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In connection with the issuance of the Euronotes,
petitioner, Finance, and the Irving Trust Co. entered into an
Indenture Agreement on October 15, 1981. This agreement
elaborates on the form and terms of the Euronote issuance and on
the responsibilities of the respective parties. The agreement
provides, inter alia, that Finance's net worth will not be
reduced to an amount that is less than 40 percent of the
aggregate amount of its outstanding indebtedness.
Also in connection with the Euronote offering, Eichhorn,
Eichhorn & Link issued a legal opinion letter dated October 7,
1981. Based upon certain representations by petitioner, the
opinion letter stated that the Euronote holders would not be
subject to U.S. income tax upon receipt of interest income from
Finance, unless the holders were engaged in a U.S. trade or
business. For purposes of this opinion letter, petitioner
represented, inter alia, that the equity capital of Finance at
the time of issuance of the Euronotes would not be less than $28
million, consisting of accounts receivable to be assigned to
Finance, and that Finance's net worth would not at any time be
reduced to an amount less than 40 percent of the aggregate amount
of its outstanding indebtedness, so as to maintain at all times a
debt-to-equity ratio not in excess of 2-1/2 to 1.
On October 15, 1981, petitioner and Finance executed a
document captioned "Assignment of Accounts Receivable". This
assignment was authorized by petitioner's board of directors on
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