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relating to payment of the $1,956,000 balance due petitioner.
Under a written agreement dated November 23, 1988 (November 1988
contract), Clinch River agreed, among other things, to pay
petitioner:
(1) $400,000 by January 15, 1989;
(2) beginning with the mill's first profitable quarter, $5
per ton for each salable ton produced, for a period of up to
24 months, up to a maximum total additional payment under
this provision of $400,000; and
(3) in each month of 1989 that is profitable for the mill,
an additional $5 per ton for all tons produced in each
month;
(4) in the event Clinch River sells the mill and receives
from the sale less than $12 million, an additional amount so
that the total amount paid petitioner for renovation of the
mill would equal $4.4 million. Alternatively, if a sale of
the mill realizes for Clinch River more than $12 million, an
additional amount so that the total amount paid petitioner
for renovation of the mill would equal $4.5 million.
Because of the above alteration of the October 1987
contract, on January 4, 1989, an adjustment reducing accrued
income by $724,975 was made on petitioner's management reports
with respect to its renovation of the mill to reflect that, as of
November 30, 1988, petitioner had the potential to receive a
total of only $4,411,025 from its work on the mill -- $5,136,000
(total contract amount as of completion of the renovation) less
$4,411,025 (approximate minimum that petitioner was scheduled to
receive, under the November 1988 contract, on sale of the mill)
equals $724,975.
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