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Cheryl A. Linden <br /> October 3 , 1995 <br /> Page 3 <br /> MCR' s parent, Mid-Continent Minerals, Inc . ( "Minerals" ) , <br /> proposes to borrow up to $2 million from Sanwa Business Credit <br /> Corp. ( "Sanwa" ) . Loan proceeds would be used as follows : <br /> -- Up to $200, 000 would be advanced by Minerals to the <br /> Creditors' Trust for development activities which would <br /> enhance the salability of MCR' s real property, including <br /> permitting, repair, limited modification of existing <br /> structures, legal, and other costs . <br /> -- Up to $1, 800, 000 would be used to complete the <br /> distributions to creditors under the Bankruptcy Plan, <br /> specifically including Class 5 reclamation claims, Class <br /> 6 environmental claims, and Class 9 general unsecured <br /> claims, and excepting only certain tax priority claims in <br /> the approximate amount of $400 , 000 . <br /> MCR and Minerals have discussed the proposed loan with Sanwa, and <br /> Sanwa appears to be receptive (subject to some matters which are <br /> discussed below) . The loan would close no later than December 15, <br /> 1995 . The DMG thus would be assured that all of the funds <br /> necessary to complete reclamation would be available before the <br /> onset of the next reclamation season. <br /> The DMG would receive the full $3 million required under <br /> the approved reclamation bond, giving credit (as set forth in the <br /> confirmed Bankruptcy Plan) for reclamation work performed by MCR <br /> prior to confirmation of the Bankruptcy Plan, and work being <br /> performed by King & Associates at no cost to the DMG. <br /> Mr. LaGiglia' s calculation of the remaining funds needed <br /> to satisfy the DMG' s Class 5 reclamation claim, Class 6 <br /> environmental claims, and Class 9 general unsecured claims, is set <br /> forth on the enclosed schedule entitled "Funds Needed to Satisfy <br /> Bankruptcy Plan. " This schedule calculates the total amount of all <br /> remaining distributions at $3 , 091, 384 , of which $1, 296 , 414 is <br /> allocated to the Class 5 reclamation claim. <br /> Excluding approximately $400 , 000 of priority tax claims, <br /> the amount necessary to satisfy all other creditors thus is about <br /> $2 . 7 million. The $1 . 8 million loaned by Minerals, together with <br /> the USFS trades which have been negotiated, would generate more <br /> than this amount . <br /> Pursuant to the Bankruptcy Plan, Minerals would be <br /> subrogated to the position of the classes of claims which have been <br /> satisfied from the loan proceeds . As MCR' s property is sold, the <br /> Creditors' Trust would first satisfy the remaining tax priority <br /> claims, and would then distribute the remaining net sales proceeds <br />