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<br />3T Cattle Company <br />May 24-27, 2004 <br /> <br />Agenda Item 21 b <br /> <br />Creditworthiness: As of 12/31/03, 3TCC has total assets of $2.21 million and liabilities of <br />$779,283. They have an existing loan with Farm Credit Service in Greeley, with a remaining <br />amount of $337,916 and an annual payment of $44,090 through 2015, on which they are current. <br /> <br />Table 2 shows the Financial Ratios for the 3TCC, and indicates average ability overall to repay the <br />$247,500 CWCS loan. <br /> <br />Table 2. Financial Ratios <br /> <br />Financial Ratio Without With completed <br /> the project project <br /> 2002-03 Future Year <br />Operating Ratio (revenue/expense) <br />weak: less than 100% 150% 150% <br />average: 100% - 120% (strong) (strong) <br />strona: areater than 120% <br />Debt Service Coverage Ratio <br />(revenues-expenses)/debt service 130% 101% <br />weak: less than 100% (strong) (aver.) <br />average: 100% - 125% <br />strona: areater than 125% <br />Cash Reserves to Current Expense <br />weak: less than 50% 61% 40% <br />average: 50% - 100% (aver.) (weak) <br />strong: greater than 100% <br />Annual Operating Cost per Acre-Ft. (consump. <br />weak: greater than $20 use) $20 $145 <br />average: $10 - $20 (aver.) (weak) <br />strong: less than $10 <br /> <br />Security - As security for the loan, 3TCC will pledge all shares of water purchased with the CWCS <br />loan, valued at $270,000. In accordance with CWCS Loan Policy #8 (Purchase of Water Rights), a <br />written appraisal or opinion of value from a qualified water rights appraiser supporting the purchase <br />price, must be submitted, prior to disbursal of CWCS loan funds. Staff finds this is in compliance <br />with CWCS Loan Policy #5 (Collateral). <br /> <br />Recommendation <br /> <br />Staff recommends a loan not to exceed $249,975 ($247,500 for project costs and $2,475 for the 1 % <br />Loan Service Fee in accordance with CWCS Loan Policy #16), to the 3T Cattle Company, from the <br />Severance Tax Trust Fund Perpetual Sase Account, to purchase surface water rights to use for well <br />augmentation. The recommended terms of the loan are 30 years at 2.5% per annum. Security for the <br />loan will be the 5 shares of purchased Weldon Valley Ditch shares. <br /> <br />Staff further recommends that final approval of the loan be conditioned upon all other standard <br />contracting provisions of the CWCB. Further, staff recommends the following approval condition: <br /> <br />The proceeds from the sale of any water rights purchased with this loan approval shall be used <br />to reduce the outstanding balance of 3TCC's loan with the CWCS. <br /> <br />cc: Kevin Averch, President, 3T Cattle Company <br />Brent Nation, P.E., Fort Morgan <br />Linda Bassi, AGO <br /> <br />Attachment <br /> <br />Page 4 of 6 <br />