ACM Partnership, Southampton-Hamilton Company, Tax Matters Partner - Page 98

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          to locate Colgate debt available for purchase were no longer successful.    
               By Partnership Interest Purchase Agreements dated June 25,             
          1991, Colgate acquired a 38.31-percent interest in ACM from                 
          Kannex for $85,897,203, and Southampton acquired a 6.69-percent             
          interest in ACM from Kannex for $15 million.  As a result of                
          these transactions, Kannex's ownership percentage declined to               
          43.04 percent.  The shift in ownership was accompanied by a                 
          revaluation of partnership assets.  Changes in asset values were            
          allocated among the partners' respective capital accounts and the           
          purchase price was determined based upon the balance of Kannex's            
          account.  In this process, the book value of the BOT LIBOR Notes            
          was adjusted to reflect their current market value increased by             
          $781,250, the full amount of the origination cost attributable to           
          the notes, and 88 percent of the adjustment was allocated to                
          Kannex's capital account.  Although not specifically provided for           
          by the partnership's Accounting Policies, a revaluation of the              
          LIBOR Notes under these circumstances was evidently consistent              
          with the agreement among the partners that Kannex would bear none           
          of the origination cost.                                                    
               By agreement dated November 27, 1991, ACM redeemed the                 
          remainder of Kannex's partnership interest for $100,775,915.  The           
          redemption was financed in part with cash and in part with the              
          proceeds of a loan from Citibank secured by the partnership's               
          holdings of Colgate debt.  In accordance with the Accounting                






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