-43-
3. Petitioner's Conclusions About the PCC Investment
Petitioner concluded that the acquisition of a 14.361-percent
equity interest in PCC (rather than the entire 28.7-percent
interest) was an attractive investment. It based its conclusions
on PCC's: (1) Strong professional management; (2) solid financial
condition; (3) history of profitability and dividends; (4) dominant
position in the markets for its products; (5) growth potential; and
(6) relationship with IFC, both past and future. As of April 14,
1987, petitioner could have sold $12,577,136 of its Brazilian debt
on the secondary market for 63 percent of face value and received
$7,923,596 million in return, but it chose not to do so. Petitioner
believed that a 14.361-percent equity interest in PCC through a
debt-equity conversion (in which it would receive 100 cents on the
dollar) was more profitable than the cash it could have received on
the secondary market.
D. Steps Leading Up to the Conversion
On February 24, 1987, NBM sent to Banco Bozano a proposal to
purchase 14.35 percent of PCC's equity for a purchase price not to
exceed $12.5 million.28 The other 14.361 percent was to be acquired
by the Bank of Scotland and its affiliate, Balmoral Industria e
Comercio, Ltda. (Balmoral), as a result of a debt-equity conversion
28 The proposal states that the purchase is to "be
effected by means of a conversion" of blocked deposits with a
$12.5 million face value.
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