(a) MARAD may approve the issuance of a MARAD Guarantee of a Note to refinance existing program debt for a Vessel Project and existing non-program debt for a Vessel Project, so long as the existing debt has been previously issued for one of the purposes set forth in the Act and the issuance of the MARAD Guarantee would otherwise satisfy the requirements of the program and the regulations in this part.

(b) Any security lien on the Vessel(s) must be discharged immediately before MARAD places a mortgage or other security interest on any of the above assets. An Applicant must satisfy all necessary eligibility requirements as set forth in these regulations, including economic soundness.

(c) The amount of a new Note issued for the existing debt may not exceed the lesser of:

(1) The amount of outstanding debt being refinanced (whether or not financed through the Program); or

(2) Whichever percentage is applicable under the provisions of the Act with respect to the depreciated Actual Cost of the Vessel Project for which the new Note is being issued.