Approximately $5.2 million in rated debt outstanding
New York, November 29, 2012 -- Moody's Investors Service has affirmed the Baa2 rating on the Greenville County, SC Airport Revenue Bonds for the South Carolina Technology and Aviation Center, (SCTAC), and revised the outlook to stable. SCTAC was formerly named the Donaldson Industrial Air Park Project (Donaldson).
Moody's ratings are based on the performance of the Lockheed Martin Corporation ("Lockheed", senior unsecured rated Baa1, stable outlook) under its master lease, the air park's conservative financial management, and sound debt service coverage. The stable outlook is based on the addition of tenants which provide increased non-Lockheed revenues and diversification, improving debt service coverage from reductions in operating expense and debt service requirements, and Lockheed's ability to withstand revenue cuts in any fiscal cliff scenario. SCTAC also has approx $0.4 million in revenue bonds outstanding in one series of bonds that are not rated by Moody's.
* Lockheed Martin Corporation (rated Baa1/stable) has signed leases that require it to make lease payments sized equal to the bonds' required annual debt service and has made significant investments into the infrastructure of their leasehold properties
* Lockheed Martin would be required to redeem or defease all outstanding amounts of the Series 2001 Bonds that relate to Lockheed if it terminates its current lease
* History of growing revenue streams stabilized through long-term lease agreements; new strategic focus has increased the number of potential SCTAC projects
* Strong and growing service area with significant manufacturing and industrial presence
* The air park has limited capital requirements with decreasing debt service requirements after 2012
* Revenue streams are very reliant on revenue generated from Lockheed Martin
* Long-term, fixed structure of lease revenues makes it difficult to adjust rates to meet rate covenants
The stable outlook is based on debt service coverage that has recovered to historic levels due to decreases operating expenses and debt service requirements, new tenants which provide additional revenue and diversification, and the stable outlook for Lockheed.
What could change the rating--UP
Substantial increase in lease revenue from tenants other than Lockheed Martin leading to larger and more diversified revenue streams could put positive pressure on the rating.
What could change the rating--DOWN
Failure to achieve the rate covenant or the occurrence of an event of default as a result of not making the rate covenant could have a negative effect on the rating. Also a weakening of the financial position of Lockheed Martin or a reduction in its lease payments to the center could have a negative effect on the rating.
Bond ratings were assigned by evaluating factors believed to be relevant to the credit profile of the issuer such as i) the business risk and competitive position of the issuer versus others within its industry or sector, ii) the capital structure and financial risk of the issuer, iii) the projected performance of the issuer over the near to intermediate term, iv) the issuer's history of achieving consistent operating performance and meeting budget or financial plan goals, v) the nature of the dedicated revenue stream pledged to the bonds, vi) the debt service coverage provided by such revenue stream, vii) the legal structure that documents the revenue stream and the source of payment, and viii) and the issuer's management and governance structure related to payment.
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Earl Heffintrayer Analyst Public Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Chee Mee Hu MD - Project Finance Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
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