Fitch Rates CA Pollution Control Financing Auth VRDBs (Zerep Mgt Corp Project) Series 2014 'A/F1'

NEW YORK--()--Fitch Ratings assigns a rating of 'A/F1', Stable Outlook, to up to $27,570,000 of California Pollution Control Financing Authority variable rate demand solid waste disposal revenue bonds (Zerep Management Corporation Project), series 2014.

KEY RATING DRIVERS:

The rating is based on the support provided by an irrevocable direct-pay letter of credit (LOC) issued by Comerica Bank (rated 'A/F1', Stable Outlook).

The bank is obligated to make payments of principal of and interest on the bonds upon maturity, acceleration and redemption, as well as purchase price for tendered bonds. The initial bond issuance is $12,875,000 with an option under the trust indenture to issue bonds up to $27,570,000. The issuance of bonds above the initial amount is contingent on the bank approving and increasing the stated amount of the LOC to support such additional bonds under Series 2014. The rating will expire upon the earliest of: (a) March 26, 2019, the initial stated expiration date of the LOC, unless such date is extended; (b) conversion from the weekly interest rate mode; (c) any prior termination of the LOC; and (d) defeasance of the bonds. The LOC provides full and sufficient coverage of the issued amount of principal plus an amount equal to 45 days of interest at a maximum rate of 12% 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 Westoff, Cone & Holmstedt. The bonds are expected to be delivered on or about March 26, 2014.

The bonds initially bear interest at a weekly rate, but may be converted to a term rate. While bonds bear interest in the weekly rate mode, interest is paid on the first Wednesday of each month, commencing on May 7, 2014. 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, who also acts as the tender agent, and the remarketing agent are given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate; (2) upon substitution or termination of the LOC; and (3) following receipt of written notice from the bank of an event of default under the reimbursement agreement, directing such mandatory tender. The bank has the option of directing acceleration rather than a mandatory tender upon an event of default under the reimbursement agreement. The bonds shall be accelerated following the trustee's receipt of notice of non-reinstatement of the interest portion of the LOC. Optional and mandatory redemption provisions also apply to the bonds including a mandatory redemption upon the expiration of the LOC. There are no provisions for the issuance of additional series of bonds.

The proceeds of the bond sale will be used to (i) finance and/or refinance the cost of acquiring, constructing, installing and equipping certain solid waste disposal facilities.

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 and Related Research:

--'U.S. Municipal Structured Finance Criteria', Feb. 24, 2014;

--'Guidelines for Letter of Credit', June 14, 2013.

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=736618

Rating Guidelines for Letter of Credit-Supported Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=710476

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=824318

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Contacts

Fitch Ratings
Primary Analyst
Linda Friedman
Senior Director
+1-212-908-0796
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Joseph Staffa
Senior Director
+1-212-908-0829
or
Committee Chairperson
Trudy Zibit
Managing Director
+1-212-908-0689
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst
Linda Friedman
Senior Director
+1-212-908-0796
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Joseph Staffa
Senior Director
+1-212-908-0829
or
Committee Chairperson
Trudy Zibit
Managing Director
+1-212-908-0689
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com