MOODY'S LOWERS RATING ON WARREN AND WASHINGTON COUNTIES INDUSTRIAL DEVELOPMENT AGENCY, N.Y., BONDS FROM 'Ba' TO 'B'
NEW YORK, Dec. 11 /PRNewswire/ -- Effective today, Moody's Investors Service lowered the rating on $86,780,000 Warren and Washington Counties Industrial Development Agency resource recovery revenue bonds from "Ba" to "B." In revising the rating, Moody's stated, "Despite the ability of the agency to meet its debt service payment due Dec. 15, the ongoing refusal of Warren and Washington counties to fully comply with their contractual obligations to make monthly payments, the questionable economic feasibility of the plant from the counties' perspective, and the significant uncertainty regarding payment of future debt service results in a deterioration of bondholder security. Unless an increase in revenues is achieved in the next six months, prospects for full payment of debt service in June appears to be in jeopardy for the Series 1989D and Series 1991B bonds which do not have a debt service reserve fund." The amount of waste available from the two counties is still only about a third of the plant's capacity. Although the 450-ton-per-day plant continues to operate at full capacity by acquiring waste on the spot market for about $40 per ton, this is less than the approximately $75 per ton paid by the two counties. Rather than make up the resultant revenue shortfall, as contractually required, each county has been paying only for the waste delivered, thus leaving the debt service fund short of revenues. Through negotiation with the various parties involved and with the written consent of bond counsel, funds legally available to make up the shortfall in the debt service fund will be transferred from the construction fund for use in making the debt service payment on Dec. 15. Although the construction fund money to be transferred was derived from tipping fees and not bond proceeds, the extraordinary actions necessary to meet debt service reflects a credit uncertainty no longer consistent with a Ba.' Litigation also continues to be a concern. Adirondack Resource Recovery Associates (ARRA) has filed a claim against the Warren and Washington Counties Industrial Development Agency for $10.7 million in delay related damages. A number of other lawsuits are also pending. Moody's will continue to monitor the credit closely and issue additional updates as needed. -0- 12/11/92 /CONTACT: Marie S. Pisecki, assistant vice president/supervisor of Moody's Public Finance Department, 212-553-7120/
CO: Warren and Washington Counties Industrial Development Agency ST: New York IN: SU: RTG
GK-PS -- NY044 -- 6306 12/11/92 14:19 EST
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|Date:||Nov 13, 1992|
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