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Each partner was represented at a December 6, 1985, meeting
between the partnership management committee and DOE
representatives. At this meeting, the partners discussed
restructuring the $1.57 billion outstanding debt into a
contingent-interest debt, similar to what had been envisioned in
the price support agreement that the partnership had reached with
SFC in July 1985.16
In a December 19, 1985, telephone call with Transco Energy
representatives, DOE General Counsel Mike Farrell indicated that
the “discussion draft” Transco Energy had submitted on August 30,
1985, was a “non-offer”. In particular, DOE was unwilling to
allow the partners to retain title to the plant, retain all tax
benefits from the project, and yet have the right to terminate
participation. Advised that title to the plant and the resulting
tax benefits were the partners’ only source of cash in the event
of a revenue shortfall, Mr. Farrell indicated that there was
probably some “wiggle room” on the tax benefits issue.
On January 29, 1986, ANRC submitted to DOE an outline of a
restructuring proposal.17 The proposal would have allowed the
16 Presumably, interest continued to accrue on the debt.
The parties, however, have ignored interest accruals in referring
to the $1.57 billion debt. For simplicity, we do the same.
17 Under the proposal, the partnership would retain
ownership of the plant and continue to be responsible for its
operation, DOE would withdraw its foreclosure action, and the
partnership’s debt would be restructured into a contingent-
interest obligation.
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