20071102Decision memo.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER RED FO RD
CO MMISSI 0 NER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:TERRI CARLOCK/CAROLEE HALL
DATE:NOVEMBER 2, 2007
RE:MID V ALE TELEPHONE EXCHANGE, INc.'S REQUEST TO
BORROW UP TO $12 145,000; CASE NO. MID-07-
On October 15 2007, Midvale Telephone Exchange, Incorporated ("Midvale
filed an Application requesting authority to borrow up to $12 145 000 from Rural
Utilities Service ("RUS"
).
Idaho Code Chapter 9 "Issuance of Securities , requires this
Application. The required fees have been paid.
The proposed loan proceeds will be used to pay for, and partially reimburse
general funds to: 1) extend service to new customers; 2) provide for switch and software
upgrades; 3) central office equipment upgrades; 4) make system improvements including
replacement of an existing analog microwave system with fiber; and, 5) repay a line of
credit with the Rural Telephone Finance Cooperative ("RTFC") that was used to
construct some of the above mentioned facilities and that will be refinanced through the
RUS loan.
The $12 145 000 loan qualifies for the 5% hardship interest rate with a September
2026 maturity date. Of the $12 145 000 loan, $1.4 million will be used for central office
equipment including switches and centralized voice mail system, microwave facilities
and toll fiber connections to serve Idaho customers. The remaining dollars will be used
for its out-of-state infrastructure and customers primarily in Arizona. Plant in the
respective states will be used as collateral for the loan.
DECISION MEMORANDUM NOVEMBER 2, 2007
Staff recommends approval of the loan request. To monitor any loan covenant
requirements, Staff also recommends adopting the following reporting requirements:1) Provide copies of the RUS final loan approvals including documentation
for advances.
Provide a copy of any executed collateral documentation.
Provide copies of all annual certification, covenant reports, and letters
regarding these determinations.
The "Report of Securities Issued"
COMMISSION DECISION
Should the Application be approved with Staff s recommended reporting
requirements?
~~
~~cJe
Terri Carlock
i:udmemos/midtO7.ltc and ch
DECISION MEMORANDUM NOVEMBER 2 , 2007