Title 7: Agriculture
PART 1717—POST-LOAN POLICIES AND PROCEDURES COMMON TO INSURED AND GUARANTEED ELECTRIC LOANS
Subpart M—Operational Controls
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§ 1717.616 Sale, lease, or transfer of capital assets.
A distribution borrower may without the prior approval of RUS sell, lease, or transfer any capital asset if the following conditions are met:
(a) The borrower is not in default;
(b) In the most recent year for which data are available, the borrower achieved a TIER of at least 1.25, DSC of at least 1.25, OTIER of at least 1.1, and ODSC of at least 1.1 in each case based on the average or the best 2 out of the 3 most recent years;
(c) The sale, lease, or transfer of assets will not reduce the borrower's existing or future requirements for energy or capacity being furnished to the borrower under any wholesale power contract which has been pledged as security to the government;
(d) Fair market value is obtained for the assets;
(e) The aggregate value of assets sold, leased, or transferred in any 12-month period is less than 10 percent of the borrower's net utility plant prior to the transaction;
(f) The proceeds of such sale, lease, or transfer, less ordinary and reasonable expenses incident to such transaction, are immediately:
(1) Applied as a prepayment of all notes secured under the mortgage equally and ratably;
(2) In the case of dispositions of equipment, materials or scrap, applied to the purchase of other property useful in the borrower's utility business; or
(3) Applied to the acquisition of construction of utility plant.
[60 FR 67405, Dec. 29, 1995, as amended at 65 FR 51748, Aug. 25, 2000]
