04-17-2009, 05:16 AM
Youser.....would you like to be on the Finance Committee? That is from the heart, as you ask the right questions and because you ask those questions and clarity you would be a tremendous asset. Please do not apologize for asking questions to add clarity to all those who are asking themselves the same things. I will try and answer below as best I can:
10) “ We now have a consideration that would allow us to literally sell back a part of the bond contract (we may never use) for a minimum of $500,000.”
Does this mean we could sell back part of the bond if in the end it is cheaper to do so than if we keep it all and continue to pay interest for years until we collect enough road fees to pay it all back?
Seperate issue, but was presented to us by Dexia. They are willing to pay us money to delete a clause in the contract that allows us to "call the bonds" and pay them off. If we sell it back it's worth $500,000 plus. The question is, will we ever have the need for this call option. That is what is being considered. We would still continue the bond.
11) The original Broker of the Bond has suggested that we add an additional $1,000,000 to the existing trust (completion account) with a 125% ratio instead of 110%. Our attorney has indicated that this is only conditional and has nothing to do with the terms of the contract.
Could you please explain this in layman’s terms and how it affects our debt and obligations? Are we considering borrowing another $1,000,0000?
Of the orininal amount of apporx. $12,000,000 $1.2 was set aside in trust to make certain that the project could be completed or debt paid. If all conditions are met then the money is released. They are asking us to put aside another $1,000,000 of the borrowed funds with even more restrictive criteria for releasing the funds. In short order, we would have $2.2 Million in resticted accounts.
13) If we returned funds at this point our estimated penalty would be $3.500,0000. Is that a better way to end the controversy? It’s the will of the collective that matters and should be and will be honored.
How does this relate to the $500,000 fee above? Does this mean if we return funds we will be paying a fee and penalty totaling $4,000,000? Won’t the controversy be settled once it becomes clear whether it costs us more in the end to keep the bond money or return funds?
Your logic is sound minus the $500,000 as it is not a fee.
16) Bond is collateralized by our account receivables only.
Are there penalties if we don’t collect enough road fees to pay the bond back by a specific date?
Like any other contract there are penalties up to and including default.
I hope this helps.
Jeff
10) “ We now have a consideration that would allow us to literally sell back a part of the bond contract (we may never use) for a minimum of $500,000.”
Does this mean we could sell back part of the bond if in the end it is cheaper to do so than if we keep it all and continue to pay interest for years until we collect enough road fees to pay it all back?
Seperate issue, but was presented to us by Dexia. They are willing to pay us money to delete a clause in the contract that allows us to "call the bonds" and pay them off. If we sell it back it's worth $500,000 plus. The question is, will we ever have the need for this call option. That is what is being considered. We would still continue the bond.
11) The original Broker of the Bond has suggested that we add an additional $1,000,000 to the existing trust (completion account) with a 125% ratio instead of 110%. Our attorney has indicated that this is only conditional and has nothing to do with the terms of the contract.
Could you please explain this in layman’s terms and how it affects our debt and obligations? Are we considering borrowing another $1,000,0000?
Of the orininal amount of apporx. $12,000,000 $1.2 was set aside in trust to make certain that the project could be completed or debt paid. If all conditions are met then the money is released. They are asking us to put aside another $1,000,000 of the borrowed funds with even more restrictive criteria for releasing the funds. In short order, we would have $2.2 Million in resticted accounts.
13) If we returned funds at this point our estimated penalty would be $3.500,0000. Is that a better way to end the controversy? It’s the will of the collective that matters and should be and will be honored.
How does this relate to the $500,000 fee above? Does this mean if we return funds we will be paying a fee and penalty totaling $4,000,000? Won’t the controversy be settled once it becomes clear whether it costs us more in the end to keep the bond money or return funds?
Your logic is sound minus the $500,000 as it is not a fee.
16) Bond is collateralized by our account receivables only.
Are there penalties if we don’t collect enough road fees to pay the bond back by a specific date?
Like any other contract there are penalties up to and including default.
I hope this helps.
Jeff