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the project, as it was then structured, would generate
insufficient cash to meet the partnership’s obligations under the
credit agreement and to enable the partners to recoup their
equity contributions. Upon receiving these notices, DOE publicly
expressed optimism that the project would represent a “valuable
national asset for the long-term energy security of this
country”. DOE also expressed willingness to continue disbursing
guaranteed funds so long as the partners continued financing
their portion of the project.
Partners and SFC Sign Letter of Intent
On April 26, 1984, SFC and the partnership reached a
tentative agreement, memorialized by a letter of intent. SFC
proposed to provide the partnership up to $790 million of
financial assistance under a price guarantee agreement. In
return, pursuant to a profit-sharing arrangement, the partnership
would eventually pay SFC $1.58 billion out of the project’s
operating profits, after first paying the entire amount of the
DOE-guaranteed debt. In addition, under the tentative agreement,
the partners would reinvest in the project the dollar equivalent
of all tax benefits and profits obtained by the partnership for
the next 3-1/2 years; this provision would have amounted to an
additional equity contribution by the partners of about $690
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