Fitch Affs Mackinaw Power's Sr Bonds at 'BBB-' / Mackinaw Power Hldgs' Term Loan at 'BB-'

CHICAGO--(Business Wire)--
Fitch Ratings affirms the 'BBB-' rating on Mackinaw Power, LLC's (Mackinaw)
$288.9 million ($264.3 million outstanding) senior secured bonds (senior bonds),
and affirms the 'BB-' rating on Mackinaw Power Holdings, LLC's (MPH) $147
million ($142 million outstanding) senior secured term loan (term loan). The
debt proceeds were used to finance the acquisition of four contracted natural
gas-fired generating facilities in Georgia. Mackinaw is an indirect wholly owned
subsidiary of MPH, which is an indirect wholly owned subsidiary of ArcLight
Energy Partners Fund III, L.P.

Fitch has evaluated the credit quality of the senior bonds and term loan on a
stand-alone basis, independent of ArcLight's credit quality. The lack of debt or
single majority shareholders at the parent level and lack of other project
ownership and creditors at intermediate holding companies substantially
mitigates concerns regarding the possibility of substantive consolidation in the
event of bankruptcy.

The rating affirmation reflects historical and expected financial and operating
performance consistent with base case projections. Debt service coverage ratios
(DSCR) were 1.78 times (x) in 2007 and 1.45x in 2008 on the senior bonds, and
1.39x in 2007 and 1.10x in 2008 on the term loan, generally exceeding base case
projections. Stable cash flows are largely dependent on achieving minimum
availability levels required under Mackinaw's tolling agreements to avoid
reductions in capacity payments. In spite of a forced outage at the single
largest generating unit in late 2007, Mackinaw was able to preserve full
capacity payments for the period through the election of the alternate delivery
point and financial settlement mechanisms allowed under its tolling agreements.

Availability levels are expected to remain in excess of tolling agreement
requirements for all the Mackinaw assets. The cancellation of a parts and
services agreement for one of the Mackinaw facilities is not expected to have a
material effect on financial performance, as elimination of monthly fees and the
ability to source third-party parts and services may offset a potential
termination payment.

The assigned ratings reflect Fitch's assessment of the ability to provide full
and timely payment of the debt service obligations solely from operating cash
flows. Debt service obligations for the senior bonds include scheduled interest
and principal payments. Debt service obligations for the term loan require only
quarterly interest payments prior to maturity. The rating of the senior bonds is
based on contracted cash flows. The term loan rating is based on consolidated
debt service coverage for the senior bonds and the term loan, due to the
structural subordination of the term loan. The term loan rating also considers
refinancing risk and the lack of a covenanted amortization profile. No term loan
amortization occurred through 2008, but $5 million in term loan debt was repaid
in April 2009, and term loan DSCRs are expected to remain consistent with the
assigned rating category. Were less debt to be amortized than expected by Fitch
relative to contractually available revenues, or refinancing risks to be further
elevated, the credit rating could deteriorate.

The generating facilities are all located in Georgia and consist of one
combined-cycle facility with a capacity of 500 megawatts and three peaking
facilities with a combined capacity of 1,370 megawatts. The generating
facilities sell energy and capacity through long-term tolling agreements with
Georgia Power Company (Fitch IDR of 'A') and Constellation Energy Commodities
Group, Inc., guaranteed by Constellation Energy (IDR 'BBB', Rating Watch
Evolving). Asset management and operating and maintenance services are provided
by Consolidated Asset Management Services, a joint venture between an ArcLight
affiliate and Sutton Ventures Group.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Greg Remec, 312-606-2339 (Chicago)
Doug Harvin, 312-368-3120 (Chicago)
Cindy Stoller, 212-908-0526 (Media Relations, New York)
cindy.stoller@fitchratings.com

Copyright Business Wire 2009