DBRS Provisionally Rates Newalta Corporation’s $125 Million Debt Issue at BB (low), Positive Trend

DBRS has today assigned a provisional rating of BB (low) to Newalta Corporation’s (Newalta or the Company) proposed issue of $125 million eight-year senior unsecured debentures (the Debentures). The rating is premised upon Newalta’s Issuer Rating of BB (low) and recovery rating of RR4 on its Unsecured Notes, indicating DBRS’s expectation of an average (30% to 50%) recovery for noteholders in the event of default. The trend is Positive. For more detailed analysis on Newalta, please refer to the DBRS rating report dated October 12, 2011.

The Debentures will be issued by way of a supplement to the trust indenture dated November 23, 2010. The issue will carry a 7.75% coupon and a November 14, 2019, maturity. Closing is expected to be on or around November 14, 2011.

The provisional rating is based on a draft preliminary offering memorandum provided by Newalta as at November 8, 2011. The assignment of final ratings is subject to receipt by DBRS of final documentation that is consistent with that which DBRS has already reviewed.

The Debentures will be direct, unsecured obligations of Newalta and will not be guaranteed at issuance. The Debentures will rank equally and ratably with all of the Company’s other unsecured and unsubordinated obligations.

DBRS expects Newalta to use the proceeds from this issuance mainly to pay for the redemption of its $115 million 7.0% convertible unsecured subordinated debentures maturing November 30, 2012, with the balance to be used for reduction of senior indebtedness and for general corporate purposes.

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

The applicable methodologies are Rating Companies in the Industrial Products Industry and DBRS Rating Methodology for Leveraged Finance, which can be found on our website under Methodologies.