[Code of Federal Regulations]
[Title 7, Volume 11]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1717.150]

[Page 138]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1717--POST-LOAN POLICIES AND PROCEDURES COMMON TO INSURED AND GUARANTEED ELECTRIC LOANS--Table of Contents
 
       Subpart D--Mergers and Consolidations of Electric Borrowers
 
Sec. 1717.150  General.

    Source: 61 FR 66871, Dec. 19, 1996, unless otherwise noted.


    (a) This subpart establishes RUS policies and procedures for mergers 
of electric borrowers. These policies and procedures are intended to 
provide borrowers with the flexibility to negotiate and enter into 
mergers that offer advantages to the borrowers and to rural communities, 
and adequately protect the integrity and credit quality of RUS loans and 
loan guarantees.
    (b) Consistent with prudent lending practices, the maintenance of 
adequate security for RUS loans and loan guarantees, and the objectives 
of the Rural Electrification Act of 1936, as amended, (7 U.S.C. 901 et 
seq.) (RE Act), RUS encourages electric borrowers to consider mergers 
when such action is likely to contribute, in the long-term, to greater 
operating efficiency and financial soundness. Borrowers are specifically 
encouraged to explore mergers that are likely to enhance the ability of 
the successor to provide reliable electric service at reasonable cost to 
RE Act beneficiaries.
    (c) Pursuant to the loan documents and RUS regulations, certain 
mergers are subject to RUS approval. See Sec. 1717.615.
    (d) Since RUS must take action in order to advance funds and 
otherwise conduct business with a successor, RUS encourages borrowers to 
consult RUS early in the process regardless of whether RUS approval of 
the merger is required. RUS will provide technical assistance and 
guidance to borrowers to help expedite the processing of their requests 
and to help resolve potential problems early in the process.