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stock as additional security for the partnership’s obligation to
DOE under the loan guarantee agreement. ANG held deeds,
easements, and contract rights (the ANG project assets) that were
needed to operate the project but that had not been titled in the
partnership’s name. Consequently, DOE had not acquired the ANG
project assets in the foreclosure sale that was conducted on June
30, 1986. At the foreclosure sale, the Government had applied
only $1 billion of the approximately $1.57 billion debt to
acquire the partnership’s assets that were subject to the
mortgage. The Government had intentionally kept the remaining
balance of the indebtedness in reserve for subsequent use in
acquiring the ANG stock.
In November 1987, DOE considered foreclosing on the ANG
stock. In a settlement agreement entered into on October 13,
1988, ANRC assigned its ANG stock to DOE, which then released the
partnership’s outstanding indebtedness. In the settlement
agreement, ANRC acknowledged that the fair market value of the
ANG stock and all remaining collateral securing the partnership’s
obligations under the guarantee agreement was less than the
partnership’s outstanding indebtedness to DOE. The settlement
agreement recites that ANRC was entering into the settlement
agreement partly “to avoid the expense of litigation to
foreclose” DOE’s lien on the ANG stock pursuant to the pledge
agreement.
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