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The sales of the recyclers from PI to ECI were financed with
nonrecourse notes. Approximately 7 percent of the sales price of
the recyclers sold by PI to ECI was paid in cash, with the
remainder financed through a 12-year nonrecourse note requiring
equal monthly installments of $100,917, including annual interest
at 19.8 percent with the first payment due 7 months after
closing. ECI’s purchase was subject to Clearwater’s leasing
agreement and FMEC’s licensing agreement as set out below.
In the second part of the transaction, ECI resold the
recyclers to F&G Corporation (F&G) for $1,162,667 each, of which
less than about 7 percent was paid in cash. The balance was
paid by a 12-year partial recourse note requiring equal monthly
installments of $100,917, including annual interest at 15.4
percent. These notes provided that 10 percent of the notes were
recourse but that the recourse portion of the notes was due only
after the nonrecourse portion, 90 percent, was paid in full. The
first payment on the note was due 7 months after the closing.
F&G’s purchase was subject to Clearwater’s agreement to
enter into a lease with F&G and was subject to FMEC’s agreement
to enter into the license as set out below.
In the third part of the transaction, F&G leased the
recyclers to Clearwater for 12 years, a lease term equal to 150
percent of the class life of the assets. Under the lease, the
monthly rental payment was $100,917, with an initial amount of
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Last modified: May 25, 2011