PROJ00528 - Laserfiche WebLink

Home Browse Search

I I I I I I I I I I I I I I I I I I I Credit worthiness: The only outstanding debt of the Company is $48,247,50 repayable at $4,599/yr to USDA Rural Development (RD), Payments to RD have been made in a timely manner and the loan is current. The loan payment history for the RD loan is found in Appendix G. The PRCC also has an existing relationship with the Pine River Valley Bank which reports that it would loan to the Company in the future, presumably based on the fact the PRCC has extinguished past bank loans as agreed, Alternative financing considerations: The PRCC has investigated alternative financing sources, They have obtained an in-kind grant of $26,550 from the Natural Resources Conservation Service for engineering design and construction inspection, However, long term financing could not be attained elsewhere, USDA Rural Development no longer makes loans to irrigation companies (unless the project involves domestic water supply.) The Company's commercial bank (Pine River Valley Bank, Bayfield Colorado) offered financing at prime plus 1/2% (8,25%) with 20-year amortization and balloon in 5 years, This loan would adjust annually based on changes in the prime rate and is not considered a good long-term solution, The annual payments would be $25,284, and at the end of 5 years a balloon payment of $213, 160 would be due, requiring the Company to again seek long-term financing, The Pine River Valley Bank letter of denial is included in Appendix G, Collateral: As security for the CWCB loan, the Company will pledge assessment income, the tunnel hill project structures, and a certificate of deposit equivalent to one annual payment of the loan. Table 4. Pine River Canal Company Financial Summary Project Cost $325,550 Loan Amount (75% of Project Cost) $243,700 CWCB Loan Payment Amount $17,147 Number of Shareholders 215 Number of Shares of Stock 13,752,25 Current PRCC Assessment per Share $3.15 Future PRCC Assessment per Share $3,95 Annual Project Cost per acre-foot (Average diversions: 54,775 acre-feet) $0,31 Economic Analysis The economic benefit of the project is considerable, If the project is not completed and the tunnel collapses during the irrigation season, the entire annual production oflands below the tunnel would be lost. There are approximately 12,000 acres of irrigated land below the tunnel. The average net yield per acre with water is $60, compared to a net yield of $25 as dry land. This results in a one-time loss of$35/acre x 12,000 acres = $420,000, This loss would continue each year until the tunnel was repaired or replaced (an additional cost of $325,550,) Clearly a major benefit of the project is avoiding the economic crop loss associated with a sudden failure of the tunnel. Pine River Canal Company Tunnel Hill Project Feasibility Study January 1999 Page 14 of 15