Moody's may downgrade FertiNitro notes

Moody's Investors Service said it placed the B3 rating of FertiNitro Finance Inc.'s $250 million 8.29% senior secured notes due 2020 on review for downgrade following an announcement from the project's management that it did not receive a completed deferred second reliability test certificate from its independent engineers, as required under the bond indenture. This non-certification event results from the independent engineer's assessment that a manufacturing defect in certain equipment at the FertiNitro complex could result in unexpected repairs that extend the plant's downtime limits beyond expectations. The non-certification will also trigger a $50 million permanent repayment of senior bank debt to lenders by Nov. 30.

FertiNitro reported $156 million of available and restricted cash on hand at Oct. 31, and Moody's expects that the company will have adequate liquidity to make the required $50 million payment. However, given the ongoing requirement to pre-fund its debt service reserve to meet interest and principal payments, the project's liquidity will be somewhat weakened.

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