Fitch Rates South Dakota Value Added Fin Auth VRDBs (Lincoln Land Proj) Ser 2014 AA-/F1+

Fitch Ratings assigns an ‘AA-/F1+’, rating to the $5,500,000 South Dakota Value Added Finance Authority variable rate demand solid waste disposal revenue bonds (Lincoln Land, LLC Project), series 2014. The Outlook for the long-term rating is Stable.

KEY RATING DRIVERS

The rating is based on the support provided by an irrevocable direct-pay confirming letter of credit (CLOC) issued by Agribank, FCB (rated ‘AA-/F1+’; Stable Outlook), which confirms an irrevocable direct-pay letter of credit (LOC) issued by Farm Credit Services of America, FLCA, which is not rated by Fitch.

The LOC 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 CLOC bank is obligated to make a payment for all outstanding bonds in the event the LOC bank fails to honor any draw or repudiates its obligations under the LOC. The rating will expire upon the earliest of: (a) Aug. 12, 2015, the initial stated expiration date of the CLOC, unless such date is automatically extended for one year periods; (b) conversion to the fixed interest rate mode; (c) any prior termination of the CLOC; and (d) defeasance of the bonds. The LOC provides full and sufficient coverage of principal plus an amount equal to 109 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 CLOC provides the same full and sufficient coverage as the LOC. The Remarketing Agent for the bonds is The Frazer Lanier Company, Inc. The bonds are expected to be delivered on or about Aug. 12, 2014.

The bonds will 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 Thursday of each November, February, May, and August The first interest payment date is scheduled for Nov. 6, 2014. The trustee is obligated to make timely draws on the LOC to pay principal, interest, and purchase price. In the event the LOC bank fails to honor a draw or repudiates its obligations under the LOC, the trustee will declare an event of default and direct an immediate acceleration of all the bonds and draw on the CLOC for the amount of all outstanding bonds. Funds drawn under the LOC are held uninvested or may be invested in accordance with rating guidelines 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: (1) upon conversion of the interest rate to a fixed rate mode; or (2) upon substitution of the LOC or CLOC. The bonds are subject to mandatory redemption upon the expiration or termination of the LOC or CLOC. Additional optional and mandatory redemption provisions also apply to the bonds. There are no provisions for the issuance of additional bonds.

Bond proceeds will be used to finance the cost of acquiring, constructing, and equipping the solid waste disposal components of a dairy production facility.

RATING SENSITIVITIES

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

Applicable Criteria and Related Research:

–‘U.S. Municipal Structured Finance Criteria’, Feb. 24, 2014;

–‘Rating Guidelines for Letter of Credit-Supported Bonds and Commercial Paper’, June 2, 2014.

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

Rating Guidelines for Letter of Credit-Supported Bonds and Commercial Paper

Additional Disclosure

Solicitation Status