20060301final_order_no_29979.pdf

Office of the Secretary
Service Date
March 1 , 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF COLUMBINE TELEPHONE COMPANY,
INC. DBA TETON TELECOM FOR
AUTHORITY TO BORROW FROM THE
RURAL TELEPHONE FINANCE
COOPERATIVE ("RTFC") IN AN AMOUNT
NOT TO EXCEED $11,000,000
ORDER NO. 29979
CASE NO. COL- T -06-
On January 26, 2006, Columbine Telephone Company, Inc. dba Teton Telecom
Columbine" or "Company ) filed an Application with the Idaho Public Utilities Commission
Commission ) seeking an Order for authority to execute a Loan Agreement with and a
Promissory Note to the Rural Telephone Finance Cooperative ("RTFC"). Pursuant to Idaho
Code 9 61-901 et seq.the Commission is empowered to grant such authority.
THE APPLICATION
Columbine requests authority to borrow up to $11 000 000 from the RTFC. This
Application was filed January 26, 2006 with a requested Order date of February 25 , 2006. To
facilitate the schedule for decision meetings, Columbine agreed to an extension for the Order to
be issued.
The proposed loan is for a term of 15 years at a fixed or variable rate to be
determined at issue. Current estimated rates are approximately 7.1 % variable or 7.1 % - 7.24%
fixed. The variable rate is subject to change monthly and may be converted to a fixed rate at any
time without a fee. The assets of Columbine and Silver Star Telephone Company, Inc. ("Silver
Star ) will not be pledged to secure the loan. Instead, the stock of Columbine, Silver Star and
Goldstar Communications (a wholly-owned subsidiary of Silver Star) along with the assets
Goldstar Communications and other unregulated subsidiaries will be pledged to secure the loan.
RTFC will require Silver Star to maintain a minimum Times Interest Earned Ratio of at least 1.5
and a minimum Debt Service Coverage Ratio of 1.25. The covenants also include restrictions on
dividend distribution, additional indebtedness and a Leverage Ratio not to exceed 5 times cash
flow.
The proceeds ofthe loan will be used to finance construction of a new office-building
complex; general plant and equipment for regulated and unregulated operations; purchase of
ORDER NO. 29979
RTFC 10% Capital Certificates; and other corporate purposes. The budgeted amounts include:
approximately $2.75 million for the Columbine office-building complex in Driggs, Idaho; $1
million supplemental funds for the Freedom, Wyoming headquarters building; $1.3 million for
fiber cable; $800 000 for terminal equipment; $600 000 for switching; $850 000 for facilities in
the Teton Springs subdivision; $2.7 million for wireless and Internet facilities; and $1 million for
the RTFC certificates.
Company has paid the requisite fees pursuant to Idaho Code 9 61-905.
STAFF COMMENTS
As with other debt authority requests, Staff continues to express concern about using
regulated operations to secure non-regulated activities. Any adjustments associated with
allocations, non-regulated costs or the need for a new office building will occur in future rate
cases.
To monitor the loan covenants required by RTFC, Staff recommended the following
reporting requirements be included in the Order approving the Application:
1) Provide copies of the RTFC final loan approvals including
documentation for advances.
2) Provide a copy of any and all executed collateral documentation.
3) Provide copies of all annual certification, covenant reports, and letters
regarding these determinations.
4) The "Report of Securities Issued.
Columbine informed Staff that it accepts these reporting requirements.
FINDINGS OF FACT
The Company is incorporated under the laws of the State of Colorado, providing
telecommunications services including local exchange service within the States of Idaho and
Wyoming, and is duly authorized to do business in this state in connection with its utility
operations.
Based on the representations in the Application, we find that the proceeds from the
subject loan will be used to: finance the construction of a new office-building complex; to
finance general plant and equipment upgrades; to fund the purchase of R TFC' s 10%
Subordinated Capital Certificates, and other corporate purposes.
ORDER NO. 29979
All requisite fees have been paid by the Company in accordance with Idaho Code
961-905.
CONCLUSIONS OF LAW
Columbine is a telephone corporation within the definition of Idaho Code 9 61-121
and a public utility within the definition of Idaho Code 9 61-129. The Commission has
jurisdiction over this Application pursuant to Idaho Code 99 61-901 et seq.and the Application
reasonably conforms to Rules 141 through 150 of the Commission s Rules of Procedure.
IDAPA 31.01.01.141-150.
The proposed loan to be issued to Columbine by RTFC is for a lawful purpose and is
within the Company s corporate powers. The proposed transaction is consistent with the public
interest, and a formal hearing on this matter would serve no public purpose.
The Commission finds that this Application shall be approved, conditioned on the
reporting requirements suggested by the Staff. Columbine shall file copies of (1) the R TFC final
loan approvals, including documentation for advances, (2) any and all executed collateral
documentation, (3) all annual certification, covenant reports, and letters regarding these
determinations, and (4) the Report of Securities Issued, as they are completed.
This general approval of the general purposes to which the proceeds will be put is
neither a finding of fact nor a conclusion of law that any particular program of the Company
which may be benefited by the approval of this Application has been considered or approved by
this Order, and this Order shall not be construed to that effect.
ORDER
IT IS HEREBY ORDERED that the Application of Columbine Telephone Company,
Inc. dba Teton Telecom for an Order granting authority to borrow from the Rural Telephone
Finance Cooperative, Case No. COL-06-, is approved with certain conditions. The Company
is directed to file copies of the following: (1) RTFC final loan approvals, including
documentation for advances, (2) any and all executed collateral documentation, (3) all annual
certification, covenant reports, and letters regarding these determinations, and (4) the Report of
Securities Issued, as they are completed.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
ORDER NO. 29979
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code 9 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this sf"
day of March 2006.
!i1.4-
MARSHA H. SMITH, COMMISSIONER
ENNIS S. HANSEN, C MMISSIONER
ATTEST:
Je D. Jewe
Co mission Secretary
O:COL-O6-
ORDER NO. 29979