(Repeat for Additional Subscribers)
May 30 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings assigns a rating of ‘AA-/F1+‘with a Stable Outlook to the $4,750,000 Colorado Agriculture Development Authority variable rate demand agricultural development revenue bonds (Hunter Ridge Dairy LLP Project), series 2013.
The rating is based on the support provided by an irrevocable direct- pay letter of credit (LOC) issued by CoBank, ACB (rated ‘AA-/F1+’ with a Stable Outlook). The bank is obligated to make regularly scheduled payments of principal of and interest on the bonds in addition to payments due upon maturity, acceleration and redemption, as well as purchase price for tendered bonds. The ratings will expire upon the earliest of: (a) May 30, 2014, the initial stated expiration date of the LOC, unless such date is automatically extended for one year periods; (b) conversion to the fixed interest rate mode; (c) any prior termination of the LOC; and (d) defeasance of the bonds. The LOC provides full and sufficient coverage of principal plus an amount equal to 109 days of interest at a maximum rate of 10% based on a year of 365 days and purchase price for tendered notes, while in the weekly rate mode. The Remarketing Agent for the bonds is W.R. Taylor & Company, LLC. The bonds are expected to be delivered on or about May 30, 2013.
The bonds initially bear interest at a weekly rate, but may be converted to a fixed rate. While bonds bear interest in the weekly rate mode, interest payments are on the first Thursday of each Aug, Nov, Feb and May, commencing Aug. 1, 2013. The trustee is obligated to make timely draws on the LOC to pay principal, interest, and purchase price. Funds drawn under the LOC are held uninvested, and are free from any lien prior to that of the bondholders.
Holders may tender their notes on any business day, provided the trustee and remarketing agent are given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate; (2) upon expiration, substitution or termination of the LOC; (3) following receipt of written notice from the bank of an event of default under the reimbursement agreement. The bonds shall be accelerated following trustee’s receipt of notice of an event of default under the reimbursement. The bank has the option of directing a mandatory redemption rather than acceleration upon an event of default under the reimbursement agreement Optional redemption provisions also apply to the bonds. There are no provisions for the issuance of additional notes.
Bond proceeds will be used to finance the acquisition, construction and equipping of the solid waste disposal component of the borrower’s dairy facility.
The rating is exclusively tied to the short and long-term rating that Fitch maintains on the bank providing the LOC and will reflect all changes to that rating.