[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: 7CFR1786.31]

[Page 1096-1097]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1786--PREPAYMENT OF RUS GUARANTEED AND INSURED LOANS TO ELECTRIC AND TELEPHONE BORROWERS--Table of Contents
 
  Subpart B--Prepayment of RUS Guaranteed Federal Financing Bank Loans 
                Pursuant to Section 306(A) of the RE Act
 
Sec. 1786.31  Application procedure.

    Applications to make a prepayment pursuant to this subpart shall be 
submitted to RUS on such forms as RUS may prescribe in the following 
manner:
    (a) Application. Each borrower desiring to make a prepayment 
pursuant to this subpart shall submit an application to RUS. No 
application from a borrower will be accepted by RUS prior to the 
commencement of the application period. An application shall not be 
deemed submitted to RUS until it is received by RUS, and the ``Date 
Received'' has been inscribed on the Notice of Intent to Prepay the 
Federal Financing Bank by an authorized official of RUS. Incomplete 
applications may be returned to the borrower at the discretion of RUS 
and thereafter must be resubmitted in order to be processed. To be 
considered complete, the application should include the following:
    (1) ``Notice of Intent to Prepay the Federal Financing Bank'' in the 
form specified in Sec. 1786.33 hereof;
    (2) A listing of each FFB loan advance to be prepaid by loan 
designation, RUS note number, RUS account number, advance date, maturity 
date, original amount, outstanding balance, and interest rate;
    (3) Evidence that the borrower meets the qualification provisions of 
Sec. 1786.28(a) of these regulations;
    (4) The certification set forth in part A of the Notice of Intent to 
Prepay the Federal Financing Bank executed by the chief executive 
officer of the borrower;
    (5) In the event that a borrower submits a prepayment application 
which proposes to utilize a portion of the financially distressed 
borrowers' reserve, a certification signed by the chief executive 
officer of the system to the effect that the borrower is either (i) in 
default or near default on interest or principal payments due on loans 
made or guaranteed under the RE Act, and is making a good faith effort 
to increase rates and reduce costs to avoid or mitigate default; or (ii) 
participating in a work out or debt restructuring plan with RUS, either 
as the borrower being restructured or as a borrower providing assistance 
as part of the work out or restructuring and stating why the borrower is 
in default or near default.
    (b) Election of Method of Prepayment. Prior to requesting RUS to 
schedule a settlement date, the borrower shall (1) elect whether it will 
use a private loan, internally generated funds, or a combination of a 
private loan and internally generated funds to make the prepayment, by 
completing part C of its Notice of Intent to Prepay the Federal 
Financing Bank; (2) specify in part C of the Notice of Intent to prepay 
the Federal Financing Bank a date after which a prepayment closing may 
be scheduled; (3) if appropriate, execute the certification set forth in 
part C of the Notice of Intent to Prepay the Federal Financing Bank; and 
(4) return a completed copy of the Notice of Intent to Prepay the 
Federal Financing Bank to the RUS area office.

[[Page 1097]]

    (c) Final Documentation. All documentation in connection with a 
proposed prepayment made pursuant to this subpart shall have been 
submitted to RUS in final form, no later than 5 business days prior to 
the settlement date agreed to by the borrower and RUS. To be considered 
complete, the final documentation shall include the following material:
    (1) A completed copy of the Notice of Intent to Prepay the Federal 
Financing Bank;
    (2) In the event that a borrower proposes to utilize a private loan 
in connection with a prepayment or a portion of a prepayment,
    (i) Evidence, in form and substance satisfactory to RUS, that the 
borrower has an irrevocable commitment from the lender to close the 
private loan on the settlement date at an interest rate that meets the 
requirements of Sec. 1786.28(c)(1);
    (ii) Evidence that the lender meets the qualification provisions of 
Sec. 1786.28(b);
    (iii) Evidence that the private loan meets the qualification 
provisions of Sec. 1786.28(c); and
    (iv) The final documentation for the private loan;
    (3) Estimate of fees, and expenses, including any taxes, in 
connection with the prepayment transaction;
    (4) A certified copy of a resolution of the board of directors of 
the borrower approving the certification cited above and requesting RUS 
approval of the prepayment.
    (5) In the case of financially distressed borrowers, evidence in 
form and substance satisfactory to the Administrator that the benefits 
of prepayment will not be used to reduce rates and that any Federal or 
state regulatory body having jurisdiction over the borrower's rates has 
acknowledged its awareness of this requirement;
    (6) In the event that borrower is unable to deliver final 
documentation or the evidence specified in accordance with, 
Sec. 1786.31(c), RUS may reschedule the settlement date at its 
discretion.

(Approved by the Office of Management and Budget under control number 
0572-0088)