- 7 - experiences, the General Partners expect that the lender will require the partnership to obtain a financial guarantee bond from an insurance company acceptable to the lender. The insurance company will then, as surety, obligate itself to pay the lender should any of the Limited Partners default in making payments under the provisions of their respective promissory notes. * * * * * * * Institutional Financing. Immediately after the formation of the partnership, the partnership intends to use the partnership property and the promissory notes given by the Limited Partners as part of their capital contribution as security for a loan. Since the loan proceeds are necessary in order to obtain the partnership property, a simultaneous closing of the institutional loan and the acquisition of the partnership property will probably have to be arranged. The partnership expects to borrow Five Hundred Thirteen Thousand and No/100 Dollars ($513,000) and expects to pay three (3) percentage points in order to obtain the loan. In addition, the partnership objects [expects] the institutional lender to require the issuance of a financial guarantee bond prior to the issuance of the loan. Certain expenses are projected in obtaining the financial guarantee bond. Based upon the General Partners’ prior experience in obtaining financial guarantee bonds, the partnership expects to pay two (2) percentage points per year for the financial guarantee bonds and plans to incur some significant legal expenses in obtaining the bond commitment. As set forth in the “Use of Proceeds” section, Forty-Two Thousand and No/100 Dollars ($42,000.00) has been budgeted for this expense. The Dakotah Hills partnership agreement also describes the partnership’s intent on this point as follows: Use of Promissory Notes. Immediately upon the formation of the partnership, the partnershipPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011