Fitch Affirms 'BBB' Rating of Empresa Electrica Guacolda US$150MM Senior Secured Loan.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the 'BBB' rating of Empresa Electrica Guacolda's (Guacolda) US$150 million senior secured loan participation certificates, due April 30, 2013, and the 'A+(chl)' national scale rating. The Rating Outlook for all ratings remains Stable. The ratings reflect Guacolda's competitive dispatch position supported by the efficiency and geographical location of its units, sound operating and commercial strategies, long-term supply contracts, growing electricity demand in the region, and acceptable projected debt-service coverage ratios Debt-service coverage ratio Earnings before interest and income taxes, divided by interest expense plus the quantity of principal repayments divided by one minus the tax rate. (DSCRs) under various stress scenarios. The ratings also recognize the other structural enhancements including a one-year debt service reserve account or a stand by letter of credit for an equivalent amount, a six-month debt payment account (which accrues monthly), a lien lien, claim or charge held by one party, on property owned by a second party, as security for payment of some debt, obligation, or duty owed by that second party. on the plant and site, and rights to receive payments under certain power purchase agreements (PPAs). The certificates rank pari passu [Latin, By an equal progress; equably; ratably; without preference.] Used especially to describe creditors who, in marshalling assets, are entitled to receive out of the same fund without any precedence over each other. PARI PASSU. By the same gradation. with all other senior secured debt of Guacolda. The rating also incorporates potential weaknesses, including exposure to fuel price volatility combined with PPAs at a fixed price. Guacolda's credit protection measures improved in the first half of 2005 reflecting increases in regulated prices (43% of its sales) and high spot market prices during the first five months (approximately 6% of its volume sales), as well as debt reduction, which resulted in lower interest expense. Guacolda's operational results have been constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. by high coal prices. Revenues increased 11%, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become grew 17%, and the EBITDA margin strengthened to 31% from 29%. The ratios of EBITDA-to-interest expense ratio improved to 2.6 times (x) compared with 1.9x as of June 2004, and net debt-to-EBITDA ratio decreased to 3.9x compared with 5.9x for the same periods, respectively. Going forward credit protection measures are expected to improve, primarily reflecting a 35% increase in the regulated node price in dollar terms related to a recently approved electricity law, effective June 2005. Node prices are expected to remain close to or slightly above current levels, reflecting the higher average fuel prices, the effect of natural gas restrictions from Argentina, the delay of new generation projects, and the inclusion in the National Power Plan of future power projects based on alternative fuel sources from natural gas. Regulated sales under a node price contract represented approximately 43% of Guacolda's total energy sales through June 2005. Guacolda is a Chilean electric-generating company that operates a 304-MW coal-fired plant (two 152-MW units) in Huasco, which is located in the third region of Chile, 710 kilometers north of Santiago, in the northern part of the SIC. Guacolda is owned by Gener (50%, rated 'BB' by Fitch), COPEC (25%, rated 'BBB+' by Fitch), and Ultra Terra (25%). Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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