- 25 - previously indicated, these were the contractual premises for termination of participation. Although the partners terminated participation in the project, the partnership continued its legal existence. No partner withdrew from the partnership. The partnership’s liabilities were unaffected. It was understood, however, that the partners’ termination of participation would lead to an event of default by the partnership under the loan guarantee agreement, allowing DOE to assume control over the project. The Partnership Defaults on the FFB Loan After the partners declined to contribute further equity to the partnership with respect to the DOE-guaranteed financing, the partnership was unable to make the deferred principal, interest, and guarantee fee payments due on August 1, 1985, under the standstill agreement. The partnership’s failure to make these payments constituted an event of default under the loan guarantee agreement and the mortgage. In August and September 1985, pursuant to the loan guarantee agreement, DOE made payments to FFB totaling approximately $1.57 billion. This sum represented the entire amount of principal and interest that the partnership owed FFB under the credit agreement and that correspondingly became due from DOE under the loan guarantee agreement. Upon paying these amounts due under the loan guarantee obligations, DOE becamePage: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Next
Last modified: May 25, 2011