- 41 -
Pohlschroeder reported the successful conclusion of the
agreement to the Partnership Committee. According to the
minutes, he pointed out that the partnership would now require
cash in order to perform its obligations under the Note Purchase
Agreement with Met Life. In addition, this investment "would
create a risk to the Partnership in the event that interest rates
increased because the Met Bonds had a fixed rate of interest."
Pohlschroeder recommended "that the Partnership hedge its risk by
purchasing notional principal contracts with a floating rate of
interest." By resolution of the Partnership Committee, Merrill
was authorized to arrange the sale of $175 million principal
amount of the Citicorp Notes to one or more of BOT, BFCE, and
Mitsubishi Bank "for cash and other LIBOR-based consideration,
upon substantially the terms of a draft Installment Purchase
Agreement presented to the meeting".
One other significant item of business at the second
partnership meeting was the adoption of the "Investment Policy
Guidelines" (Investment Guidelines). Weeks before the formation
of the Partnership, Pohlschroeder had reported to Heidtke that
Colgate would ensure in the Partnership Agreement that the
company's own cash management policies would be used as guidance
to maintain "liquidity * * * required to facilitate the buyback
of long-term debt". As it turned out, the partners were not yet
ready to adopt such policies at the time the Partnership
Agreement was executed. The primary objective of the belated
Page: Previous 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 NextLast modified: May 25, 2011