ACM Partnership, Southampton-Hamilton Company, Tax Matters Partner - Page 63

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          needed in order "to achieve the ideal Colgate liability                     
          structure."  Pohlschroeder envisioned "two possible situations              
          arising in the future" which would call for the disposition of              
          some of the LIBOR Notes.  One was the exchange of long-term debt            
          for medium- or short-term debt.  "Because a shorter term                    
          instrument is less volatile, a smaller notional amount of the               
          LIBOR Note is required for hedging purposes."  A second situation           
          was a change in the treasury risk sharing ratios.  "The                     
          partnership is overhedged when Colgate decides to take more of              
          the treasury risk and ABN reduces its share of the treasury risk.           
          Conversely, as ABN's participation goes up, it needs more of a              
          hedge in [the] form of the LIBOR notes."                                    
               Merrill provided Colgate with estimates of the expected                
          costs of the contemplated partnership transactions.  The                    
          "Perpetual Partnership Cost Component Analysis" reproduced in               
          modified form below was prepared based on market conditions                 
          prevailing on September 1, 1989, and evidently assumed that the             
          partnership would remain in existence indefinitely after these              
          transactions were completed.                                                














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