Statute: 1971 ACT AS AMENDED
Title: Title VI Assistance to Farm Credit System
Subtitle: Subtitle A - Assistance Board
U.S. Code Citation: 12 U.S.C. 2278a-5
12 U.S.C. 2278a-5 SEC. 6.5. ASSISTANCE.
(a) IN GENERAL. The Assistance Board shall assist an institution that has been certified under section 6.4 by—
(1) authorizing the institution to issue preferred stock under section 6.27, in amounts necessary to maintain the book value of stock, participation certificates, and other similar equities of the institution, at the level provided for in subsection (c) of this section;
(2) in the case of high-cost debt for which the institution is primarily liable, authorizing the institution to issue preferred stock under section 6.27, in an amount equal to the premium that would be required by the holder of the debt for the institution to retire the debt at the then current market value;
(3) on a request by the institution, authorizing the issuance of preferred stock under section 6.27 to facilitate the merger of the requesting institution with one or more other System institutions; or
(4) providing assistance by such other methods as the Assistance Board determines appropriate.
(b) DEFINITION OF HIGH-COST DEBT. For purposes of subsection (a)(2) of this section, the term "high-cost debt" means securities or similar obligations issued before January 1, 1986, that mature on or after December 31, 1987, and bear a rate of interest in excess of the then current market rate for similar securities or obligations.
(c) MINIMUM EQUITY VALUE. The Assistance Board shall authorize a certified institution to issue amounts of preferred stock under section 6.27 sufficient to—
(1) maintain the value of stock, participation certificates and other similar equities at no less than 75 percent of the par value of the stock or the face value of the certificates or equities, as determined under generally accepted accounting principles; and
(2) strengthen the institution to a point where it is economically viable, and capable of delivering credit at reasonable and competitive rates.
(d) LIMITATION. Except as provided in section 410(c) of the Agricultural Credit Act of 1987, no assistance shall be provided in connection with a merger until the stockholders and the institutions involved have approved the merger and the Farm Credit Administration has given final approval to the merger plan.
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