CHICAGO--(BUSINESS WIRE)--Fitch Ratings believes that the recent bankruptcy filing of Synagro Technologies Inc. (STI) will not immediately affect the credit quality of Synagro-Baltimore LLC (series 2008 A revenue refunding bonds rated 'BBB+' by Fitch) or Philadelphia Project Finance, LLC (series 2009 sewage sludge disposal revenue bonds rated 'BBB'). The Rating Outlook for Synagro-Baltimore LLC and Philadelphia Project Finance, LLC (collectively, the project companies) remains Stable.
Fitch believes there is no imminent risk that the project companies' credit quality will be affected by STI's Chapter 11 bankruptcy filing, which named a number of STI's subsidiaries but excluded the indirectly-owned project companies. Fitch cannot predict whether any of STI's creditors will seek substantive consolidation of the project companies as part of the STI bankruptcy. The project companies have been organized as bankruptcy-remote, special-purpose vehicles, mitigating the potential for substantive consolidation.
STI announced that EQT Infrastructure II (EQT), a European private equity fund, has agreed to purchase substantially all of STI's assets. STI states that the bankruptcy filing is intended to reorganize STI's capital structure and facilitate the sale to EQT. STI's voluntary petition for reorganization was filed in the U.S. Bankruptcy Court for the District of Delaware.
The project companies are special-purpose vehicles created to own and operate sludge-processing facilities that provide disposal services to their respective municipalities under availability-based, fixed price service agreements. STI is the largest recycler of organic residuals in the United States. STI serves over 600 water and wastewater treatment facilities and manages over 350 dry tons of municipal biosolids per day through thermal drying and pelletization processes.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Rating Criteria for Infrastructure and Project Finance', (July 12, 2012);
--'Rating Criteria for Availability-Based Projects' (June 19, 2012).
Applicable Criteria and Related Research
Rating Criteria for Infrastructure and Project Finance
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=682867
Rating Criteria for Availability-Based Projects
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681351
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