ACM Partnership, Southampton-Hamilton Company, Tax Matters Partner - Page 79

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          Notes paid interest at the commercial paper rate plus 15 basis              
          points, paid and reset monthly.  The initial coupon was set at              
          8.78 percent and the first reset date was November 15.  The Notes           
          were rated AA by Standard & Poors.  The holder had the option of            
          tendering the Citicorp Notes for repayment on October 16, 1991,             
          at 100 percent of the principal amount.  The Citicorp Notes were            
          not registered under the Securities Act, 15 U.S.C. sec. 77a                 
          (1933) and were not traded on an established securities market.             
               At the time of purchase, it was contemplated that the                  
          Citicorp Notes would be sold at the end of the month.  Indeed,              
          arrangements to sell the notes were already well underway.  In              
          several meetings beginning in late October, Pepe and other                  
          Merrill representatives discussed a proposed structure for the              
          sale with the Capital Markets Group of the Bank of Tokyo's (BOT)            
          New York Agency.  Parallel discussions were held with the New               
          York Branch of Banque Francaise du Commerce Exterieure (BFCE).              
          During the first week of November, Merrill disclosed the specific           
          terms of its proposal to each bank.  The banks would purchase               
          $175 million of the Citicorp Notes, paying 80 percent of the                
          price ($140 million) in cash and the remainder with an                      
          installment purchase note providing for a 5-year LIBOR cash flow            
          having a present value of $35 million.  In addition, the banks              
          would enter into collateral swaps with Merrill Capital that                 
          provided the banks with risk protection and an attractive return.           
          Merrill had already prepared the legal documentation for the                




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