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d. Interim use for idle cash
Petitioner explains the investment in the Citicorp Notes on
November 3, 1989, in part by the need for an interim use for the
partners' cash contributions during the indefinite period during
which efforts were made to identify and acquire Colgate debt.
This is supported by the account that Taylor gave of the sequence
of events in his trial testimony:
The partnership was funded on November 2nd.
From that date forward, Colgate or
Southampton-Hamilton was - was negotiating
for the repurchase of a prior [sic-private]
placement note from Met.
Merrill Lynch was trying to identify, locate,
and purchase Colgate long bonds, and ABN Bank
was charged with identifying, locating, and
purchasing Euro notes * * * so, * * * the
cash needed to be invested and it was
invested in these notes. [Emphasis added.]
The weight of the evidence indicates that the search for
Colgate debt had begun long before the partnership was funded,
and that by the beginning of November the timing of the
partnership's purchase of the debt was largely within its
control. Between December 4 and 8, 1989, ACM acquired the Met
Note, Euro Notes, and Long Bonds in an aggregate principal amount
of $135.9 million. Prior to ACM's formation, Merrill prepared a
series of cash-flow projections with respect to the investment
activities of a liability management partnership under various
assumptions. In the six projections between August 8 and
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