DBRS Assigns Provisional A (high) Rating to Lower Mattagami Energy Limited Partnership Senior Secured Bonds

DBRS has today assigned a provisional rating of A (high) with a Stable trend to Lower Mattagami Energy Limited Partnership’s (LMELP or the Issuer) prospective offering of two issues of Senior Secured Bonds (the Bonds), expected to total $500 million.

The existing LMELP Issuer Rating of A (high), assigned on August 17, 2010, had been intended to apply to LMELP’s future secured bond issuance. Please see the rating report of the same date for more detail.

The financing plan to fund the $2.6 billion redevelopment and expansion includes a $700 million Commercial Paper program (rated R-1 (low)), backstopped by a $700 million bank credit facility, to be periodically repaid with Senior Secured Bonds. Proceeds from the $500 million Bond offering will be used to repay short-term indebtedness and to fund future redevelopment costs.

The Bonds are being issued by way of private placement, and pursuant to a master trust indenture and supplemental indenture. The Bonds will be the direct, secured and unsubordinated obligations of the Issuer, ranking pari passu with all other bonds of the Issuer. The Bonds, obligations of LMELP, are also guaranteed by affiliate Lower Mattagami Limited Partnership and have full recourse until the Recourse Release Date to sponsor Ontario Power Generation Inc. (OPG, rated A (low) and R-1 (low)).

Construction commenced in June 2010, and as of March 31, 2011, according to OPG, work was proceeding consistent with the approved budget and schedule. As of December 31, 2010, life-to-date expenditures totalled $292 million, and $155 million of commercial paper was outstanding.

Notes:
All figures are in Canadian dollars unless noted otherwise.

The applicable methodology is Rating Project Finance, which can be found on our website under Methodologies.