ACM Partnership, Southampton-Hamilton Company, Tax Matters Partner - Page 110

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                    Flow of Benefits in 12/17/91 Structured Transaction               
                                      Diagram 3                                       

               Purchase Contingent LIBOR Notes at the Bid                             
          ACM                                         <    BFCE                       
                                                                                     
          Benefit to Bank = $$                                                        

          AMerrrill Capital puts the bank (BFCE) into the   Hedge Swap                
          Position of a dealer                              Benefit to                
          ABank benefits by executing transaction at a dealer's       Merrill = $     
          Price (Benefit shown as $$)                                                 
          AThrough Hedge Swap, most of the benefit of dealer                       ?  
          Pricing is transferred back to Merrill (shown as $)                         
          ABank is left with above-market asset, but has taken           Merrill      
          Incremental credit risk                                       Capital       



                             Valuation of Sparekassen's                               
                                Position on 12/22/89                                  
                                ( $ millions = mm )                                   
          LIBOR Notes                                                                 
               Price paid to Southampton     (9.41)mm                                 
               Mid-market value              9.63 mm                                  
          Hedge Swap                                                                  
               Asset leg                     9.58 mm                                  
               Liability leg                 (9.63)mm                                 
               Merrill's cancellation option     (0.17)mm                             
          Net Present Value                  7,208                                    
          Implied Return Over LIBOR              10.41%                               
               1 The approximate calculation is:  $7,208 gain divided by              
          $9,406,180 invested, spread over 0.189 year duration of payments.           
          The calculation assumes that Merrill Capital will cancel the swap           






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