Illinois Administrative Code › Title 32 - ENERGY › Part 326 - FINANCIAL ASSURANCE REQUIREMENTS › Appendix F - Wording for Parent Company Guarantee Documents

Current through Register Vol. 48, No. 28, July 12, 2024
a) A parent company guarantee, as specified in 32 Ill. Adm.
				Code 326.150, shall contain letters from the chief executive officer and the
				chief financial officer containing the following provisions, except that
				instructions in brackets are to be replaced with the relevant information and
				the brackets deleted:
CHIEF EXECUTIVE OFFICER
I am the [chief executive officer or equivalent] of
				[name and address of firm], a [insert "proprietorship", "partnership", or
				"corporation"]. This letter is in support of this firm's use of the financial
				test to demonstrate financial assurance, as specified in 32 Ill. Adm. Code
				326.
I hereby certify that [name of firm] is currently a
				going concern, and that it possesses positive tangible net worth in the amount
				of $________.
This firm [insert "is required" or "is not
				required"] to file a Form 10K with the U.S. Securities and Exchange Commission
				for the latest fiscal year. The fiscal year of this firm ends on [month,
				day].
I hereby certify that the content of this letter is
				true and correct to the best of my knowledge.
[Signature]
[Below the signature, type or print that person's
				name and title]
[Date]
CHIEF FINANCIAL OFFICER
I am the [chief financial officer or equivalent] of
				[name and address of firm], a [insert "proprietorship", "partnership", or
				"corporation"]. This letter is in support of this firm's use of the financial
				test to demonstrate financial assurance, as specified in 32 Ill. Adm. Code
				326.
[Complete the following paragraph regarding
				facility(ies) and associated cost estimates or amounts specified in 32 Ill.
				Adm. Code
				326.70.
				For each facility, include its license number, name, address and current cost
				estimates for the specified activities.]
This firm guarantees, through the parent company
				guarantee submitted to demonstrate compliance under 32 Ill. Adm. Code 326, the
				reclamation of the following facility(ies) owned or operated by subsidiary(ies)
				of this firm. The current cost estimates or amounts specified in 32 Ill. Adm.
				Code 326.70, so guaranteed, are shown for each facility:
Name of Facility
Location of Facility
Cost Estimate or 326.70
						  Amounts
This firm [insert "is required" or "is not
				required"] to file a Form 10K with the U.S. Securities and Exchange Commission
				for the latest fiscal year.
The fiscal year of this firm ends on [month, day].
				The figures for the financial test required by 32 Ill. Adm. Code
				326.160
				are derived from this firm's independently audited, year-end financial
				statements and footnotes for the latest completed fiscal year, ended
				[date].
[Insert completed financial test from subsection (c)
				of this Appendix F.]
I hereby certify that the content of this letter is
				true and correct to the best of my knowledge.
[Signature]
[Below the signature, type or print that person's
				name and title]
[Date]
b) A parent company guarantee, as specified in 32 Ill. Adm.
				Code 326.150, shall contain the following provisions, except that instructions
				in brackets are to be replaced with the relevant information and the brackets
				deleted:
PARENT COMPANY GUARANTEE
Guarantee made this [date] by [name of guaranteeing
				entity], a [insert "proprietorship," "partnership," or "corporation"] organized
				under the laws of the State of [insert name of state], herein referred to as
				"guarantor," to the Illinois Emergency Management Agency (hereinafter called
				the Agency), on behalf of our subsidiary [licensee] of [business
				address].
Recitals
1) The guarantor has full authority and capacity to
				enter into this guarantee [if guarantor is a corporation, add the following
				phrase "under its bylaws, articles of incorporation, and the laws of the State
				of [insert licensee's state of incorporation], its state of incorporation."].
				[If the guarantor has a Board of Directors, insert the following: "Guarantor
				has approval from its Board of Directors to enter into this guarantee."]
2) This guarantee is being issued to comply with
				regulations issued by the Agency, pursuant to the Radiation Protection Act of
				1990. The Agency has promulgated regulations in 32 Ill. Adm. Code 326 that
				require that general or specific licensees provide assurance that funds will be
				available when needed for reclamation activities.
3) The guarantee is issued to provide financial
				assurance for reclamation activities for [identify licensed facility(ies)] as
				required by 32 Ill. Adm. Code 326. The reclamation costs are as follows:
				[insert the current cost estimates or amounts specified in 32 Ill. Adm. Code
				326.70 guaranteed for each identified facility].
4) The guarantor meets or exceeds the financial test
				criteria specified in 32 Ill. Adm. Code 326.160 and agrees to comply with all
				notification requirements as specified in 32 Ill. Adm. Code 326.
5) The guarantor has majority control of the voting
				stock for the following licensee(s) covered by this guarantee. [For each
				facility, include its license number, name, address and current cost estimates
				for the specified activities.]
6) Reclamation activities as used in this Appendix F
				refers to the activities required by 32 Ill. Adm. Code 330 for reclamation of
				facility(ies) identified in this Appendix.
7) For value received from [licensee], [if the
				guarantor is a corporation, add "and pursuant to the authority conferred upon
				the guarantor by ["the unanimous resolution of its directors" or "the majority
				vote of its shareholders"], a certified copy of which is attached,"] the
				guarantor guarantees to the Agency that if the licensee fails to perform the
				required reclamation activities as required by 32 Ill. Adm. Code 330, the
				guarantor shall:
A) Carry out the required reclamation activities;
				or
B) Upon written notification from the Agency, pay
				the reclamation cost amount guaranteed for the facility(ies) to the Agency as
				directed by the Director.
8) The guarantor agrees to submit revised financial
				statements, financial test data and an auditor's special report and reconciling
				schedule annually within 90 days after the close of the parent guarantor's
				fiscal year.
9) The guarantor agrees that if, at the end of any
				fiscal year before termination of this guarantee, it fails to meet the
				financial test criteria, the licensee shall send within 90 days after the end
				of the fiscal year, by certified mail, return receipt requested, notice to the
				Agency that the licensee intends to provide alternative financial assurance as
				specified in 32 Ill. Adm. Code 326.170. Within 120 days after the end of the
				fiscal year, the guarantor shall establish such financial assurance if [the
				licensee] has not done so.
10) The guarantor agrees to notify the Agency
				promptly if the ownership of the licensee or parent firm is transferred and to
				maintain this guarantee until the new parent firm or the licensee provides
				alternative financial assurance acceptable to the Agency.
11) The guarantor agrees that, within 30 days after
				it determines that it no longer meets the financial test criteria or it is
				disallowed from continuing as a guarantor for [the licensee], it shall
				establish an alternative financial assurance as specified in 32 Ill. Adm. Code
				326.170 as applicable, in the name of [licensee] unless [licensee] had done
				so.
12) The guarantor as well as its successors and
				assigns shall remain bound jointly and severally under this guarantee
				notwithstanding any or all of the following: amendment or modification of the
				license or Agency-approved reclamation funding plan for that facility, the
				extension or reduction of the time of performance of required activities, or
				any other modification or alteration of an obligation of the licensee pursuant
				to 32 Ill. Adm. Code 326.
13) The guarantor agrees that all bound parties
				shall be jointly and severally liable for all litigation costs incurred by the
				Agency in any successful effort to enforce the agreement against the
				guarantor.
14) The guarantor shall remain bound under this
				guarantee for as long as [licensee] must comply with the applicable financial
				assurance requirements of 32 Ill. Adm. Code 326 for the previously listed
				facility(ies), except that the guarantor may cancel this guarantee by meeting
				the requirements of 32 Ill. Adm. Code 326.170.
15) The guarantor agrees that if [licensee] fails to
				provide alternative financial assurance as specified in 32 Ill. Adm. Code
				326.170, the guarantor shall provide such alternative financial assurance in
				the name of [licensee] or make full payment under this guarantee.
16) If the guarantor files financial reports with
				the U.S. Securities and Exchange Commission, then it shall promptly submit them
				to the Department during each year in which this guarantee is in effect.
I hereby certify that the content of this guarantee
				is true and correct to the best of my knowledge.
Effective date: ____________________
[Name of guarantor]
[Signature of chief executive officer or
				equivalent]
[Below the signature, type or print that person's
				name and title]
Signature of witness or notary:
				_____________________
c) Financial test documentation for parent company guarantee
				(Complete either Alternative 1 or Alternative 2):
Alternative 1
1) Current reclaiming and decommissioning cost
				estimates or certified amounts
A) Current reclaiming cost estimate or certified
				amount for all decommissioning activities covered by this parent company
				guarantee$___________
B) Total reclaiming cost estimates or certified
				amounts for all decommissioning activities covered by other NRC or Agreement
				State guarantees, parent company guarantees or
				self-guarantees$__________
C) Total amounts for all decommissioning activities
				under parent company guarantees, self-guarantees and commitments to other
				regulatory agencies (e.g.,
				USEPA)$__________
Total for line
				1$__________
2) * Total liabilities (if any portion of the cost
				estimates for reclaiming or decommissioning is included in total liabilities on
				your firm's financial statements, you may deduct the amount of that portion
				from this line and add that amount to lines 3 and
				4)$__________
3) * Tangible net
				worth**$__________
4) * Net
				worth$__________
5) * Current
				assets$__________
6) * Current
				liabilities$__________
7) * Net working capital (line 5 minus line
				6)$__________
8) * The sum of net income plus depreciation,
				depletion and
				amortization$__________
9) * Total assets in United States (required only if
				less than 90 percent of firm's assets are located in the United
				States)$__________
Yes
No
10) Is line 3 at least $10 million?
11) Is line 3 at least 6 times line 1?
12) Is line 7 at least 6 times line 1?
13) Are at least 90 percent of the firm's assets
				located in the United States? If not, complete line 14
-
14) Is line 9 at least 6 times line 1?
-
Guarantor shall meet two of the following three
				ratios:
-
15) Is line 2 divided by line 4 less than
				2.0?
-
16) Is line 8 divided by line 2 greater than
				0.1?
-
17) Is line 5 divided by line 6 greater than
				1.5?
----------------------------------------------------------------------------------------------------------------
* Denotes figures derived from financial
				statements.
** Tangible net worth is defined as net worth minus
				goodwill, patents, trademarks and copyrights.
Alternative 2
1) Current reclaiming and decommissioning cost
				estimates or certified amounts
A) Current reclaiming cost estimate or certified
				amount for all decommissioning activities covered by this parent company
				guarantee$__________
B) Total reclaiming cost estimates or certified
				amounts for all decommissioning activities covered by other NRC or Agreement
				State guarantees, parent company guarantees or
				self-guarantees$__________
C) Total amounts for all decommissioning activities
				under parent company guarantees, self-guarantees and commitments to other
				regulatory agencies (e.g.,
				USEPA)$__________
Total for line
				1$__________
2) Current bond rating of most recent unsecured,
				uncollateralized and unencumbered issuance of this firm
Rating______________________
Name of rating
				service______________________
3) Date of issuance of
				bond__________________
4) Date of maturity of
				bond___________________
5) Tangible net worth** (if any portion of estimates
				for reclaiming or decommissioning is included in total liabilities on your
				firm's financial statements, you may add the amount of that portion to this
				line)$__________
6) Total assets in United States (required only if
				less than 90 percent of firm's assets are located in the United
				States)$__________
Yes
No
7) Is line 5 at least $10 million?
8) Is line 5 at least 6 times line 1?
9) Are at least 90 percent of the firm's assets
				located in the United States? If not, complete line 10
10) Is line 6 at least 6 times line 1?
11) Is the rating specified on line 2 BBB or better
				(if issued by Standard & Poor's) or Baa or better (if issued by
				Moody's)?
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* Denotes figures derived from financial
				statements.
** Denotes figures derived from financial
				statements.
d) A parent company guarantee, as specified in 32 Ill. Adm.
				Code 326.150, shall include submission of an auditor's special report
				containing the following provisions, except that instructions in brackets are
				to be replaced with the relevant information and the brackets deleted:
AUDITOR'S CONFIRMATION OF CHIEF FINANCIAL
				OFFICER'S LETTER
We have examined the financial statements of [name
				of parent guarantor] ("Company") for the year ended [insert date], and have
				issued our report thereon dated [date]. Our examination was made in accordance
				with generally accepted auditing standards and, accordingly, included such
				tests of the accounting records and such other auditing procedures as we
				considered necessary.
The Company has prepared documents to demonstrate
				its financial responsibility under the Illinois Emergency Management Agency's
				financial assurance regulations, 32 Ill. Adm. Code 326. This letter is
				furnished to assist the licensee [insert Agency license number and name] in
				complying with these regulations and should not be used for other
				purposes.
The attached schedule reconciles the specified
				information furnished in the chief financial officer's (CFO's) letter with the
				company's financial statements. In connection therewith, we have:
1) Confirmed that the amounts in the column "Per
				Financial Statements" agree with amounts contained in the company's financial
				statements for the year ended [date];
2) Confirmed that the amounts in the column "Per
				CFO's Letter" agree with the amounts in the chief financial officer's
				letter;
3) Confirmed that the amounts in the column
				"Reconciling Items" are adequately explained in the attached schedule, that
				each reconciling item represents an appropriate adjustment to the financial
				data, and that the amount of each reconciling item is accurate; and
4) Recomputed the totals and percentages. Because
				the procedures in paragraphs (1)-(4) above do not constitute a full examination
				made in accordance with generally accepted auditing standards, we do not
				express an opinion on the manner in which the amounts were derived in the items
				referred to above. In connection with the procedures referred to above, no
				matters came to our attention that cause us to believe that the chief financial
				officer's letter and supporting information should be adjusted.
__________________________________________
SignatureDate
AUDITOR'S SCHEDULE RECONCILING AMOUNTS IN
				CFO'S LETTER
[COMPANY]
Year ended
				[date]
Line # in CFO's Letter
Per Financial Statements
Reconciling Items
Per CFO's Letter
6
Total current liabilities
X
Long-term debt
X
Deferred income taxes
X
XX
Accrued decommissioning costs included in current
						  liabilities
X
Total liabilities (less accrued decommissioning
						  costs)
X
4
Net worth
XX
Less: Cost in excess of value of tangible assets
						  acquired
X
XX
Accrued decommissioning costs Included in current
						  liabilities
X
Tangible net worth (plus decommissioning costs)
XX
(Balance of schedule is not illustrated.)
AGENCY NOTE: This illustrates the form of schedule that is
				  contemplated. Details and reconciling items will differ in specific
				  situations.