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acquisition of these three hydroelectric projects was financed by
the initial capital contributions that were made to PKVI LP.
During the years in issue, the bulk of PKVI LP’s assets consisted
of hydroelectric powerplant projects in North Carolina and
Georgia. PKVI LP’s debts to unrelated parties were generally
nonrecourse in nature and were secured by these hydroelectric
properties.
As of December 31, 1986, PKVI LP had loan agreements
outstanding with First Fidelity, Liberty Life Insurance Co.
(Liberty Life), and Middle Georgia Fuel Products, Inc. (MGFP), as
follows:
Outstanding
Interest Principal Balance
Lender Maturity Date Rate as of 12/31/86
First Fidelity Jan. 27, 1987 9.00% $200,000
Liberty Life Dec. 1, 1998 10.50 672,644
MGFP July 1, 1988 10.00 328,500
As of that date, the outstanding principal balances of the
transfers associated with these agreements totaled $1,201,144.
Of this $1,201,144, $227,326 was listed as a current
liability on the Statement of Financial Condition included in
PKVI LP’s audited financial statements for the year ended
December 31, 1986, and as “Mortgages, notes, and bonds payable in
less than 1 year” on the Schedule L attached to PKVI LP’s
Form 1065, U.S. Partnership Return of Income, for 1986. The
balance of this amount was listed as a long-term liability on the
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