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gation to make payments of interest and principal on
the 1984 tax-exempt bonds] with the proceeds of an
Additional Note issued pursuant to Section 3.5 of the
[Trust] Indenture. Such Refunding Series B Note will
be purchased by the County [Mercer County] with the
proceeds of the sale of its Mercer County, North Da-
kota, Pollution Control Refunding Revenue Bonds, Series
1995 (the Refunding Bonds) [i.e., the 1995 tax-exempt
bonds]. The Refunding Bonds will be sold pursuant to a
Forward Purchase Contract (the Refunding Bond Purchase
Agreement) between the County and Morgan Stanley & Co.
Incorporated (the date of execution of such Refunding
Bond Purchase Agreement hereinafter called the Refund-
ing Bond Sale Date) providing for the future delivery
of Refunding Bonds on a date (the Refunding Bond Deliv-
ery Date) shortly after the first optional call date
[December 30, 1994] for the [1984 tax-exempt] Bonds.
* * * On the Refunding Bond Delivery Date, (i) the
County will issue the Refunding Bonds and purchase the
Refunding Series B Secured Note from the Owner Trustee
with the proceeds of the Refunding Bonds, (ii) the
Owner Trustee will prepay the Initial Series B Secured
Note with the proceeds of the sale of the Refunding
Series B Secured Note and Supplemental Rent paid by the
Lessee, (iii) the County will use the funds received
from the Owner Trustee in respect of the prepayment of
the Initial Series B Secured Notes to redeem the Bonds
* * *.
The modified 1985 sale and leaseback detailed the calcula-
tion of petitioner’s annual basic rent obligation in pertinent
part as follows:
(3) the amount of Basic Rent payable on each Basic
Rent Payment Date following such refinancing [of the
1984 tax-exempt bonds] shall be reduced by the amount
of Bond Premium, Owner Participant’s Refunding Transac-
tion Expenses and Lessee’s [petitioner’s] Refunding
Transaction Expenses paid by the Lessee in connection
with such refinancing and not previously taken into
account in any adjustment to Basic Rent plus interest
at the Weighted Average Cost of Capital [8.34 percent],
compounded semi-annually, on any such amounts paid by
the Lessee from the date of payment by the Lessee to
the date of recovery through a reduction in Basic Rent
pursuant to this Clause 3;
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