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<br />41 *ty by a letter frIolm Phill i p Hogue,, President,
<br />ing capaci
<br />Investment Banking of Dianiels & Associatesir Inic'. and a let-
<br />s,
<br />ter from the First Bank of ]Boston whi I conclude that North
<br />Central should have available, additional borrowing capacity
<br />far in, excesis olf its, cash requirementsilli
<br />Second, North Central managIem,ent, has obtained confirmation
<br />that finan,ci�al rat used to test, the compliance of
<br />North, Clentralls, borrowings from First Boston are in facit
<br />.
<br />applied a yea i
<br />r later than that in Mr. fat tour 's
<br />September 111, 1986 ,� memorandum. 11
<br />To, dater the financial analysis has reveled the followiLnigoi.
<br />Il's RATIOS
<br />'I i fl IS to
<br />Based upon North Central,ls response regarding the inancial
<br />III
<br />rIatiosi.t,esit as, it plert,ains to the First Bank of Boston loan
<br />a
<br />"Itment, there i,s still ambIlgu,ilty, as, tio when the fi"nan-
<br />coliniml.
<br />e
<br />cia,, 1, tests are applied. As indicated in the Bank of Boston
<br />fe
<br />let-ter i ,f the closing were to occur on or about January 1,
<br />1987 no telsit,s would be a,ppiicabl,e in '19,871, and the first
<br />yela,r of the tests would, be 198�8 , "I It appears that there is
<br />still a Possibility that the financial tests could be
<br />appilied on January 1,r 1988,91
<br />5 1.
<br />Howeveirl, our concern with the ratio issue, is based on the
<br />pro formal prelsiented by North Clentral, As stated earlier,
<br />the assumpt-l"Ons, of' the piro f oirlma,is we have received have hor.
<br />been cha,ll,en,g�ed in our analysisdi A modition of the,
<br />0, fica 61
<br />asisu,m,pit ions in such ar-eas as interest .1 rates, penetrations,
<br />cash flow, eitc, could effect the ratio questions The Sank
<br />of
<br />.Boston has *informed Mrl,, Cattoor that they rev3'Lewed other
<br />prig formal from thelir own sensitivity analysis and have made
<br />a loan commitment blasied upon al,l old the information they had
<br />ava,l,lab,le to them. Therefore, it isi our conclusion that the
<br />ra,tio, question is, irreleivant, to, any furthier analysis of the
<br />transfer, "in that our, concern was based upon one set of pro
<br />f'orma,s which have been discredited.,
<br />111.1 ECONOMIC VIABILITY OF FINANCIAL PLAN
<br />With the objective of determining wheither the financial plan,
<br />9, 0
<br />as Presented to, the Commission is, Viable, it is concluded
<br />tha,t, the pro formal do not support an economically viable
<br />plan,, North Central has indicated, to the Commission that
<br />their borrowing plan as presented is dependent upon addi-
<br />tional borrowings, if the Piro, foirmas did 'in fact become
<br />real i It y, North Central has indicated that they have borrow-
<br />ing capacity of approximately 5,.15 times, the operating cash
<br />f'lolw being generated from thei,ir systems 1l, As it relates to
<br />industry star rids North Cientralls, claim regarding their
<br />
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