§ 54.1016 - xxx

§ 54.1016 Letter of credit.

Cross Reference

Link to an amendment published at 85 FR 75822, Nov. 25, 2020.

(a) Before being authorized to receive Mobility 5G Fund Phase II support, a winning bidder shall obtain an irrevocable standby letter of credit which shall be acceptable in all respects to the Commission.

(1) Each recipient winning bidder that becomes authorized to receive Mobility 5G Fund Phase II support shall maintain the standby letter of credit or multiple standby letters of credit in an amount equal to, at a minimum the amount of Mobility Fund Phase II auction support that has been disbursed and that will be disbursed in the coming year, one year of support, until the Universal Service Administrative Company Administrator has verified that the recipient met the final service milestone as described in § 54.1015(d) of this chapter.

(i) Once the recipient has met its 60 percent service milestone as described in

support recipient serves at least 85 percent of the eligible square kilometers for which it is authorized to receive support in a state, and at least 75 percent of the eligible square kilometers in each eligible census tract, by the Year Six Final Service Milestone..

(i) For Year One of a support recipient's support term, it must obtain a letter of credit valued at an amount equal to one year of support.

(ii) For Year Two of a support recipient's support term, it must obtain a letter of credit valued at an amount equal to eighteen months of support.

(iii) For Year Three of a support recipient's support term, it must obtain a letter of credit valued at an amount equal to two years of support.

(iv) For Year Four of a support recipient's support term, and for each year thereafter unless the support recipient is allowed to reduce it pursuant to § 54.1015(b)

of this chapter, it may, subject to the consent of the Universal Service Administrative Company,

, it must obtain a letter of credit valued at an amount equal to three years of support.

(v) A support recipient may obtain a new letter of credit or renew its existing letter of credit so that it is valued at

a minimum at 90 percent of the total support amount already disbursed plus the amount that will be disbursed in the coming year. (ii) Once the recipient has met its 80 percent service milestone as described

an amount equal to one year of support once it meets its optional or required service milestones as specified in § 54.1015(b). The recipient may obtain or renew this letter of credit upon verification by the Administrator that it has deployed service that meets the 5G Fund deadlines as specified in § 54.1015(b) and performance requirements as specified in § 54.1015(c). The recipient may maintain its letter of

this chapter, it may, subject to the consent of the Universal Service Administrative Company,

credit at this level for the remainder of its deployment term, so long as the Administrator verifies that the recipient successfully and timely meets its remaining required interim and final service milestones.

(vi) A support recipient that fails to meet its required interim service milestones must obtain a new letter of credit or renew its existing letter of credit

so that it is

valued at

a minimum at 60 percent of the total support amount already disbursed plus the amount that will be disbursed in the coming year.

an amount equal to its existing letter of credit, plus an additional year of support, up to a maximum of three years of support.

(vii) A support recipient that fails to meet two or more required interim service milestones must maintain a letter of credit valued at an amount equal to three years of support and may be subject to additional noncompliance penalties as set forth in § 54.1020.

(2) The bank issuing the letter of credit shall be acceptable to the Commission. A bank that is acceptable to the Commission is:

(i) Any United States Bank - bank:

(A) Whose deposits are That is insured by the Federal Deposit Insurance Corporation; , and

(B) That has a Weiss bank safety rating of B− or higher, or issued by Weiss of B−or better; or

(ii) CoBank, ACB -

(A) As

so long as it maintains assets that

would

place it among the

top-100 U.S. banks in terms of the amount of assets

100 largest United States Banks, determined on

the

basis of total assets as of the

end of the

calendar year immediately preceding the issuance of the letter of credit

;

(B) Its obligations are insured by the Farm Credit System Insurance Corporation; and

(C) It

and it has a long-term unsecured credit rating

of BBB− or better from

issued by Standard & Poor's of BBB− or better (or

the

an equivalent rating from

a

another nationally

-

recognized credit rating agency); or

(iii) The National Rural Utilities Cooperative Finance Corporation -

(A) As

, so long as it maintains assets that

would

place it among the

top-100 U.S. banks in terms of the amount of assets

100 largest United States Banks, determined on

the

basis of total assets as of the

end of the

calendar year immediately preceding the issuance of the letter of credit

;

and

(B) It

it has a long-term unsecured credit rating

of BBB− or better from

issued by Standard & Poor's of BBB− or better (or

the

an equivalent rating from

a

another nationally

-

recognized credit rating agency); or

(iv) Any non-U.S. bank that - United States bank:

(A) Is That is among the 100 largest non-U.S. banks in the world, determined on the basis of total assets as of the end of the calendar year immediately preceding the issuance of the letter of credit (determined on a U.S. dollar equivalent basis as of such date);

(B) Has a branch office

(i) Located in the District of Columbia; or

(ii) Located in New York City, New York, or such other branch office agreed to by the Commission, that will accept a letter of credit presentation from the Administrator via overnight courier, in addition to in-person presentations; and

(C) Maintains Has a long-term unsecured credit rating of issued by a widely recognized credit rating agency that is equivalent to a BBB− or better from rating by Standard & Poor's (or the equivalent from a nationally-recognized credit rating agency); and

(D) Issues the letter of credit payable in United States dollars.

(b) Before being authorized to receive Mobility 5G Fund Phase II support, a winning bidder shall provide with its letter of credit obtain an opinion letter from its outside legal counsel clearly stating, subject only to customary assumptions, limitations, and qualifications, that in a proceeding under Title 11 of the United States Code, 11 U.S.C. 101 et seq. (the “Bankruptcy Code”), that the bankruptcy court would not treat the letter of credit or proceeds of the letter of credit as property of the winning bidder's bankruptcy estate, or the bankruptcy estate of any other winning bidder-related entity requesting issuance of the letter of credit, under section 541 of the Bankruptcy Code.

(c) Authorization to receive Mobility 5G Fund Phase II support is conditioned upon full and timely performance of all of the performance requirements set forth in this section, § 54.1015(c), and any additional terms and conditions upon which the support was granted.

(1) If Failure by a Mobility 5G Fund Phase II recipient has triggered support recipient to meet any of the service milestones set forth in § 54.1015(b) will trigger reporting obligations and the withholding of support as described in § 54.1020. Failure to come into full compliance during the relevant cure period as described in § 54.1020(b)(4)(ii) or § 54.1020(c) will trigger a recovery action by USAC as the Administrator set out forth in § 54.1017 and has failed to 1020(b)(4)(ii) or § 54.1020(c), as applicable. If the recipient authorized to receive 5G Fund support does not repay the requisite amount of support within six (6) months, USAC the Administrator will be entitled to draw upon the entire amount of the letter of credit and may disqualify the Mobility 5G Fund Phase II support recipient from the receipt of Mobility 5G Fund Phase II auction support or additional universal service support.

(2) The default will be evidenced by a letter issued by the Chief of either the Wireless Telecommunications Bureau or Wireline Competition Bureau, or their its respective designees, which letter, describing the performance default and attached to a standby letter of credit draw certificate, shall be sufficient for a draw on the standby letter of credit .

[82 FR 15450, Mar. 28, 2017, as amended at 82 FR 16297, Apr. 4, 2017]

for the entire amount of the standby letter of credit.

Effective Date Note

Effective Date NotesNote:

1. At 82 85 FR 1545075822, MarNov. 2825, 20172020, § 54.1016 was added. This section contains information collection and recordkeeping requirements and will not become effective until approval has been given by the Office of Management and Budget.

2. At 83 FR 17942, Apr. 25, 2018, § 54.1016 was amended by revising paragraph (a)(1)(ii) and will not become effective until approval has been given by the Office of Management and Budget

revised, however, paragraph (b) has a delayed effective date.