Fitch Ratings has affirmed Georgia Transmission Corporation's (GTC) $180 million senior unsecured commercial paper program (the Program) at 'F1+'. The rating assigned to the program is based on the combination of the liquidity support provided by a Revolving Credit Agreement (the Agreement) with various banks (see below) and GTC's general financial strength, including GTC's access to additional sources of liquidity. In addition, Fitch affirms GTC's senior secured obligations at 'AA-'. The Rating Outlook is Stable.
Merrill Lynch and SunTrust Bank serve as the dealers for the commercial paper notes (the Notes) and National Rural Utilities Cooperative Finance Corporation (CFC) serves as administrative agent and lead arranger for the revolving credit facility. The banks participating in the Agreement (the Lenders) are CFC (rated 'A/F1' by Fitch), Bank of Tokyo-Mitsubishi UJF Trust Company (rated 'A/F1' by Fitch), Lloyds TSB Bank plc (rated 'AA+/F1+' by Fitch), Bayerische Landesbank (rated 'A+/F1+' by Fitch), Bank of America, N.A. (rated 'AA/F1+' by Fitch), CoBank, ACB (rated 'AA-/F1+' by Fitch) and Suntrust Bank (rated 'A+/F1+' by Fitch)
The support provided by the Agreement for the 'F1+' rating will expire on the earlier of June 20, 2012, as defined in the Agreement, unless such date is extended, or upon any prior termination of the Agreement. The effective date of the Agreement is June 21, 2007. The Agreement provides a maximum commitment of $180 million to cover principal of the Notes in the event that roll-over proceeds of commercial paper notes are insufficient to pay amounts due upon maturity of the Notes. Following the occurrence of certain events of default under the Agreement, which are not considered likely, the Lenders may direct the administrative agent to terminate their commitments under the Agreement.
GTC is a not-for-profit cooperative providing network transmission service to 39 Georgia electric distribution cooperatives. GTC's member distribution cooperatives provide electric service to more than 1.5 million customers in the state of Georgia. GTC was formed in 1996 as a result of the restructuring of Oglethorpe Power Corporation (OPC), whereby the original generation & transmission company was divided into three separate companies, all owned by and serving the 39 members. GTC became the owner of the transmission assets and provides transmission service, OPC continues to supply power to the members, and Georgia System Operations Corporation was formed to manage the operations business.
GTC is responsible for the payment of interest on the Notes. The Notes are general unsecured obligations of GTC, the interest on which will be paid from GTC revenues. Substantially all of GTC's assets are pledged for its senior secured debt.
The primary underpinnings for GTC's strong rating include:
--the strength of the long-term, take-or-pay, joint and several contracts with its members;
--the value of the secured interest in GTC's transmission assets;
--GTC's stable financial profile, including 2006 debt service coverage of 1.12 times (x) and increased liquidity and equity levels;
--the limited business risk associated with GTC's participation in the Georgia Integrated Transmission System (ITS);
--the financial strength and strong service territory characteristics of GTC's members.
Credit concerns are minimal and include:
--GTC members' procurement of energy to meet their incremental power supply needs above those provided by existing OPC resources (OPC is a related entity, rated 'A' by Fitch). Power supply payments made by the members to GTC for transmission service are made as operating expenses of each member's system and are on parity with those made to OPC for power supply costs. Fitch has some concern with the potential impact of existing and future supplemental arrangements.
For additional information on GTC, see the Fitch Credit Analysis dated Sept. 8, 2006, which is available on the Fitch Ratings website at www.fitchratings.com.
Fitch's rating definitions and the terms of use 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 are also available from the 'Code of Conduct' section of this site.