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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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