Wally Findlay Galleries International, Inc. and Subsidiaries - Page 14

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          lease from the French subsidiary in its third trimester would not           
          be able to renew on terms as favorable as the French subsidiary             
          itself could expect.  Consequently, if the subsidiary attempted             
          to assign the lease before renegotiating it, no assignee would be           
          willing to pay as much for the lease as the opportunity cost to             
          the Wally Findlay Group of surrendering it.  Another reason to              
          delay any assignment of the lease was that the French subsidiary            
          was involved in a dispute over the rights to certain areas in the           
          Avenue Gabriel building.  Another tenant was using the disputed             
          areas for its restaurant.  The results of an investigation by a             
          court-appointed expert in 1983 had supported the French                     
          subsidiary's claim and prospects for regaining possession were              
          good, but until the litigation was concluded or settled the                 
          marketability of the lease was impaired.                                    
               By the end of FY 1987 the officers of WFGI had not found a             
          buyer for the group as a whole or for the French subsidiary                 
          separately.  The subsidiary renewed the lease for a third term              
          and then disposed of it.  In a complex multiparty transaction,              
          two-thirds of the premises were assigned by the subsidiary to a             
          Frenchman named Mr. Leadouze, and the other one-third was                   
          assigned to WFGI.  Mr. Leadouze paid FF 1.3 million for the                 
          portion of the leasehold that he received.  WFGI acquired its               
          portion of the leasehold at a cost of $253,461.  The French                 
          subsidiary ceased operations during FY 1987, a liquidator was               

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