§  54.1508   Letter of credit for stage 2 fixed support recipients.

   (a) Letter of credit. Before being authorized to receive support from
   Stage 2 of the fixed Uniendo a Puerto Rico Fund or the fixed Connect
   USVI Fund, a winning applicant shall obtain an irrevocable standby
   letter of credit which shall be acceptable in all respects to the
   Commission. No later than the number of days provided by public notice,
   the applicant shall submit a letter from a bank meeting the eligibility
   requirements outlined in this section committing to issue an
   irrevocable stand-by letter of credit, in the required form, to the
   winning applicant. The letter shall at a minimum provide the dollar
   amount of the letter of credit and the issuing bank's agreement to
   follow the terms and conditions of the Commission's model letter of
   credit. The letter of credit must remain open until the recipient has
   certified it has deployed broadband and voice service meeting the
   requirements in this subpart to 100% of the required number of
   locations, and Universal Service Administrative Company (USAC) has
   verified that the entity has fully deployed.

   (b) Value. Each recipient authorized to receive the Uniendo a Puerto
   Rico Fund and the Connect USVI Fund Stage 2 fixed 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 fixed support
   that has been disbursed and that will be disbursed in the coming year,
   until the USAC has verified that the recipient met the final service
   milestone.

   (1) Once the recipient has met its 60 percent service milestone, it 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.

   (2) Once the recipient has met its 80 percent service milestone, it may
   obtain a new letter of credit or renew its existing letter of credit so
   that it is valued at a minimum at 80 percent of the total support that
   has been disbursed plus the amount that will be disbursed in the coming
   year.

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

   (1) Any United States bank:

   (i) That is insured by the Federal Deposit Insurance Corporation; and

   (ii) That has a bank safety rating issued by Weiss of B- or better; or

   (2) CoBank, so long as it maintains assets that place it among the 100
   largest United States Banks, determined on basis of total assets as of
   the calendar year immediately preceding the issuance of the letter of
   credit and it has a long-term unsecured credit rating issued by
   Standard & Poor's of BBB- or better (or an equivalent rating from
   another nationally recognized credit rating agency); or

   (3) The National Rural Utilities Cooperative Finance Corporation, so
   long as it maintains assets that place it among the 100 largest United
   States Banks, determined on basis of total assets as of the calendar
   year immediately preceding the issuance of the letter of credit and it
   has a long-term unsecured credit rating issued by Standard & Poor's of
   BBB- or better (or an equivalent rating from another nationally
   recognized credit rating agency); or

   (4) Any non-United States bank:

   (i) 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);

   (ii) Has a branch office in the District of Columbia or such other
   branch office agreed to by the Commission;

   (iii) Has a long-term unsecured credit rating issued by a
   widely-recognized credit rating agency that is equivalent to a BBB- or
   better rating by Standard & Poor's; and

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

   (d) Bankruptcy opinion letter. A winning applicant of the Uniendo a
   Puerto Rico Fund and the Connect USVI Fund Stage 2 fixed support shall
   provide with its letter of credit an opinion letter from its 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"),
   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 under section 541 of the Bankruptcy Code.

   (e) Authorization for Stage 2 support. Authorization to receive the
   Uniendo a Puerto Rico Fund and the Connect USVI Fund Stage 2 fixed
   support is conditioned upon full and timely performance of all of the
   requirements set forth in this section, and any additional terms and
   conditions upon which the support was granted.

   (1) Failure by a Uniendo a Puerto Rico Fund and the Connect USVI Fund
   Stage 2 fixed support recipient to meet its service milestones as
   required by § 54.1506 will trigger reporting obligations and the
   withholding of support as described in § 54.320(c). Failure to come into
   full compliance within 12 months will trigger a recovery action by the
   USAC. If the Uniendo a Puerto Rico Fund or Connect USVI Fund Stage 2
   fixed support recipient does not repay the requisite amount of support
   within six months, the USAC will be entitled to draw the entire amount
   of the letter of credit and may disqualify the Uniendo a Puerto Rico
   Fund or Connect USVI Fund Stage 2 fixed support recipient from the
   receipt of any or all universal service support.

   (2) A default will be evidenced by a letter issued by the Chief of the
   Wireline Competition Bureau, or the Chief's designee, which letter,
   attached to a standby letter of credit draw certificate, shall be
   sufficient for a draw on the standby letter of credit for the entire
   amount of the standby letter of credit.