- 43 -
was 5/8 percent of the par value of the Citicorp Notes, or
$1,093,750. The banks issued the LIBOR Notes at a price equal to
the aggregate consideration less the cash. The notional
principal amount of the Notes was the amount that was required at
current market swap rates to give the expected LIBOR cash flows a
present value equal to this price.
The following table summarizes the various costs associated
with the Citicorp Notes and LIBOR Notes:
Citicorp Notes aggregate par amount $175,000,000
Transaction price 99.375%
Transaction value 173,906,250
Accrued interest (12 days @ 8.65 percent) 504,564
Total consideration 174,410,814
BOT BFCE TOTAL
Citicorp Notes par value $125,000,000 $50,000,000 $175,000,000
Accrued interest 360,403 144,161 504,564
Cash payment (100,000,000) (40,000,000) (140,000,000)
Cost of LIBOR Notes 25,360,403 10,144,161 35,504,564
Origination cost (781,250) (312,500) (1,093,750)
Issue price/present value
of LIBOR Notes 24,579,153 9,831,661 34,410,814
Notional principal of
LIBOR Notes 69,850,000 27,910,000 97,760,000
On the same day that the partnership acquired the LIBOR
Notes for the stated purpose of hedging the partners' exposure to
interest rate risk associated with the Colgate debt, Southampton
served notice of an adjustment to the Yield Component sharing
ratio. Desiring greater exposure, Southampton increased its
share of the Yield Component from 16.7 percent to 29.7 percent.
ACM invested the $140 million cash received in the sale in
several commercial paper issues (time deposits and certificates
Page: Previous 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 NextLast modified: May 25, 2011