- 45 -
Markets Desk at the New York Branch of Sparekassen SDS
(Sparekassen).9 Pepe proposed a transaction involving the
purchase of the BFCE LIBOR Notes by Sparekassen and collateral
swaps that provided Sparekassen with risk protection and an
attractive return. Schickner was already familiar with the
transaction structure; at about the same time, Pepe offered him
one or two similar deals in connection with other section 453
partnerships. On December 5, in order to conclude the deal,
Schickner notified the bank's headquarters in Copenhagen that he
was reserving a credit line in the amount of $10 million.
The third partnership meeting took place on December 12,
1989, in Curacao. On behalf of Southampton, Pohlschroeder served
notice of an adjustment in the Yield Component, whereby
Southampton elected to increase its share of interest rate
exposure to 39.7 percent. Next, the Committee voted to accede to
a Colgate proposal to exchange $4.7 million aggregate principal
amount of the Long Bonds plus $4,165 cash payment for $5 million
aggregate principal amount of new 3-1/2 year fixed rate debt.
Macauley Taylor next stated that the debt exchange
contemplated by the foregoing resolutions would reduce
the Partnership's exposure to the risk of interest rate
fluctuations and recommended that the Partnership
reduce its position in the variable rate instruments
purchased to hedge against such exposure. He reported
that a reduction of approximately 30 percent in the
9 During 1989, Sparekassen was the largest savings bank in
Denmark. Later, in the same year, it merged with the two other
banks to form Unibank. We refer to the bank at all times as
Sparekassen.
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