NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns a rating of 'A/F1' to the $4,945,000 California Pollution Control Financing Authority variable rate demand (VRDBs) solid waste disposal revenue bonds (Zanker Road Resource Management, Ltd., Project) series 2011A. The rating is based on the support provided by an irrevocable direct-pay letter of credit (LOC) issued by Comerica Bank (rated 'A/F1', with a Stable Outlook by Fitch).
The 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 ratings will expire upon the earliest of: (a) March 2, 2016, the initial stated expiration date of the LOC, unless such date is extended; (b) conversion to a term interest rate mode; (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 45 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 weekly rate mode. The Remarketing Agent for the bonds is Westhoff, Cone & Holmstedt. The bonds are expected to be delivered on or about March 2, 2011.
The bonds initially bear interest at a weekly rate, but may be converted to a term rate. While bonds bear interest in the weekly rate mode, interest payments are on the first Wednesday of each month, commencing April 6, 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 held uninvested, and are free from any lien prior to that of the bondholders.
Holders may tender their bonds on any business day, provided the trustee, who also acts as the tender agent, and the remarketing agent are given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate; (2) upon substitution or termination of the LOC; (3) following receipt of written notice from the bank of an event of default under the reimbursement agreement, directing such mandatory tender. 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 the trustee's receipt of notice of non-reinstatement of the interest portion of the LOC. Optional and mandatory redemption provisions also apply to the bonds including a mandatory redemption upon the expiration of the LOC. There are no provisions for the issuance of additional bonds.
The proceeds of the bond sale will be used to finance the acquisition of equipment for the processing and transfer of solid waste at a construction and demolition debris processing facility and at a wood and yard waste processing facility and other equipment functionally related thereto located in San Jose, CA.
Additional information is available on Fitch's website at www.fitchratings.com.
Applicable criteria and Related Research:
"U.S. Municipal
Structured Finance Rating Criteria", Aug. 16, 2010;
"Rating
Guidelines for Letter of Credit-Supported Bonds", April 29, 2009.
Applicable Criteria and Related Research:
U.S. Municipal Structured
Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=548588
Rating
Guidelines for Letter of Credit-Supported Bonds
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=435132
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