7 CFR 2201.20 - Collateral.
(a)Existence of adequate Collateral. An Applicantshall provide the Board such documentation as is necessary, in the judgment of the Board, to provide satisfactory evidence that appropriate and adequate Collateral secures a Loanguaranteed under the Program. Prior to approving a Guarantee, the Boardshall require that the value of the Collateral pledged be at least equal to the unpaid balance of the Loan Amount.
(b)Form of Collateral.Collateral required by paragraph (a) of this section shall consist solely of Assets of the Applicant, any Affiliate of the Applicant, or both, as identified in the Loan Documents, including primary Assets to be used in the delivery of the service for which the Loan is guaranteed. Such Assets may include, but are not limited to, the following:
(2) Assignments of all relevant contractual agreements, including contractual rights to certain cash flows, marketing arrangements, third-party guarantees, insurance policies, contractors' bonds, and other agreements or rights that may be of value;
(3) All permits, governmental approvals, franchises and licenses, necessary to carry out and operate the required equipment or service; and
(4) Other Assets, which, in the judgment of the Board, possess Collateral value suitable for securing the Loan, including a pledge of all or part of the Applicant's ownership interest in the Project or company, and any after-acquired property.
(c)Applicant's compliance findings. An Applicant's compliance with paragraphs (a) and (b) of this section does not assure a finding of reasonable assurance of repayment, or assure the Board's Guarantee of the Loan.
(e)Review of valuation. The value of Collateral securing a Loan is subject to review and approval by the Board, and may be adjusted downward by the Board if the Board reasonably believes such adjustment is appropriate. The Board's evaluation of the proposed Collateral for the Loan will be based on several factors, including but not limited to:
(2) The cash flow characteristics of the Project;
(4) The competitiveness of the Project's economics and the associated certainty of cash flows in the future; and
(f)Ongoing Collateral Assessment. The Boardshall require that the value of the Collateralshall be at all times at least equal to the unpaid balance of the Loan Amount. To ensure that the ongoing value of the Collateral is properly maintained, the Board may require the borrower to have an ongoing third-party inspection and valuation of the Collateral that is acceptable to the Board. If the Collateral value at the measurement date is less than the unpaid balance of the Loan Amount, the Borrower or its designated Affiliates(s) will be required to pledge additional acceptable Collateral to cover any deficit.
(g)Lien on Collateral.
(1) Upon the Board's approval of a Guarantee, the Administratorshall have liens on Collateral securing the Loan, which shall be superior to all other liens on such Collateral. The value of the Collateral (based on a determination satisfactory to the Board) shall be at least equal to the unpaid balance of the Loan amount, giving significant consideration to the expected value of the Collateral in the event of defaults with specific consideration given to the residual value of the ProjectAssets to third-parties and the liquidity of such Assets.
(2) Both the Administrator and the Lender or Agentshall have a perfected security interest in the Collateral fully sufficient to protect the financial interests of the United States and the Lenders. However, the security interest perfected by the Administratorshall ensure that the Administrator has first priority in such Collateral.
Title 7 published on 2015-08-22.
No entries appear in the Federal Register after this date, for 7 CFR Part 2201.