[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: 7CFR1744.50]

[Page 349]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1744--POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED AND INSURED TELEPHONE LOANS--Table of Contents
 
         Subpart B--Lien Accommodations and Subordination Policy
 
Sec. 1744.50  Non-Act purposes.

    (a) The Administrator will consider requests for the accommodation 
of the Government's lien on the borrower's system or the subordination 
of the Government's lien on after-acquired property which will enable 
the borrowers to obtain financing from private lenders for the purpose 
of providing new telecommunication services which may not be eligible 
for financing under the Act if the Administrator is satisfied that:
    (1) The borrower will have the ability to repay its existing and 
proposed indebtedness;
    (2) The security for outstanding Government loans and guarantees is 
reasonably adequate and will not be adversely affected by the 
accommodation or subordination; and
    (3) Approval of the request is in the interests of the Government 
with respect to the financial soundness of the borrower and other 
matters, such as assuring that the borrower's system is constructed 
cost-effectively using sound engineering practices.
    (b) In determining that the security for outstanding Government 
loans and guarantees is reasonably adequate and will not be adversely 
affected by the accommodation or subordination the Administrator will 
consider, among other matters, when applicable, the following:
    (1) Market forecasts for the project;
    (2) Projected revenues, expenses and net income of the borrower's 
existing system and the project;
    (3) Maximum debt service on indebtedness of both the borrower's 
system and the project;
    (4) Projected rate of return on the borrower's investment in the 
project;
    (5) Fair market value of property acquired by the borrower as part 
of the project;
    (6) Impact of the project on the ratio of the borrower's secured 
debt to assets;
    (7) Projected growth in borrower's system and project equity; and
    (8) Amount of funds available for plant additions, replacements and 
other similar costs of the system and the project.
    (c) In determining whether the accommodation or subordination is in 
the interests of the Government, the Administrator may consider, among 
other matters, whether the project will improve the borrower's financial 
strength and the assurance of repayment of Government debt.

[51 FR 32430, Sept. 12, 1986. Redesignated at 55 FR 39396, Sept. 27, 
1990, and amended at 59 FR 43716, Aug. 25, 1994. Further redesignated at 
66 FR 41760, Aug. 9, 2001 and amended at 66 FR 41763, Aug. 9, 2001]