A borrower may, without the prior approval of RUS, sell, lease, or transfer any capital asset if the following conditions are met:
(a) The borrower is not in default;
(b) In the most recent year for which data is available, the borrower has met its coverage ratios as set in 7 CFR part 1710.114(b) or other financial requirements as established by their Mortgages, Loan Contracts, and/or other Security Agreements;
(c) The sale, lease, or transfer of assets will not reduce the borrower's existing or future requirements for energy or capacity being furnished to the borrower under any wholesale power contract which has been pledged as security to the government;
(d) Fair market value is obtained for the assets;
(e) The aggregate value of assets sold, leased, or transferred in any 12-month period is less than 10 percent of the borrower's net utility plant prior to the transaction;
(f) The proceeds of such sale, lease, or transfer, less ordinary and reasonable expenses incident to such transaction, are immediately:
(1) Applied as a prepayment of all notes secured under the mortgage equally and ratably;
(2) In the case of dispositions of equipment, materials or scrap, applied to the purchase of other property useful in the borrower's utility business; or
(3) Applied to the acquisition of construction of utility plant.
[60 FR 67405, Dec. 29, 1995, as amended at 65 FR 51748, Aug. 25, 2000; 86 FR 36197, July 9, 2021]