns (P)Ba3 to Georgia Renewable Power, LLC; outlook stable
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH  CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND  OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND  PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES  ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR  PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.

MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. 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 or in preparing its Publications.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.

To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.

Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​​​​​
Moodys.com