The Tennessee Energy Acquisition Corporation Announces Consent Solicitation for its Gas Project Revenue Bonds, Series 2006A and Series 2006B
NEW YORK, Dec. 12, 2011 /PRNewswire/ — The Tennessee Energy Acquisition Corporation (“TEAC”) announced today that it is soliciting consents from holders of its Gas Project Revenue Bonds, Series 2006A (the “Series 2006A Bonds”) and Series 2006B (the “Series 2006B Bonds,” and, together with the Series 2006A Bonds, the “Series 2006 Bonds”) on the terms and subject to the conditions set forth in the Consent Solicitation Statement and Supplement to Consent Solicitation Statement dated December 12, 2011.
As more fully described in the Consent Solicitation Statement, the proposed amendments would permit TEAC to:
- Amend the gas purchase agreement between TEAC and J. Aron & Company, as gas supplier, to eliminate a seller default if The Goldman Sachs Group, Inc. fails to maintain a credit rating of “BBB-” or higher by Standard & Poor’s or “Baa3″ or higher by Moody’s, or otherwise post credit support.
- Enter into a receivables purchase agreement with the gas supplier to provide credit support for Project Participants and reduce the reliance on the investment agreements in the Senior and Reserve Subaccounts of the Debt Service Reserve Account. The existing guaranty from The Goldman Sachs Group, Inc. will be amended to include the gas supplier’s payment obligations under the receivables purchase agreement. The receivables purchase agreement will allow Moody’s and S&P to assign ratings to the Series 2006A Bonds unconstrained by the ratings of MBIA, DEPFA or any of the Project Participants.
The proposed amendments will become effective upon the satisfaction of certain conditions, including the Series 2006A Bonds receiving ratings of at least “A3″ from Moody’s, “A-” from S&P and “A” from Fitch Ratings and the Series 2006B Bonds maintaining a rating of at least “BBB” from Fitch.
Adoption of the proposed amendments requires the consents of a majority in principal amount of the Series 2006A Bonds and the Series 2006B Bonds outstanding, voting separately. A majority of the holders of the Series 2006B Bonds have given their oral agreement to deliver their consents, and $34,790,000 of the holders of the Series 2006A Bonds have given their oral agreement to deliver their consents.
The consent solicitation will expire at 5:00 p.m., New York City time, on January 6, 2012, unless terminated, shortened or extended by TEAC (such date and time, the “Expiration Date”). Only holders of record of the Series 2006 Bonds as of 5:00 p.m., New York City time, on December 2, 2011 are eligible to deliver consents to the proposed amendments in the consent solicitation.
TEAC has retained Wells Fargo Securities to act as Solicitation Agent in connection with the consent solicitation. Questions about the consent solicitation may be directed to Wells Fargo Securities at (866) 309-6316 (toll-free) or (704) 715-8341 (collect). Copies of the Consent Solicitation Statement and related documents may be obtained from D.F. King & Co., the Information Agent and Tabulation Agent for the consent solicitation, at (800) 431-9645 (toll-free) or (212) 269-5550 (collect).
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 Series 2006 Bonds. The consent solicitation is being made solely on the terms and subject to the conditions set forth in the Consent Solicitation Statement and Supplement to the Consent Solicitation Statement, and is not being made in any jurisdiction in which it is unlawful to solicit or grant consents.
TEAC is a public corporation of the State of Tennessee and an instrumentality of its 21 associated municipalities and the State of Tennessee. TEAC provides natural gas supply, transportation and management services on a nonprofit basis to its associated municipalities, each of which owns and operates a municipal gas utility in Tennessee. TEAC has sold all of the gas supply financed with the Series 2006 Bonds to 17 of its associated municipalities and to nine other municipal gas systems and joint action agencies in the southeastern U.S. To date, this gas supply project has provided over 100 billion cubic feet of clean, reliable and economical natural gas to the project participants.
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SOURCE Tennessee Energy Acquisition Corporation