ORDER NO. 77133
IN THE MATTER OF THE APPLICATION OF ARMSTRONG TELEPHONE COMPANY FOR AUTHORITY TO BORROW SIXTEEN MILLION TWO HUNDRED TWO THOUSAND TWO HUNDRED AND FIFTY DOLLARS ($16,202,250) FROM THE RURAL UTILITIES SERVICE AND THE RURAL TELEPHONE BANK TO BE SECURED BY A RESTATED MORTGAGE, SECURITY AGREEMENT AND FINANCING STATEMENT.
PUBLIC SERVICE COMMISSION
CASE NO. 8895
On May 17, 2001, Armstrong Telephone Company ("Armstrong") filed with the Commission an application for authorization to borrow $16,202,250 from the Rural Utilities Service ("RUS") and the Rural Telephone Bank ("RTB") by a Restated Mortgage, Security Agreement and Financing Statement with an interest rate to be determined at the time of issuance.
In a memorandum dated July 16, 2001, the Technical Staff of the Commission filed its comments regarding this matter. Staff noted that the loan would consist of two amounts: $10,233,000 to be obtained from RUS; and $5,969,250 to be obtained from RTB. Staff further noted that the new loans represented a re-financed mortgage agreement with the lenders and will be secured by property owned by Armstrong in Cecil County, Maryland. Staff concluded that in its view, Armstrong's request is consistent with the public convenience and necessity. Accordingly, Staff recommended that the Commission approve the application.
Section 6-102(b) of the Public Utility Companies Article, Md. Ann. Code, provides:
The Commission shall authorize a public service company to issue stocks, bonds, securities, notes, or other evidence of indebtedness, payable wholly or partly more than 12 months after the date of issuance, if the Commission finds that the issuance is reasonably required for the public service company to:
construct, complete, extend, or improve its facilities;
discharge or lawfully refund its obligations;
maintain or improve service; or
reimburse money, not secured by or obtained from the issuance, that is expended for a purpose described in item (1), (2), or (3) of this subsection within 5 years before the filing of an application with the Commission for the reimbursement…
After considering this matter at the Administrative Meeting of July 25, 2001, the Commission grants Armstrong Telephone Company's application to borrow $16,202,250 from RUS and RTB. The record indicates that the proceeds will be used to support the Company’s facilities-based construction to enhance the provisions of rural telephone service that Armstrong provides. Accordingly, the Commission finds that the proposed issuance is consistent with the public convenience and necessity and is reasonably required for one or more of the purposes enumerated in the Public Utility Companies Article, § 6-102(b), Annotated Code of Maryland. This Order shall not be construed in any way as approval of a particular capital structure for ratemaking purposes.
IT IS, THEREFORE, this 27th day of July, in the year Two Thousand and One, by the Public Service Commission of Maryland,
ORDERED: (1) That Armstrong Telephone Company is authorized to borrow from the Rural Utilities Service and the Rural Telephone Bank the sum of Sixteen Million Two Hundred Two Thousand Two Hundred and Fifty Dollars ($16,202,250) to be secured by the Restated Mortgage, Security Agreement and Financing Statement with an interest rate to be determined at the time of issuance
(2) That Armstrong Telephone Company shall use the proceeds from this issuance for the purposes stated in the Application.
(3) That Armstrong Telephone Company shall file reports as necessary to comply with COMAR 20.07.04.02C.
By Direction of the Commission,
Donald P. Eveleth
Assistant Executive Secretary