NEW YORK--(BUSINESS WIRE)-- Fitch Ratings assigns a rating of 'AA-/F1+', with a Stable Outlook to the Royal Crest Dairy, Inc. taxable variable/fixed rate demand bonds, series 2011. The rating is based on the support provided by an irrevocable direct-pay letter of credit (LOC) issued by U.S. Bank National Association (rated 'AA-/F1-', with a Stable Outlook by Fitch).

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 ratings will expire upon the earliest of: (a) Nov. 1, 2014, the initial stated expiration date of the LOC, unless such date is extended; (b) conversion to the adjustable or fixed interest rate mode; (c) any prior termination of the LOC; and (d) defeasance of the bonds. The LOC provides full and sufficient coverage of principal plus an amount equal to 98 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 daily and floating rate mode. The Remarketing Agent for the bonds is Gates Capital Corporation. The bonds are expected to be delivered on or about Nov. 4, 2011.

The bonds initially bear interest at a floating rate, but may be converted to a daily, adjustable or fixed interest rate mode. While bonds bear interest in the floating rate mode, interest payments are on the first business day of each May, August, November and February, commencing Feb. 1, 2012. 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 is given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) upon conversion to the daily, adjustable or fixed interest rate; or (2) upon substitution of the LOC. The bonds shall be accelerated following trustee's receipt of notice of an event of default under the reimbursement agreement. The bonds shall be subject to mandatory redemption upon expiration of the letter of credit. Optional and mandatory redemption provisions also apply to the bonds. Additional bonds may be issued provided they receive a separate series designation and the trustee is prohibited from drawing on the LOC to make payment on them.

Bond proceeds will be used to purchase a bottle-washing equipment line and refinance existing debt of the company.

Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

-- 'U.S. Municipal Structured Finance Rating Criteria', Aug. 25, 2011;

-- 'Rating Guidelines for Letter of Credit-Supported Bonds', July 26, 2011.

Applicable Criteria and Related Research:

Rating Guidelines for Letter of Credit-Supported Bonds
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647311

U.S. Municipal Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=624129

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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.

CONTACT:

Fitch, Inc.
Primary Analyst
Mario Civico, +1-212-908-0796
Senior Director
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Linda Friedman, +1-212-908-0727
Senior Director
or
Committee Chairperson
Trudy Zibit, +1-212-908-0689
Managing Director
or
Media Relations
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com

KEYWORDS:   United States  North America  Colorado  New York

INDUSTRY KEYWORDS:   Professional Services  Finance

MEDIA: