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On February 15, 1991, PKVI LP and Liberty Life agreed to
consolidate their three outstanding loan agreements into one
agreement. The principal balance of this consolidated loan
agreement was $1,854,939, an amount that included the $1,709,312
of outstanding principal balances from the three original loan
agreements between PKVI LP and Liberty Life plus $145,628 of
accrued interest. The interest rate for this consolidated loan
agreement was 10.78 percent, i.e., the weighted average of the
interest rates from the original loan agreements.
PKVI LP experienced difficulties with its Georgia
hydroelectric facilities, City Mills and Juliette, during 1991.
As a result, PKVI LP defaulted on the loan agreement it had
entered with MGFP to finance the Juliette facility. As noted
above, PKVI LP and MGFP had renegotiated this loan agreement
during 1990. In addition, PKVI LP failed to make the required
payments of principal on its consolidated loan agreement with
Liberty Life. These payments were scheduled to begin on August
15, 1991.
As of December 31, 1991, PKVI LP had the following loan
agreements outstanding:
Outstanding
Interest Principal Balance
Lender Maturity Date Rate as of 12/31/91
Liberty Life Aug. 15, 2003 10.78% $1,854,939
MGFP Dec. 31, 1991 10.00 401,284
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