[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: 7CFR1717.154]

[Page 140-141]
 
                          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. 1717.154  Transitional assistance in connection with new loans.

    Requests for transitional assistance in connection with new loans 
may be submitted to RUS no later than the loan application.
    (a) Loan processing priority. (1) RUS loans are generally processed 
in chronological order based on the date the complete application is 
received in the regional or division office. At the borrower's request, 
RUS may offer loan processing priority for the first loan to a 
successor, provided that the loan is approved by RUS not later than 5 
years after the effective date of the merger. In considering the 
request, the Administrator will take into account, among other factors, 
the amount of the loan application, whether there is a significant 
backlog in pending loan applications, the impact that loan priority 
would have on the backlog, the savings and efficiencies to be realized 
from the merger and the relative importance of loan priority to 
facilitating the merger. The Administrator may, in his or her sole 
discretion, grant or decline to grant priority, or grant priority for a 
limited amount of the loan application while deferring for later 
consideration the remainder of the application.
    (2) For any subsequent loans approved during those 5 years, RUS may 
offer loan processing priority. In reviewing requests for loan 
processing priority on subsequent loans, RUS will consider the loan 
authority for the fiscal year, the borrower's projected cash flows, its 
electric rates and rate disparity, and the likely mitigation effects of 
priority loan processing. See 7 CFR 1710.108 and 1710.119.
    (3) Loan processing priority is available following any merger where 
at least one of the merging parties is an active borrower.
    (b) Supplemental financing.(1) RUS generally requires that an 
applicant for a municipal rate loan obtain a portion of its debt 
financing from a supplemental source without an RUS guarantee. See 7 CFR 
1710.110. RUS will, at the borrower's request, waive the requirement to 
obtain supplemental financing for the first RUS loan approved after the 
effective date if that first loan is a municipal rate loan whose loan 
period does not exceed 2 years, and the loan is approved by RUS not 
later than 5 years after the effective date. For any subsequent loans 
approved during these 5 years, or if the borrower requests a loan period 
longer than 2 years, RUS may, subject to the availability of loan funds, 
waive or reduce the amount of supplemental financing required. In 
reviewing requests to reduce or waive supplemental financing on 
subsequent loans or on loans with a loan period longer than 2 years, RUS 
will consider the differences in interest rates between RUS and 
supplemental loans and the impacts of this difference on the borrower's 
projected cash flows and its electric rates and rate disparity. If 
significant differences would result, the waiver will be granted.
    (2) Waiver of supplemental financing may be available if:
    (i) All parties to the merger are active distribution borrowers, or
    (ii) At least one of the merging parties is an active distribution 
borrower, all merging parties are either active distribution borrowers 
or former distribution borrowers, and the merger is effective after 
December 19, 1996.
    (c) Reimbursement of general funds and interim financing.(1) 
Borrowers may request RUS loan funds to reimburse general funds and/or 
interim financing used to finance equipment and facilities included in a 
RUS approved construction work plan or amendment if the construction was 
completed immediately preceding the current loan period. This 
reimbursement period is generally limited to 24 months. See 7 CFR 
1710.109. RUS may, in connection with the first RUS loan approved after 
the effective date, approve a reimbursement period of up to 48 months 
prior to the current loan period if the loan is approved not later than 
5 years after the effective date. In reviewing requests for this longer 
reimbursement period, RUS will consider the stresses that the 
transaction and other costs of entering into the merger places on the 
borrower's rates and cash flows, and the mitigating effects of more 
generous reimbursement.
    (2) A longer reimbursement period may be available if:
    (i) All parties to the merger are active distribution borrowers, or

[[Page 141]]

    (ii) At least one of the merging parties is an active distribution 
borrower, all merging parties are either active distribution borrowers 
of former distribution borrowers, and the merger is effective after 
December 19, 1996.

[61 FR 66871, Dec. 19, 1996, as amended at 67 FR 58322, Sept. 16, 2002]