Basin Electric Power Cooperative - Page 7

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          agreements, petitioner sold to and leased back from the trustee             
          of the six grantor trusts in the aggregate petitioner’s entire              
          interest in AVS unit II, including the AVS unit II pollution                
          control facilities.                                                         
               The 1984 lease and sublease, the 1984 bond indenture agree-            
          ment, the 1984 tax-exempt bonds, and the 1985 sale and leaseback            
          agreements were agreements reflecting an integrated plan of                 
          interrelated and interdependent transactions or steps.  Each of             
          those transactions or steps was necessary in order to effectuate            
          petitioner’s objective of transferring by sale or otherwise the             
          AVS unit II to one or more transferees and leasing that unit back           
          from such transferee(s).                                                    
               Under the 1985 sale and leaseback, part of the total consid-           
          eration that the owner participant provided to petitioner to                
          acquire a percentage undivided interest in the AVS unit II                  
          consisted of the owner participant’s assumption of that portion             
          of petitioner’s obligation to pay the 1984 sublease rent (i.e.,             
          to make payments when due of interest and principal on the 1984             
          tax-exempt bonds) which was proportionate to the percentage                 

               3(...continued)                                                        
               Each 1985 sale and leaseback agreement that petitioner and             
          the owner participant entered into was materially identical to              
          each of the other five 1985 sale and leaseback agreements.                  
          Unless otherwise indicated, we shall for convenience refer only             
          to the 1985 sale and leaseback or the 1985 sale and leaseback               
          agreement and the owner participant.  However, any such refer-              
          ences pertain to all six sale and leaseback agreements and all              
          six owner participants.                                                     




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Last modified: May 25, 2011