1993-10-05_GENERAL DOCUMENTS - C1981017 (3)

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including -the Inn, have been sold in recent years and applied to the Debtor's secured debt which had been guaranteed by Redstone. Carbondale Power Services, Inc. was formed in 1989 to develop, in partnership with Bechtel or Bechtel affiliates, an 80 megawatt electrical generation facility near Carbondale, Colorado which would burn coal from the Debtor's refuse pile. The name of the partnership was Columbine Power Company, L.P. The Debtor holds a 2% limited partnership in Columbine. The Debtor took a low percentage of the partnership because the partners would be required to contribute capital to develop the plant in accordance with their partnership percentages, and the Debtor lacked the capital to contribute to the new enterprise. The Debtor anticipated that it would make money from the sale of 10, 000, 000 tons of coal refuse, at a net price of $1 per ton. Columbine ultimately determined that the facility could not be economically developed, due to a reduction in the estimate of the size of the refuse pile from 10,000,000 tons to 6,000, 000 tons, which was less than the amount needed to justify the capital expense involved in building the plant, and due to environmental opposition. The partnership's sole asset was a power sales agreement with Public Service Company of Colorado ( "PSCo" ) . This contract was qualified under the Public Utility Regulatory Power Act ( "PURPA" ) , which encouraged development of alternative energy sources and use of waste by-products such as coal refuse. In August 1991, Columbine entered into an agreement with PSCo under which PSCo purchased Columbine's rights and assumed Columbine's obligations under the Power Purchase Agreement for 'the sum of $4,500, 000 . The Debtor realized approximately $92,000 from this sale. Another corporation, Pitkin Iron Corporation ( "Pitkin Iron" ) , is not a corporate affiliate of the Debtor but has a close relationship with the Debtor. Pitkin Iron is owned by Robert Delaney, John Reeves Sr. , Donald Joyce Sr. , Thomas Gibbs, Trustee, Leonard Ring, and Mr. Ring's two children. Pitkin Iron has provided support services for the Debtor, including operating"``a limestone quarry, a rockdust plant, and an aggregate plant for packwall, and also provided services for the coal haul contract carrier, the truck services building, and truck wash building. Pitkin Iron also 4* leased a six acre tract known as the Fabrication Shop Tract from the Debtor, which lease has a 90 day cancellation clause. All of these operations are shut down, except for the Fabrication Shop Tract. However, because the Debtor is unable to obtain workers ' compensation coverage, Pitkin Iron provides payroll services for personnel under the Debtor's direction, and leases certain pieces of equipment to the Debtor to assist in the Debtor's Mine reclamation program. The Debtors' obligations to its major secured creditor, Sanwa Business Credit Corporation, are cross-guaranteed by the C:\WP51\JB9\M1DCON\DI9CLO6.STM 4 October 6, 2993