Fitch Downgrades Senior Notes of OrCal Geothermal LLC to 'BB'; Outlook Revised to Negative (Finance Yahoo! - News Release)
Fitch Ratings has downgraded the rating on $165 million ($76.5 million outstanding) senior notes due 2020 of OrCal Geothermal LLC (OrCal) to 'BB' from 'BBB-'. The ratings downgrade reflects OrCal's exposure to depressed Short Run Avoided Cost (SRAC) energy prices through debt maturity, and revenue contract renewal risk for 50% of capacity after 2015.
The Rating Outlook has been revised to Negative from Stable reflecting uncertainty regarding achievement of production increases and contract prices that must be realized to maintain debt service coverage consistent with the current rating.
Recent declines in production performance in 2012 also highlight Ormat owned-OrCal's output variability. A major capital improvement plan at Heber 1, located in the Imperial Valley in Southern California, slated for 2012 and unexpectedly delayed, was a major contributor to availability declines at the plant. The remainder of the capital plan for Heber 1 is expected to occur in 2014, a year behind schedule. Fitch believes the improvements could boost capacity.
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