EFTA01119794.pdf

I SLAND NIMMI YACHTING ATTACHMENT D BVI Properties: Property Descriptions and Annotations to Financial Projections Island Global Yachtin Ltd. • • Fort Lauderdale, FL 33301 Tel: • Fax: • www.islecap.com EFTA01119794  ATTACHMENT 1) BVI Properties: Property Descriptions and Annotations to Financial Projections British Virgin Islands (BVI) Portfolio The BVI Portfolio consists of two projects, Village Cay Marina (109 slips) in Road Town, Tortola and Virgin Gorda Yacht Harbour (331 slips) in The Valley, Virgin Gorda. The Sun Partnerships own minority interests in both projects through joint venture entities controlled and majority owned by affiliates of the BVI Investment Club ("BVIIC"). IGY has not accounted for any development or redevelopment scenarios in its financial projections because it would hold minority interests in both projects and such scenarios would require consent from BVIIC. Both projects, however, have excellent locational or physical attributes that could provide development and revenue enhancement opportunities more thoroughly discussed below. &LK= Village Cay is 100% owned by Village Cay Marina Enterprise Limited, a BVI company ("VS Property Owner"). VC Property Owner is owned 66.7% by Sage Investment Club (or BVIIC) and 33.3% by Village Cay (MOF III), LP, a Texas limited partnership ("MOF Village Cay"). Sun MOF HI GP, LLC, a Texas limited liability company, is the direct general partner of MOF Village Cay, and it is owned 100% by MOF III, which is controlled by SRI (as noted above). SRI therefore indirectly controls the 33.3% minority interest in VC Property Owner that is owned by the Sun Partnerships. MOF Village Cay is structured like MOF III, such that the capital partners received "Class A" limited partner interests and MOF III received all of the "Class B" limited partner interests as a promoted interest. MOF HI owns an 8.43% Class A interest in MOF Village Cay. IGY Facilities would acquire the Principal Interests in Village Cay through its acquisition of the interests in MOF HI described above. IGY would acquire the Principal Interests based on an asset valuation of $13 million, which is $1 million 1 than the amount contemplated by the Purchase Agreement. This price reduction was negotiated with SRI following IGY's completion of its due diligence. Virgin Gorda Yacht Harbor is 100% owned by Virgin Yacht Harbour Holdings Limited, a BVI company ("VG Property Owner"). VG Property Owner is owned 75% by Sage Yacht Harbour Enterprises Limited (sometimes referred to as the "BVI Investment Club"), a BVI entity that is a "belonger" for local ownership purposes and which is unaffiliated with SRI or the Principals, and 25% by Virgin Gorda YH (MOF III), LP, a Texas limited partnership ("MOF Virgin Gorda"). Sun MOF HI GP, LLC, a Texas limited liability company, is the direct general partner of MOF Virgin Gorda, and it is owned 100% by MOF HI, which is controlled by SRI (as noted above). SRI therefore indirectly controls the 25% minority interest in VG Property Owner that is owned by the Sun Partnerships. MOF Virgin Gorda is structured like MOF III, such that the capital partners received "Class A" limited partner interests and MOF III received all of the "Class B" limited partner interests as a promoted interest. MOF HI owns an 18.42% Class A interest in MOF Virgin Gorda. IGY Facilities would acquire the Principal Interests in Virgin Gorda through its acquisition of the interests in MOF III described above. IGY would acquire the Principal Interests based on an asset valuation of $16 million, which is equal to the amount contemplated by the Purchase Agreement. ControlRiehts - Village Cav MOF Village Cay entered into a Shareholders Agreement with BVIIC to govern the rights of the joint venture partners in VC Property Owner (the "VC Agreement"). Under the VC Agreement, 1 EFTA01119795 MOF Village Cay's consent is required for certain actions, including but not limited to (the "VC Major Decisions"): (i) any development plan for Village Cay; (ii) capital calls exceeding $500,000; (iii) borrowings in excess of $500,000; (iv) dispositions of interests in VC Property Owner, other than to affiliates; and (iv) liquidation of VC Property Owner. If the parties cannot agree on the VC Major Decisions, then MOF Village Cay would have the right to put its interest in VC Property Owner to BVIIC on the basis of fair market value, which is determined pursuant to a third party appraisal process. Additionally, MOF Village Cay may exercise a put right if SRM is terminated as manager of the marina for any reason. Pursuant to the VC Agreement, distributions shall be payable in accordance with the following: (i) If distributable cash in the first three years of operation (through April 2008) is insufficient to provide each shareholder with a minimum 10% annual return for such year, then cash is distributed first to MOF Village Cay until it receives a 10% return for the given year. If distributable cash is insufficient to satisfy the above return, then any shortfall accrues and bears interest at 10% per year until paid (ii) Any shortfall in the 10% return owed to the BVIIC also bears interest at 10% per year until paid. (iii) If MOF Village Cay receives its return at the end of the 3-year period, then distributable cash is allocated to BVIIC until it receives its annual 10% return (including accrued amounts). The partnership agreement for MOF Village Cay provides that any sale of Village Cay Marina, or its interest therein, would require approval of more than 61% of the interests in the partnership. Additionally, the general partner of MOF Village Cay (which would be IGY Facilities) agrees to make distributions of available cash to the partners within 45 days of each calendar quarter. Available cash includes all gross proceeds received from VC Property Owner, net of expenses and reserves. fontrol Ravin's. — nryin Gorda. MOF Virgin Gorda entered into a Shareholders Agreement with BVIIC to govern the rights of the joint venture partners in VG Property Owner (the "VG Agreement"). Under the VG Agreement, MOF Virgin Gorda's consent is required for certain actions, including but not limited to (the "VG Major Decisions"): (i) any development plan for Virgin Gorda; (ii) capital calls exceeding $500,000; (iii) borrowings in excess of 5500,000; (iv) dispositions of interests in VG Property Owner, other than to affiliates; and (iv) ►iquidation of VG Property Owner. If the parties cannot agree on the VG Major Decisions, then MOF Virgin Gorda would have the right to put its interest in VG Property Owner to BVIIC on the basis of fair market value, which is determined pursuant to a third party appraisal process. Additionally, MOF Virgin Gorda may exercise a put right if SRM is terminated as manager of the marina for any reason. The VG Agreement does not provide for preferential distributions to the shareholders. The partnership agreement for MOF Virgin Gorda provides that any sale of Virgin Gorda, or its interest therein, would require approval of more than 61% of the interests in the partnership. Additionally, the general partner of MOF Virgin Gorda (which would be IGY Facilities) agrees to make distributions of available cash to the partners within 45 days of each calendar quarter, subject to deferral of certain amounts for the first three quarters of each year. Available cash includes all gross proceeds received from VC Property Owner, net of expenses and reserves. Mama Tarn 2 EFTA01119796 SRI has notified IGY that local government officials have recently disputed the amount of stamp taxes paid in connection with the acquisition of Virgin Gorda Yacht Harbour and Village Cay Marina. The maximum possible taxes owed by MOF Virgin Gorda in respect to Virgin Gorda is $90,000 (as noted below) and the maximum owed by MOF Village Cay is approximately $6,000 (excluding interest and penalties, as noted below). IGY has consulted with William Hare of Forbes Share, local counsel, regarding applicable law and the likelihood of losses arising from the dispute. Counsel believes there is some risk that the Government may require increased taxes to be paid, but there is no certainty that this will be the case. In fact, local counsel believes this dispute really stems from local politics and that it will be settled. Counsel has attempted to reach out to various Government officials (with consent from SRI) and the attorney for SRI's local partner, but has been unable to obtain additional information as of the date hereof. The indemnification section in the Purchase Agreement provides that IGY would be indemnified and held harmless for taxes due in respect to periods prior to the First Closing. An indemnification claim may be satisfied from a $500,000 cash escrow at First Closing. If this amount is insufficient, the balance may be paid from the purchase price paid to the Principals for the interests in Virgin Gorda, in the 80/20 proportion of stock/cash consideration paid by IGY at the First Closing. The time limit for asserting any claim relating to taxes is the applicable statute of limitations, which in this case may be up to 5 years. We have prepared an amendment to the Purchase Agreement, and the Principals have agreed, to confirm that this would be an indemnifiable claim (i.e., the anti-sandbagging provision would not apply even though this was discovered by IGY prior to the Closing). The Amendment also provides that the Principals would be required to pay the claim in all cash, although the Principals have not yet agreed to this last statement. In general, it appears that IGY is adequately protected under the Purchase Agreement should any incremental tax be due. Finally, in a worst case scenario, the Government may file criminal charges against BVIIC, which is the "belonger" entity that manages Virgin Gorda and Village Cay, and which would have been responsible for paying the stamp tax. If this were to happen, IGY would need to find a replacement "belonger" entity for each asset. However, local counsel considers the filing of criminal charges as a remote possibility, primarily because several owners of BVIIC are influential in local politics. Local counsel currently is reviewing whether IGY Facilities would owe a stamp tax upon acquisition of the Principal Interests or Third Party Interests at the First Closing and Second Closing. The potential outstanding stamp taxes for each project are discussed in more detail below. I) Village Cav Marina: A) Property Description: Located in the heart of Road Town, Tortola, this mixed-use (hotel, marina, restaurant/bar) property is comprised of three jetties that provide 109 slips, a 20-room hotel, two 2BR/2BA condominium units, 180-seat restaurant/ bar, and an estimated 28,000 square feet of retail and ancillary marina and hotel support structures. The project consists of 0.97 acres of land and 8.28 acres of seabed area. 3 EFTA01119797 B) rroiected Operations and Financial Analysis: For purposes of projecting IGY returns, it is assumed that IGY acquires 100% of the interests held by the partners in the Sun Partnerships, or that all of the limited partners accept the tender offer to be commenced by IGY within 180 days of the First Closing. Due to the 33.3% minority interest that IGY would acquire in this asset, it is not possible to project major redevelopment scenarios with any certainty. We have, therefore, not taken into consideration in the financial assumptions our discussions with Sun management regarding the hotel improvement program that was commenced in 2006 and their efforts to expand the market for local users for catering and other F&B related businesses. The projected 10-year hold analysis contemplates that IGY would operate the existing facilities "as-is" and recommend that the VC Property Owner undertake a dock replacement program in years 3 and 4 due to the estimated remaining life. Capital expenses are based on a combination of Sun's 5-year capital budget as well as ATM's 10-year capital replacement schedule. A detailed 5-year capital expenditure schedule is attached to this report. See Attachment J to the Memorandum for an Executive Summary of ATM's property condition report. Estimated acquisition and due diligence costs of approximately $188,333 have been included as part of the analysis. These costs include an estimated $50,000 in legal and title, $65,000 Non- Belonger Stamp Tax of 1.5% payable to the government, a 1% acquisition fee totaling $43,333, payable to IGY, $10,000 payable to ATM for property diligence and S20,000 in other closing costs. These fees arc based on the net equity purchase price valuation of $13 million times the 33.3% interest being acquired. Final acquisition costs are subject to true-up of 2006 budgeted capital costs versus spent, applicability of Stamp Tax to IGY's transaction, legal costs both direct and allocated, and final recording and notary costs, among others. Revenue at Village Cay is derived primarily from three areas: restaurant operations, marina, and hotel. The 180-seat restaurant and bar generates approximately 45% of total revenue while the marina, with affiliated fuel and utility income, generates 35% of total revenue. The hotel and condominium rentals provide 17% of total revenue and the remaining 3% is derived from retail space rental. Under Sun's management, Village Cay had an NOI (before management fees) of $977,458 in 2005 based on $3.9 million in gross revenue. Projections for 2006 (based on actual figures for January - October and projected figures for November - December) indicate an NOI (before management fees) of approximately $1.2 million based on gross revenues of just over $4.9 million. Under IGY ownership, Village Cay is projected to produce an NOI (before management fees) of $1.3 million in 2007, an increase of 8% over reforecast 2006. The management fee is $132,000 per year and is split 50% with the BVIIC. Including the management fee, NOI is projected to be nearly $1.2 million in 2007, resulting in an implied going-in cap rate of 9.1% based on the stipulated value of $13 million for the project. Within the projected 10-year cash flow pro forma, revenue growth is assumed to be 5% per year for the first four years, and growing at 3% per year thereafter for all business lines except for hotel. Hotel revenue has a 10% increase in year 2 (due to hotel renovations) and then follows the same growth rates as dock and restaurant lines. Expense growth is assumed to be 3% per year. 4 EFTA01119798 According to ATM, docks and piers are close to the end of their estimated life of 30 years and are in need of repair and near-term replacement. The estimated $3 million required for dock replacement has been spread over years 3 and 4 for purposes of underwriting. In actuality, the timing of dock replacement/ reconfiguration, or other capital work would require approval of the majority partner. Capital work will need to be spaced accordingly to avoid capital calls as the property is projected to have a debt service coverage ratio of 1.15x in 2007. Based on a 10-year hold and applying a 8.5% exit cap rate less a 3% cost of sale, the asset is projected to return an internal rate of return of 12.2%. IGY's return during this time frame would be 13.5% including payment of the 1% acquisition fee of approximately $43,333 to Island Global Yachting Directives LLC ("IGYD"), management fees of $66,000 per year, and assuming the entire 33.3% interest is acquired. Current Debt: The mortgage loan was originated on April 12, 2005 with Banco Popular in the amount of $7,600,000 for a term of 15 years maturing on May 1, 2020. The interest rate is equal to 275 basis points above the 90 day LIBOR rate. Each monthly payment shall consist of 179 fixed principal payments equal to $42,222 and accrued interest based on the outstanding principal balance. The fatal payment shall consist of a principal payment of $42,262 and accrued interest. For modeling purposes, IGY assumed LIBOR at 5.36% for a combined interest rate of 8.11% over the life of the loan. The projected loan balance as of December 31, 2006 is $6,581,664. C) Development and Other Opportunities: Based upon our visit and discussions with on-site management, we explored several revenue- enhancing opportunities that could be implemented in the future but, as previously stated, are not taken into consideration in the financial projections. I) capturing more group travel traffic, 2) enhancing revenue per available room, 3) increasing the number of rentable rooms, 4) increase revenue from food and beverage operations, and 5) reconfiguration of marina to accommodate more mega-yachts. A summary of our findings for these revenue enhancement and development options follows: 1) Group Travel — Based on our discussions with on-site management the facilities at Village Cay currently see significant group reservations from sailboat crews and family that are participating in the numerous regattas and races held in the area and are often the preferred choice due to the proximity of the marina to the hotel and adjoining restaurant Thar. A marketing campaign focused on drawing more weddings, reunions and other family events, potentially packaged with sailing excursions, may enhance traffic and revenues on marina, hotel, and food and beverage profit centers. 2) Increasing Room Revenues: Higher rack rates may be achievable if the hotel and rooms were upgraded and, in some cases, re-modeled. Redesign and layout of exterior areas including the patio and pool have been discussed as means to increase the efficiency and attractiveness of this area. 5 EFTA01119799  3) Increasing the Number of Rooms - The project owns two, two-bedroom/two-bath condominiums in an adjacent 19-unit condominium complex, each of which grosses approximately $45,000 on annual basis. Hotel management believes the rental program could be expanded through the addition of condominium units as they come to market. The last known sale occurred within the past year for approximately $250,000. Assuming a conservative 35% cost of sales factor, each additional condominium unit could potentially earn $29,250 as follows: Total Revenue per Condo: $ 45,000 Less: 35% COS: -$ 15.750 Net Cash Flow: $ 29,250 Return on Cost: 11.7% ($29,250/ $250,000) The addition of condominium units would also provide one additional parking space. The project currently only has two parking spots and relics on nearby public parking. 4) Increasing Revenue from Food & Beverage Operations — Management believes that food and beverage income can be enhanced through targeted marketing to capture local social and business functions. This facet of operations would be a beneficiary of exterior improvements and re-design of patio and pool areas as space and operational efficiency could be improved. 5) Reconfiguration of Marina Slips to Accommodate Mega-Yachts - ATM's Marina Due Diligence Assessment notes that near-term complete pier replacement is indicated based on the age of the structure (built 1974) and its estimated life (-30 years). They note further that, "with the needed pier reconstruction comes an opportunity for reconfiguration of the marina basin. Though the facility is generally adequate for current demand, accommodation for some larger slips is indicated to provide berthing for larger yachts and wider sailboats (catamarans). Expansion opportunities to the west should be investigated closely in terms of basin limits/submerged lands boundaries." See Attachment J to the Memorandum for an Executive Summary of ATM's property condition report. D) Stamp Tax Issue: Local law requires that an entity which acquires a leasehold interest in real property pays stamp taxes equal to 1% of the amount of the purchase price which is allocated to "land and improvements." Village Cay Marina Enterprises Limited ("Village Cay Property Owner") acquired the property for $10.25 million and subsequently engaged an independent third party to conduct a segregation analysis for purposes of allocating the purchase price. As a result, $2,115,000 was allocated to "land and improvements." The entity then paid stamp taxes totaling $84,600, or 4% of $2,115,000. The BVI entity therefore believes it may have overpaid stamp taxes because it should have only paid $21,150, or 1% of $2,115,000. However, it is possible that the Government argues the entire purchase price should have been allocated to land and improvements, resulting in a stamp tax of $102,500, or $17,900 due and payable. As the 33.3% passive owner, the Sun partnership's share would be $5,960.70. Additionally, the Government may assert interest, penalties and other charges that are not determinable. 6 EFTA01119800 II. Virgin Gorda Yacht Harbor: A) Property Description: Located in The Valley, Virgin Gorda, this mixed-use facility is comprised of a marina, boatyard, development land, and a retail building with restaurants, grocery store, and other retail. There are 94 full service wet-slips and an extensive bulkhead that provides 17 berths for commercial vessels. There are approximately 220 dry storage spaces available. Virgin Gorda Yacht Harbour ("VGYH") encompasses 33 total acres, 9 of which are flat, undeveloped land, and 10 which comprise the boatyard, storage, and other services. There are approximately 17,000 square feet of retail space on 0.4 acres, and the remaining 13.6 acres are made up of the marina and submerged land. B) Projected Operations and Financial Analysis: Due to the 25% minority position and lack of control over funding, it is not possible to project major redevelopment scenarios with any certainty. The 10-year cash flow pro forma reflects a project controlled by IGY and operated in its current configuration. It is further assumed that IGY would undertake a significant bulkhead repair and dock replacement program in years 1 and 2, totaling $3.8 million, due to the estimated remaining life and condition of these structures. For underwriting purposes, the 9 acres of vacant land remains as such and a lower target IRR was deemed acceptable to provide a margin for "upside" development potential. Capital expenses arc based on a combination of Sun's 5-year capital budget as well as ATM's 10- year capital replacement schedule. A detailed 5-year capital expenditure schedule is attached to this report. See Attachment J to the Memorandum for an Executive Summary of ATM's property condition report. Estimated acquisition and due diligence costs of approximately $600,000 have been included as part of the analysis. These costs include an estimated $50,000 in legal and title, $480,000 in Non- Belonger Stamp Tax of 12% payable to the government, a 1% acquisition fee totaling $40,000, payable to IGY, $10,000 for ATM property review and $20,000 for other closing costs. These fees are based on the purchase price valuation of $16 million times the 25% interest being acquired. Final acquisition costs are subject to true-up of 2006 budgeted capital costs versus spent, applicability of Stamp Tax to IGY's transaction, legal costs both direct and allocated, and final recording and notary costs, among others. Under Sun's management, VGYH had an NOI (before management fees) of $1,016,230 in 2005 based on $3.5 million in gross revenue. Revenue at VGYII is derived primarily from four areas: marina, retail leases, boat storage and service income from a boatyard. The marina, with affiliated fuel and utility income, generates 41% of gross revenue. Boatyard services and storage income provides 40% of gross revenue and the retail space rental provides the remaining 19%. Projections for 2006 (based on actual figures for January - October and projected figures for November - December) indicate an NOI (before management fees) of approximately $1.32 million based on gross revenues of just over $3.9 million. Under IGY ownership, VGYII is projected to produce an NOI (before management fees) of $1.4 million in 2007, an increase of nearly 6% over reforecast 2006. The management fee is $132,000 per year and is split 50% with a BVIIC controlled entity. Including the management fee, NOI is 7 EFTA01119801 projected to be $1.27 million in 2007, resulting in an implied going-in cap rate of 7.9% based on the stipulated value of S16 million for the project. Within the projected 10-year cash flow pro forma, revenue growth is assumed to be 5% per year for the first two years, at 7% per year from year 3 through year 7, and growing at 5% per year thereafter. Expense growth is assumed to be 3% per year. According to ATM, docks and piers are close to the end of their estimated life of 30 years and are in need of repair and near-term replacement. The estimated $3.8 million required for bulkhead and dock replacement has been spread over years 1 and 2 for purposes of underwriting. In actuality, the timing of dock replacement/ reconfiguration, or other capital work would require approval of the majority partner. Capital expenses will likely be deferred as the property is projected to have a debt service coverage ratio of 0.85x in 2007, resulting in cash flow shortfalls of $221,080 in year 1 and $83,465 in year 2. Sun management is aware of the projected shortfall and is in the process of submitting a debt modification proposal to Banco Popular. No details of this proposal were provided and the discussions are being led by the BVIIC. Based on a 10-year hold and applying an 8.5% exit cap rate less a 3% cost of sale, the asset is projected to return an internal rate of return of 8.8%, excluding any development opportunities. IGY's return during this time frame would be 8.8% after including the acquisition fee of approximately 540,000 payable to IGYD, management fees of $66,000 per year, and assuming the entire 25% interest is acquired. Current Debt The mortgage loan was originated on September 2, 2004 with Banco Popular in the amount of $9,400,000 for a term of 15 years maturing on 9/1/2019. The interest rate is equal to 75 basis points above the Prime Rate. The first 24 monthly payments shall be interest only. Thereafter, commencing September 2006, each monthly payment shall consist of 155 fixed principal payments equal to $55,000 and accrued interest based on the outstanding principal balance. The final payment shall consist of a principal payment of $875,000 and accrued interest. The estimated loan balance as of December 31, 2006 is $9,235,000. For modeling purposes, IGY assumed Prime at 8.25% for a combined interest rate of 9% over the lift of the loan. As indicated above, this loan had been an interest-only payment until September 2006; due to the amortizing features of this note, debt service payments are projected to increase by more than $600,000 in 2007 over prior year, leading to insufficient cash flow to meet debt service. Additionally, a construction loan was originated by a newly formed subsidiary of VG Property Owner in March 3, 2006 with Banco Popular in the amount of $3,000,000 for a term of 22 years. The interest rate is equal to 100 basis points above the Prime Rate. The first 24 months of monthly payments shall be interest only. Thereafter, the balance shall be converted/incorporated into a commercial mortgage up to 20 years. We have inquired as to the amount drawn under the loan by BVIIC to date. The construction loan is secured as a second position note on VG Property Owner. 8 EFTA01119802 C) Development and Other Opportunities: Based upon our visit and discussions with on-site management, the partnership has commenced a long-term re-development of the property that envisions moving the boatyard from its current location to the opposite side of the marina basin and using the current boatyard site for the development of Virgin Gorda Yacht Harbour Town Centre. In its current phase, the new development, which has encroached on the current boatyard property, is comprised of two buildings totaling nearly 20,000 square feet, currently anchored by Banco Popular. Sun management has indicated they are not involved in the planning or scope of the development and have been unable to provide specific information on the scope or timing of the development. At the time of the visit, concrete slab had been laid and the site was partially cleared. The BVI Government Information Service reports a ground-breaking ceremony at the site on February 16, 2006. D) Stamp Tax Issue: Local law requires that a buyer of a fee simple interest in real property pays stamp taxes equal to 4% of the amount of the purchase price which is allocated to "land and improvements." Virgin Gorda Yacht Harbour Holdings Limited ("Virgin Gorda Property Owner") purchased the property for $12 million and subsequently engaged an independent third party to conduct a segregation analysis for purposes of allocating the purchase price. As a result, $3.0 million was allocated to "land and improvements" and the entity thus paid stamp taxes totaling $120,000 (4% x $3,000,000). Virgin Gorda Property Owner later engaged a second valuation after the taxes were paid. The analysis stated that $6.8 million was allocable to the "land and improvements." However, Virgin Gorda Property Owner did not pay increased stamp taxes, likely based on the assumption that the valuation increased because property values increased since the time that stamp taxes were due at acquisition. Assuming the Government disagrees with the above analysis, Virgin Gorda Property Owner would owe additional stamp taxes of $152,000. This is based on 4% of the difference between the 2nd valuation of $6.8 million and the 1st valuation of $3 million. In a worst case scenario, local counsel has advised that the Government might assert that the entire $12 million purchase price should be allocated to "land and improvements," resulting in total transfer taxes of $480,000 and an outstanding amount of $360,000 owed. MOF Virgin Gorda (the Sun partnership) would owe 25% of any amount due - $38,000 (if based on the 2nd valuation) or $90,000 (if based on total purchase price). Additionally, the Government may assert interest, penalties and other charges that are not determinable. 9 EFTA01119803 10 EFTA01119804