ACM Partnership, Southampton-Hamilton Company, Tax Matters Partner - Page 69

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          expected to invest the partners' contributions pending                      
          acquisition of Colgate debt.  The earlier oral assurance to which           
          RMD refers may have been one that Merrill made to the first                 
          section 453 partnership in which ABN collaborated, the Nieuw                
          Willemstad Partnership.  Failing to locate a buyer for the                  
          partnership's private placement notes within the time frame                 
          required by the partners, Merrill itself became the counterparty,           
          buying the private placement notes and issuing LIBOR Notes.  A              
          second condition was that the loan to Kannex be syndicated in               
          order to reduce the credit risk.                                            
               ABN records indicate that the credit proposal was "approved            
          per RMD".  There is no record of any modification to the NACC and           
          RMD conditions.  Under ABN procedures, if credit conditions had             
          been changed, the changes should be reflected in NACC files.                
          Although there are cases in which a branch fails to advise NACC             
          of changes in credit conditions or changes are made without                 
          documentation, such cases are rare.                                         
               Kannex was incorporated in the Netherlands Antilles on                 
          October 25, 1989, and issued shares with a total par value of               
          $6,000, held in equal proportions by Coign and Glamis.  Kannex's            
          financial statements reflect accounts receivable for loans to the           
          foundations in the amount of $6,000, indicating that they                   
          borrowed from the corporation the funds they used to acquire its            
          stock.  By "Revolving Credit Agreement" dated November 2, 1989,             
          ABN's Cayman Islands Branch (ABN Cayman Islands) agreed to make             




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