Fitch Rates Colorado Hsg & Fin Auth (Acme Manufacturing Co), Series 2016A & B ‘A+/F1’

NEW YORK

Fitch Ratings assigns a rating of ‘A+/F1’ to the following Colorado Housing and Finance Authority variable rate demand economic development revenue bonds:

–$4,615,000 tax-exempt (Acme Manufacturing Company, Inc. Project) series 2016A;

–$3,855,000 taxable (Acme Manufacturing Company, Inc. Project) series 2016B.

The Rating Outlook for the long-term rating is Negative.

KEY RATING DRIVERS

The rating is based on the support provided by an irrevocable direct-pay letter of credit (LOC) issued by UMB Bank, N.A. (rated ‘A+/F1’, Negative Outlook), which has an initial stated expiration date of May 19, 2021, unless such date is extended or earlier terminated, while the bonds are in the weekly interest rate mode only.

The bank is obligated to make regularly scheduled payments of principal of and interest on the bonds in addition to payments due upon maturity, acceleration and redemption, as well as purchase price for tendered bonds. The LOC provides full and sufficient coverage of principal plus an amount equal to 39 days of interest at a maximum rate of 10% 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 Gates Capital Corporation. The bonds are expected to be delivered on or about May 19, 2016.

The bonds initially bear interest at a weekly rate, but may be converted to a fixed rate. While bonds bear interest in the weekly rate mode, interest payments are on the first business day of each month, commencing June 1, 2016. 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 and remarketing agent are given the requisite prior notice of the purchase. The bonds are subject to mandatory tender upon conversion to the fixed interest rate and substitution or termination of the LOC. The interest component shall automatically and immediately reinstate following an interest drawing. The bonds shall be subject mandatory redemption following trustee’s receipt of notice of an event of default under the Reimbursement Agreement. Other optional and mandatory redemption provisions also apply to the bonds. Additional bonds may be issued provided the trustee receives an amendment to the LOC such that the available amount under the LOC is sufficient to pay principal, interest and purchase price on all the bonds outstanding under the trust indenture.

Bond proceeds will be used to finance the cost of land, buildings, structures, fixtures and improvements.

RATING SENSITIVITIES

The rating is exclusively tied to the short- and long-term rating that Fitch maintains on the bank providing the LOC and will reflect all changes to that rating.

Additional information is available at ‘www.fitchratings.com‘.

Applicable Criteria

Rating Criteria for Letter of Credit-Supported Bonds and Commercial Paper (pub. 05 Apr 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878782

U.S. Municipal Structured Finance Criteria (pub. 23 Feb 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=862222

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1004603

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004603

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Fitch Ratings
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