GLENDORA, Calif., July 30, 2013 /PRNewswire/ -- Southern California Public Power Authority ("SCPPA") announced today that it is soliciting consents from holders of its Gas Project Revenue Bonds (Project No. 1), Series 2007A and Series 2007B (the "Bonds") to amendments to supporting documents on terms and subject to the conditions set forth in its Consent Solicitation Statement dated July 30, 2013 and accompanying Consent Form (collectively, the "Consent Solicitation Documents").
As more fully described in the Consent Solicitation Documents, the proposed amendments, if effected, will:
- Provide additional credit support for payments by three of the project participants (the Cities of Burbank, Colton, and Pasadena, California–collectively the "Specified Project Participants") by amending a receivables purchase agreement with J. Aron & Company and a guaranty of The Goldman Sachs Group, Inc. ("GSG").
- Replace AIG-FP Broadgate Limited with Mitsubishi UFJ Securities International plc ("MUFJSI") as commodity swaps counterparty.
- Create a custodial arrangement with respect to payments owed by J. Aron and guaranteed by GSG or to J. Aron under its commodity swaps with MUFJSI in order to mitigate SCPPA's credit exposure to the counterparty under its commodity swaps with MUFJSI.
- Replace the debt service account portion of an Investment Agreement provided by American General Life Insurance Company with an investment agreement to be provided by J. Aron and guaranteed by GSG.
- Amend the prepaid gas natural gas sales agreements between SCPPA and J. Aron to eliminate a seller default if GSG fails to maintain an investment grade credit rating from S&P or Moody's and then fails to provide specified credit support upon request from SCPPA.
The amendments are proposed to improve the credit ratings currently assigned to the Bonds by Moody's and Fitch Ratings (while maintaining the rating currently assigned to the Bonds by S&P) and to reduce reliance on the performance of counterparties unrelated to J. Aron, including the commodity swap counterparty and National Public Finance Guarantee Corp. in the event any of the Specified Project Participants fails to make payments under its gas supply contract. The proposed amendments will become effective, if at all, only upon the satisfaction of certain conditions, including an increase in the ratings of the Bonds to at least "A3" from Moody's and "A-" from Fitch Ratings and maintenance of a rating of at least "A-" from S&P.
Execution of the proposed amendments requires the consent of the registered owners of a majority in principal amount of the Bonds outstanding or their proxies. As of July 26, 2013, $317,555,000 principal amount of Bonds were outstanding, consisting of $281,555,000 principal amount of Series 2007A Bonds and $36,000,000 principal amount of Series 2007B Bonds.
The consent solicitation will expire at 5:00 p.m., New York City time, on August 23, 2013, unless amended or terminated (such date and time, the "Expiration Date"). Only holders of record of the Bonds as of 5:00 p.m. New York City time, on July 26, 2013, are eligible to deliver consents to the proposed amendments in the consent solicitation.
SCPPA has retained Wells Fargo Securities, LLC to act as Solicitation Agent in connection with the consent solicitation. Questions regarding the consent solicitation may be directed to Wells Fargo Securities, LLC at (866) 309-6316 (toll-free) or (704) 410-4760 (collect). Copies of the Consent Solicitation Documents as well as assistance with voting and delivery of consents may be directed to D.F. King & Co., Inc., the Information Agent and Tabulation Agent for the consent solicitation, at (800) 431-9645 (toll-free) or (212) 269-5550 (collect) or by email at email@example.com.
This announcement is for informational purposes only and is not a solicitation of consents with respect to any securities. This announcement shall not constitute an offer to buy or a solicitation of an offer to sell any Bonds. The consent solicitation is being made solely by, and on the terms and subject to the conditions set forth in, the Consent Documents and is not being made in any jurisdiction in which it is unlawful to solicit of grant consents.
SCPPA is a joint powers agency established pursuant to Title 1, Division 7, Chapter 5 of the Government Code, as amended, of the State of California. SCPPA issued the Bonds in 2007 to finance the purchase of a long-term gas supply for five of its members—the Cities of Anaheim, Burbank, Colton, Glendale, and Pasadena, California.
SOURCE Southern California Public Power Authority