Fitch Affirms Greenville County, South Carolina's Airport Revs At 'BBB-'.

Business Editors

NEW YORK--(BUSINESS WIRE)--March 31, 2003

In conjunction with the private placement of Greenville County, SC's (the county) $1,000,000 airport revenue bonds (Donaldson Industrial Air Park Project) (taxable), series 2003, Fitch affirms the 'BBB-' rating on $15.8 million in parity revenue bonds, including the new issue and series 1999 and 2001 bonds. The new issue will be dated April 3, 2003 and will mature April 1, 2004-2007. The bonds will finance the construction and equipping of an office building to be initially leased to Lockheed Martin Corporation.

The 'BBB-' rating reflects the Donaldson Industrial Air Park's (DIAP or the air park) satisfactory financial performance and management's control over airport activities. Credit strengths also include DIAP's competitive niche in aircraft industrial development that benefits the county's overall economy. Credit concerns focus on DIAP's homogenous revenue base, since it is dependent on industrial lease revenues and concentrated on a few major lessees. The main tenant, Lockheed Martin Aircraft Center (LMAC), comprises an estimated 75% of total monthly lease revenues. The revenue concentration and lease renewal risks are partially mitigated by LMAC's estimated $40 million in infrastructure investments and increased defense-related activity. LMAC is rated 'BBB' by Fitch with a Positive Rating Outlook as of September 2002. The Outlook change is attributed to, among other factors, LMAC's position as the leading U.S. defense contractor, recent financial performance, a successful debt reduction program and the positive defense industry environment.

A commission formed by both the City of Greenville and Greenville County operates the DIAP. The air park, constituting 2,600 acres, was converted from an old U.S. Air Force base into an airport industrial park to encourage industrial development. The park serves more than 70 firms in aviation-related industries requiring direct access to airport infrastructure. The air park's infrastructure has served as an incentive to keep major aircraft maintenance operations.

The new bonds are secured by a parity lien with series 1999 and 2001 bonds on net revenues of the air park. Pledged revenues are dominated by lease payments and include small amounts of fuel flowage fees, and 50% of any income or earnings derived by the Donaldson Industrial Air Park Commission (the commission). The definition of pledged revenues is broad and includes newly implemented landing fees. Standard bondholder protective covenants include a 1.25 times (x) coverage test for additional indebtedness with the inclusion of projected lease revenue increases. Compliance with the test requires inclusion of the perspective revenues from new lease agreements with LMAC. Fiscal 2002 net revenues plus additional lease payments from signed lease agreements and anticipated revenues from the lease agreement which will be signed with the closing of these bonds, will cover maximum annual debt service (MADS) on all parity bonds 1.36x. In addition, the commission's fiscal 2002 general fund balance is a solid $1.5 million which equals 71% of total spending. Fund balances are anticipated to drop slightly in fiscal 2003, incorporating the commission's $500,000 contribution to the new office building's construction and equipping.

The lease payments, accounting for 80% of fiscal 2002 revenues, are derived from numerous tenants. Though their respective lease agreements are subject to various lease expirations and termination provisions, retention to date has been positive, and management anticipates maintaining positive relationships with all of the current tenants. LMAC's expected 4-year lease is the same as the term of these bonds and has optional renewal payments for use of the building beyond those years. Anticipated lease payments are slightly higher than the projected debt service payments. LMAC's lease includes termination payments equal to their share of outstanding debt. All facilities and improvements are owned by the air park.

Local economic factors, including low taxes and reasonable labor costs, continue to make the air park attractive. Fitch rates Greenville County's general obligation bonds 'AAA'.