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liability management partnership proposal was presented to
successively higher levels within Colgate's management. The vice
president of taxation was now comfortable with the economic
substance of the partnership. The treasurer concluded that this
was a "uniquely suitable transaction for us." They, in turn,
presented the tax and treasury aspects of the proposal to the
chief financial officer and to the president of the company, who
approved it. The decision was made to enter into negotiations
with ABN.
3. The Partners
ABN chose a form for its participation that would appear on
its consolidated balance sheet as a loan to a third party rather
than an equity investment. A Netherlands Antilles corporation
named Kannex Corp., N.V. (Kannex), would be formed to borrow
approximately $170 million from a bank and contribute it to the
partnership. Kannex's stock would be held by two Netherlands
Antilles stichtingen named Coign and Glamis. Stichtingen are
foundations under Dutch law, have no owners, and conduct no
commercial activities. Their sole purpose in this transaction
would be to hold Kannex's stock. Control over the foundations
would be exercised by their respective boards, of which de Beer
would serve as chairman and other ABN Trust employees as members.
The foundations would appoint ABN Trust to act as sole managing
director of the corporation.
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