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expenditures, $692,347 constituted finance charges relating to
the financing provided by FNBB and Mezzanine Capital. The
remaining $650,000 constituted legal and professional fees.
On October 16, 1989, for $1,000, FNBB assigned the options
that it held in the stock of CC Holdings to Bank of Boston
Capital (Bank of Boston), a wholly owned subsidiary of FNBB.
Subsequently, on September 12, 1990, Bank of Boston assigned to
Security Pacific National Bank (SPNB) for an unspecified
consideration a portion of the options representing 5 percent of
the equity in CC Holdings, and Bank of Boston retained the
options with respect to the remaining 7.5 percent of the equity
in CC Holdings.
On November 5, 1991, CC Holdings was merged into petitioner,
and petitioner’s stock was offered to the public in an initial
public offering (IPO) at $10 per share. Most of petitioner's
debts were paid off using the $25 million in proceeds realized
from the IPO.
On November 5, 1991, simultaneously with the IPO, the
options held by Bank of Boston and SPNB in CC Holdings’ stock
were exercised, and the banks received a total of 313,125 shares
of stock in petitioner with a combined total value of $3,131,250.
The combined net value of the stock in petitioner that the banks
realized in exercising the options equaled $3,068,750 ($3,131,250
less the $62,500 exercise price for the options).
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