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(a) The authority may participate in a loan made by an originator to acquire or build fixtures, machinery, equipment, or other tangible personal property if the loan satisfies the conditions prescribed in this section.
(b) The authority may participate in a loan made by an originator to refinance an outstanding loan described in (a) of this section if, in addition to other requirements of this section, the authority is satisfied that (1) the loan to be refinanced was not made with proceeds of outstanding general obligation indebtedness of the authority nor relates to a project that was originally financed with outstanding general obligation indebtedness of the authority, (2) the borrower will receive economic benefit from the refinancing, and (3) the loan is permitted under the Internal Revenue Code of 1986, as amended. The economic benefit to the borrower may be in the form of an interest rate reduction, a reduction of debt service payments, an extension of the maturity of the loan, the elimination of call or balloon payment provisions, or other economic benefits.
(c) The principal amount of a tangible personal property loan may not exceed 75 percent of the appraised value of the tangible personal property collateral offered as security for the loan, except that in no event may the tangible personal property loan to be purchased under this section exceed the total of loan proceeds used to refinance an existing debt plus the cost of new construction, expansion, or acquisition, unless the additional amounts of the loan to be purchased are restricted to uses approved by the authority to finance commercial activity in Alaska by a business enterprise.
(d) A tangible personal property loan must be secured by a security agreement that is a first lien on the tangible personal property.
(e) The term of a tangible personal property loan may not exceed 15 years or 75 percent of the economic life of the collateral offered as security for the tangible personal property loan, whichever is less, as determined by the authority.
(f) The authority may allow the loan originator to amortize its portion of the loan using a shorter amortization schedule than the amortization schedule for the authority's portion provided:
(1) in the authority's opinion, the project financed can support the increased debt service;
(2) the accelerated amortization schedule is required to induce the originator to make the loan; and
(3) the originator's term is at least one-half of the amortization term of the authority's participation or seven and one-half years, whichever is less.
(g) The terms and conditions of a lease that secures a tangible personal property loan must be approved by the authority.
(h) Unless waived by the authority, the applicant shall obtain insurance coverage on the tangible personal property securing the tangible personal property loan from responsible companies in such amounts and against such risks as is satisfactory to the authority.
(i) The authority may, in its discretion, allow secondary financing on a project financed by a tangible personal property loan if the applicant shows that the additional debt can be repaid from the revenue earned by the tangible personal property offered as security for the tangible personal property loan.
(j) If required by the authority, the originator must obtain a guarantee for repayment of an applicant from the following persons:
(1) a partner or member of the applicant;
(2) a joint venturer with the applicant;
(3) any stockholder of the capital stock of the applicant; or
(4) the parent corporation if the applicant is a subsidiary corporation.
History: In effect before 1988; am 1/11/88, Register 106; am 11/30/90, Register 118; am 7/19/91, Register 119; am 9/25/92, Register 124; am 12/2/94, Register 134; am 2/11/99, Register 150; am 11/1/99, Register 153; am 8/8/2003, Register 168
Authority: AS 44.88.080
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Last modified 7/05/2006