November
13, 2007 Final liquidation payment
made to Class A and B Stockholders: On
November 13, 2007, the Bank paid out approximately
$39.69 million to its Class A (Government)
and Class B (Private) Stockholders as
the final distribution to complete its
liquidation. The final payment amount
was approximately 4.435 cents per share
. All stockholders that received a payment
in November were sent a Form 1099-DIV
reporting the amount of the payment during
the month of January 2008.
February
11, 2008 - Final Meeting of Bank Board:
A final meeting of the Bank's last Board
of Directors was held to mark the completion
of the dissolution of the Bank.
RTB Summary
On May 7, 1971, the Rural Telephone Bank
(Bank) was established by amendment to
the RE Act as a source of supplemental
financing for telecommunications companies
and cooperatives eligible to borrow under
the RE Act's telephone loan program. A
Board of Directors was appointed to manage
the operations of the Bank and the employees
of REA (now USDA Rural Development Utilities
Programs) performed the Bank's day to
day operations. By establishing a capital
structure which provided for a mixed Federal
and private ownership, the Bank was designed
to assure rural telephone systems access
to private sources of capital by establishing
a supplemental credit mechanism to which
borrower systems may turn for all or part
of their future capital requirements.
The capital structure of the Bank consists
of three classes of stock: Class A, Class
B, and Class C. Class A stock was issued
by the Bank in exchange for approximately
$600 million of capital provided by the
taxpayers. This provided the Bank with
its initial "seed" money to
begin its lending operations. The Bank
paid an annual dividend of two percent
on Class A stock. Class B stock was purchased
by recipients of Bank loans in an amount
equal to five percent of the loan. Class
B stock did not earn a cash dividend,
but Bank borrowers acquired additional
shares of Class B stock through patronage
refunds. Class C stock was available for
purchase by Bank borrowers, entities eligible
to borrow from the Bank, and by organizations
controlled by Bank borrowers. Class C
stock was also acquired through the conversion
of Class B stock after repayment of the
loans associated with the Class B stock.
Class C stock earned a cash dividend at
a rate determined by the Board of Directors.
In addition to providing for a mixed-ownership
through the A, B, and C classes of stock,
the RE Act amendment also provided that
the ownership, control, and operation
of the Bank be transferred to the Class
B and C stockholders after 51 percent
of the Class A stock was retired (known
as privatization of the Bank). The retirement
of Class A stock began in fiscal year
1996.
After years of discussion
regarding the possible privatization of
the Bank, in February 2005, President
Bushs FY2006 Budget proposed the
dissolution of the Bank. After six months
of discussion and deliberation, the Board
of Directors unanimously approved resolutions
to liquidate and dissolve the Bank on
August 4, 2005. On November 10, 2005,
the liquidation and dissolution process
was initiated with the signing of the
2006 Agriculture Appropriations bill by
President Bush, which contained a provision
lifting the restriction on the retirement
of more than 5 percent of the Class A
stock held by the U.S. government. This
paved the way for all Bank stock to be
redeemed.
The liquidation and
dissolution process is now largely complete.
Stock redemption agreements were sent
to over 92 percent of shareholders on
January 10, 2006. The Government's Class
A stock was redeemed on April 10, 2006;
redemption payments to Class B and C shareholders
began on April 11, 2006 and were completed
by September 30, 2006. The final liquidation
payments were made to Class A and B shareholders
at the time of liquidation on November
13, 2007. The only action still to be
taken is the completion of a final audit.
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