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debentures. For example, under section 5.02 (supra pp. 9-10),
minimum payments to a sinking fund are to be computed by
reference to outstanding debentures less converted debentures.
Sections 5.05 and 5.07 (supra p. 10) contain provisions for
adjustment of the sinking fund and calculation of payment for
redemption to take converted debentures into account. These
provisions do no more than modify the need for a sinking fund
with respect to converted debentures that would be in the hands
of RMECC, the entity obligated on the debenture, or Metals, its
parent, neither of whom would need to have funds set aside to pay
themselves. Elimination of converted debentures from the sinking
fund does no more than reflect the realities of the relationship
between RMECC and Metals and fails to counteract the other
indications that the converted debentures were to survive the
exchange. Nor are we persuaded that Metals was attempting to
change the terms of the debentures by the correspondence with
Chemical Bank in New York relating to its status as conversion
agent instead of as trustee, see supra p. 15. In our judgment,
this correspondence reflects a careful effort to comply with, not
modify, the terms of the indenture.
The terms of the indenture herein are substantially similar
to those of the indenture involved in Husky Oil Co. v.
Commissioner, 83 T.C. 717 (1984), affd. sub nom. Marathon Oil Co.
v. Commissioner, 838 F.2d 1114 (10th Cir. 1987), where we
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