[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: 7CFR1735.74]

[Page 320-321]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1735--GENERAL POLICIES, TYPES OF LOANS, LOAN REQUIREMENTS--TELECOMMUNICATIONS PROGRAM--Table of Contents
 
              Subpart G--Acquisitions Involving Loan Funds
 
Sec. 1735.74  Submission of data.

    (a) RUS will not approve any acquisition, other than of toll 
facilities (see subpart J of this part), financed in whole or in part 
with loan funds until the borrower submits the following data to the 
GFR:
    (1) For any nonborrowers involved, their most recent balance sheets, 
operating statements, detail of plant accounts, reports to the state 
commission, and audits, if available.
    (2) Completed RUS Form 507, ``Report on Telephone Acquisition,'' 
which provides system data, including the type of purchase and purchase 
price, a system description, and data by exchange. See Sec. 1735.3 for 
information on obtaining copies of this form.
    (3) A map (such as a road map) showing county lines, the boundaries 
of the proposed acquisition and the borrower's existing service 
territory, and the names of other telephone companies serving adjoining 
areas.
    (4) A brief statement of the plans for incorporating the acquired 
facilities into the borrower's existing system.
    (5) The number of subscribers currently receiving service in the 
area to be acquired and the number of new subscribers that will be 
served over the next 5 years as a result of the acquisition.
    (6) The proposed purchase price.
    (7) Two copies of any options, bills of sale, or deeds, and four 
copies of any acquisition agreements. All of these

[[Page 321]]

documents are subject to RUS approval. If the acquisition agreement is 
approved by RUS, two copies of it shall be returned to the borrower.
    (8) An appraisal by the borrower's consulting engineer or other 
qualified person of the physical plant to be acquired. The appraisal 
shall include the following:
    (i) Inspection of each central office, noting the age and condition 
of the switch and associated equipment, and the extent and quality of 
maintenance of the equipment and premises.
    (ii) Inspection of the outside plant, noting the general age and 
condition of cable and wire, poles and related hardware, pedestals, and 
subscriber drops. Any joint use or ownership shall be explained.
    (iii) Inspection of miscellaneous items such as commercial office 
facilities, vehicles, furniture, tools and work equipment, and materials 
and supplies in stock, noting age and condition.
    (iv) Inspection of all buildings and other structures (such as radio 
towers), noting age and condition.
    (v) Detailed description of all real estate including the present 
market value that local real estate dealers, bankers, insurance agents, 
etc., place on the property.
    (vi) Any widely accepted method, approved by RUS, may be used to 
estimate the condition of the facilities in paragraphs (a)(8)(i) through 
(a)(8)(iv) of this section. The ``percent condition'' method is 
recommended, but is not required.
    (9) Copies of deeds to real estate to be acquired, with an 
explanation of the proposed use of the land.
    (10) Copies of leases to be acquired.
    (11) Copies of any existing mortgages with parties other than RUS, 
indentures, deeds of trust, or other security documents or financing 
agreements relating to the property to be acquired and any contracts or 
other rights or obligations to be assumed as part of the acquisition.
    (12) A list of all counties in which the proposed system will have 
facilities.
    (13) If the borrower is a cooperative-type organization, a 
description of its plans for taking subscribers in as members, 
membership fees, equity payments required because of the acquisition, 
and extent of membership support.
    (14) A certification, signed by the president of the borrower, that 
the borrower is participating in the State's telecommunications 
modernization plan (for information concerning the plan, see 7 CFR part 
1751, subpart B). This certification is not required if the borrower is 
seeking a guaranteed loan.
    (15) Any other data deemed necessary by the Administrator for an 
evaluation of the acquisition.
    (b) For stock acquisitions, the borrower shall submit the following 
in addition to the items listed in (a) of this section:
    (1) A list of all stockholders of the company to be acquired and the 
number of shares each owns.
    (2) Guarantees and indemnifications to be obtained from the sellers 
of the stock.

(Approved by the Office of Management and Budget under control number 
0572-0084)

[54 FR 14626, Apr. 12, 1989. Redesignated at 55 FR 39395, Sept. 27, 
1990; 58 FR 66256, Dec. 20, 1993]