20180709Decision Memo.pdf

RE:
DECISION MEMO
TO COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER A}TDERSON
LEGAL
WORKING FILE
FROM:TERRI CARLOCK
JOSEPH TERRY
DATE: JULY 9,2018
IN TITE MATTER OF THE APPLICATION OF COLUMBINE
TELEPHONE COMPANY,INC. FOR AUTHORITY TO GUARANTY
LOAN TO HORIZON COMMUNICATIONS,INC.IN AN AMOUNT NOT
TO EXCEnf) 59,4U,444; CASE NO. COL-T-18-01.
On June 19,2A18, Columbine Telephone Company,Inc. ("Columbine"), filed an
application to execute an unsecured guaranty of payment in favor of the Rural I'elephone
Finance Cooperative ("RTFC") guaranteeing payment of certain term loans from RTFC to
Columbine's parent company Horizon Communications, Inc. ("Horizon") in the amount of
99,444,444 and consisting of three separate debt facilities, one in the amount of $3,502,263, one
in the amount of $3,333,333 and one in the amount of $2,308,848 (collectively, the "Horizon
Loans").
In support of said Application, Columbine alleges that the guaranty is a condition of the
Horizon Loans. These loans will be used in part to refinance the total outstanding balances on
lines of credit to Columbine from RFTC and to finance a portion of Columbine's budgeted
capital expenditurcs, and that the unsecured obligation to guaranty repayment of the Horizon
Loans will not further encumber the Company assets or affect the revenue requirement of its
regulated obligation. Columbine further alleges that guarantees by each of Columbine's sister
companies also would be required, and that the Horizon Loans would be further secured by fust
priority liens on Horizon assets.
All fees have been paid related to this Application.
1DECISION MEMORANDUM JULY 9,2018
LOAN GUARANTY
The Horizon Loans from RFTC to the Company's parent company, Horizon, consists of
three loans. The first ("A Loan") is a $3,502,263,nine-year, secured fully amortizing term loan
to refinance the total amounts Columbine and its sister Company Silver Star's loans to the
RFTC. The second ("B Loan") is a $3,333,333, nine-year, fully amortizing term loan to fund
part of the Silver Star and the Company's budgeted capital expenditures. The third ("C Loan") is
a $2,608,848, nine-year, fully amortizing lerm loan to fund Silver Star's and the Company's
budgeted capital expenditures.
Horizon Communications, Inc., a corporation organized under the laws of the State of
Wyoming, with the follorving wholly owned subsidiaries: Columbine Telephonc Company, lnc.,
Silver Star Telephone Company, Inc., Gold Star Communications, LLC, and Millennium
networks, LLC. Unsecured guarantees for the full amount of the Horiz.on Loans plus interest and
fees will be pledged from all subsidiaries, as well as from Horizon assets.
STAFF' RECOMMENDATION
Staffrecommends the Commission authorize Columbine to guaranty the Horizon Loan as
unsecured guarantees for $3,502,263, $3,333,333, and $2,308,848, totaling $9,444,444.
Staff recommends Columbine file copies of all agreement terms and final documents.
COMIVIISSION DECISION
Does the Commission approve the unsecured guaranty of the Horizon Loans?
Does the Commission wish to require copies of all agreement terms and final documents
to be files with the Commission Secretary?
Terri Carlock
2DECISION MEMORANDUM
T
ruLY 9,2018