ACM Partnership, Southampton-Hamilton Company, Tax Matters Partner - Page 97

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               At the end of August 1990, Colgate's treasury concluded that           
          a significant change had occurred in the interest rate                      
          environment.  Inflationary expectations and the prospect of war             
          in the Persian Gulf were causing a rise in long-term interest               
          rates and a steepening of the yield curve.  Under these                     
          conditions, the value of Colgate debt held by the partnership               
          would fall.  Reversing its policy over the past 10 months of                
          accepting substantially greater interest rate exposure than its             
          pro rata share, Colgate caused Southampton to reduce its share of           
          the Yield Component to 10 percent, effective September 6.                   
          Thereafter, Southampton adjusted the Yield Component Sharing                
          ratio on two more occasions, maintaining its exposure between               
          10 and 20 percent.                                                          
               Contrary to the expectations of Colgate's management,                  
          long-term interest rates declined.  By the spring of 1991                   
          Colgate's treasury department identified a constellation of                 
          factors favoring consolidation of the partnership and retirement            
          of its Colgate debt holdings in the near future.  Not only were             
          general interest rates lower, but the credit spreads on Colgate             
          debt had narrowed appreciably, reflecting stronger prices for the           
          company's stock and diminished takeover risk.  Moreover, efforts            











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