Fitch Downgrades Main Street 2008A Gas Prepaid Revs to 'C'

Business Wire, Sept 23, 2008

NEW YORK -- Fitch Ratings downgrades Main Street Natural Gas, Inc. (Main Street) gas project revenue bonds, series 2008A to 'C' from 'CCC'; the Rating Watch Negative assigned on Sept. 15, 2008 is removed. This action takes into account Lehman Brothers Commodity Services (LBCS) failure to deliver gas and Main Street's (Purchaser) exercising of its right to terminate the Gas Purchase Agreement (GPA) yesterday (Monday, Sept. 22, 2008).

The 'C' rating reflects Fitch's assessment that a default is imminent. LBCS failed to deliver gas for five consecutive days beginning Thursday Sept. 18, which constitutes a Persistent Delivery Default under the GPA granting Main Street the right to terminate the GPA. After such notice, LBCS has two days to cure its failure to deliver. If not cured, the GPA will be terminated. Due to the timing of the termination event at the end of the month, the termination payment date will be Oct. 31.

The termination payment date could be moved forward in the event that LBCS files for bankruptcy (LBCS is a subsidiary of Lehman Brother's Special Finance unit). An LBCS bankruptcy, together with Lehman Brother's Holdings Inc's (LBHI, LBCS's Guarantor) filing for bankruptcy on Sept. 15, would constitute a termination event and require immediate payment by LBCS of the termination amount. It is Fitch's assessment that regardless of the timing of the termination payment, bondholders will not be paid in full on the payment date.

Consequently, if the termination amount is not paid by LBCS, pursuant to the GPA, LBHI shall be notified of the non-payment and requested to immediately pay the termination payment as required under the Guaranty. If this chain of events occurs, it is Fitch's assessment that the bonds will be in default and bondholders will become unsecured creditors of LBHI.

For additional details regarding the transaction, please see the full report available on the Fitch Ratings web site www.fitchratings.com.

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.