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interest payments under the 8-3/4-percent notes were
unconditionally guaranteed by City.
On the same day the 8-3/4-percent notes were issued, Finance
transferred the $30 million proceeds to City. City issued a
promissory note to Finance in the principal amount of $30 million
(1977 promissory note). The 1977 promissory note provided that
the principal amount owed would become due and payable at exactly
the same time and in exactly the same amounts as the aggregate
principal obligations of the 8-3/4-percent notes issued by
Finance. The 1977 promissory note also required City to pay
interest each year on any amount of indebtedness outstanding.
The interest was to be equal to the sum of: (1) The total
interest payable by Finance on the 8-3/4-percent notes; (2) an
amount equal to one-fourth of 1 percent per annum of the
aggregate principal amount of the 8-3/4-percent notes
outstanding; and (3) an additional amount equal to the excess, if
any, of Finance’s annual costs of operation over its annual gross
receipts from all sources.
The 1977 promissory note further provided that the portion
of the interest payable by City equal to that payable by Finance
on the 8-3/4-percent notes was due at the same time and in the
same amount as the interest payments became due and payable by
Finance on the 8-3/4-percent notes. The balance of the interest
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Last modified: May 25, 2011