NEW YORK--(BUSINESS WIRE)--On the effective date of Aug. 17, 2011, Fitch Ratings will assign a rating of 'AA-/F1+' to the $2,000,000 California Pollution Control Financing Authority variable rate demand solid waste disposal revenue bonds (Vanderham Family Trust-Koetsier & Sons Dairy Project), series 2003. The rating is based on the support provided by an irrevocable direct-pay substitute letter of credit (LOC) issued by CoBank ACB, (rated 'AA-/F1+', Stable Outlook by Fitch). The bonds are currently outstanding and supported by a LOC issued by Bank of America, N.A. Fitch will be assigning credit enhanced ratings to the bonds for the first time in connection with the provision of the substitute LOC provided by CoBank, ACB.
The LOC bank is obligated to make payments of principal of and interest on the bonds upon maturity, acceleration and redemption, as well as purchase price for tendered bonds. The rating will expire upon the earliest of: (a) May 1, 2013, the stated expiration date of the LOC, unless such date is automatically extended for one-year periods; (b) conversion to a fixed interest rate; (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 108 days of interest at a maximum rate of 12% based on a year of 365 days and purchase price for tendered bonds, while in the variable (weekly) rate mode. The Remarketing Agent for the bonds is W.R. Taylor & Company, LLC. The bonds are expected to be reoffered on Aug. 17, 2011.
The bonds initially bear interest at a weekly rate, but may be converted to a fixed interest rate. While bonds bear interest in the weekly rate mode, interest payments are on the first Thursday of each September, December, March and, June. The scheduled interest payment date is Sept. 1, 2011. The trustee is obligated to make timely draws on the LOC to pay principal, interest, and purchase price. Funds drawn under the LOC are invested in accordance with rating guidelines and mature when needed, and are free from any lien prior to that of the bondholders. Holders may tender their bonds 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 to the fixed interest rate; (2) upon substitution of the LOC; and (3) following receipt of written notice from the bank of an event of default under the reimbursement agreement. The bank has the option of directing an acceleration rather than a mandatory tender upon an event of default under the reimbursement agreement. The bonds shall be accelerated following trustee's receipt of notice of non-reinstatement of LOC interest. The bonds are subject to mandatory redemption upon expiration of the LOC. Other optional and mandatory redemption provisions also apply to the bonds. No additional bonds may be issued under the trust indenture.
Bond proceeds were used to finance the acquisition, construction, installation and equipping certain solid waste disposal facilities in Fresno County, California.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'U.S. Municipal Structured Finance Rating Criteria', April 25, 2011;
--'Rating Guidelines for Letter of Credit-Supported Bonds', July 26, 2011.
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