-5-
In 1985, the Home Savings Co. (Home Savings) agreed to provide
$208 million to be used as permanent financing for the first hotel
tower and as construction financing for the second hotel tower. As
a condition for its loans, Home Savings required Mr. Manchester and
his businesses to put up a letter of credit for $16 million. THEI,
through IHCL,2 arranged for the $16 million letter of credit,
issued by Security Pacific National Bank. In exchange, IHCL
received a 35.354-percent limited partnership interest in both PLH
and PGL.
Dondi
In November 1985, Dondi Properties (Dondi), which was
controlled by Vernon Savings and Loan Association (Vernon),
invested in IHCL. Dondi received a 15-percent limited partnership
interest in IHCL in exchange for its agreement to provide $19.8
million to the capital of IHCL. As a result of this transaction,
THEI's limited partnership share in IHCL was decreased from 99
percent to 84 percent. Mr. Manchester withdrew from IHCL.
The entry of Dondi was reflected in a "Restated and Amended
Agreement of Limited Partnership of IHCL", dated November 29, 1985
2 Pursuant to the IHCL Original Agreement, THEI was
required to contribute certain letters of credit to the capital
of IHCL. THEI did not, however, receive any credit to its
capital account as a result of the issuance of any letter of
credit.
Pursuant to the IHCL Original Agreement, Mr. Manchester
was required to contribute $150 to the capital of IHCL. The
record does not indicate whether Mr. Manchester, in fact, made
such a contribution.
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