-60-
market. It chose to participate in the government repurchase
market where the Central Bank paid full face value for the debt.
Our task is to decipher the events that did occur, rather than
those that could have occurred. Mr. Narayana, petitioner's
officer charged with overall responsibility for the debt-equity
conversion, testified that petitioner considered the conversion
more beneficial than a sale of the debt on the secondary market.
Furthermore, as the Court's Supplemental Opinion in G.M. Trading
acknowledges, a creditor is motivated to engage in a debt-equity
conversion by the additional value the transaction creates, above
and beyond the secondary market sale of the debt. If not for this
added value, a creditor would have no reason to spend the time and
resources necessary to complete the transaction. 106 T.C. at 260-
261.
It is clear that petitioner engaged in the debt-equity
conversion because it concluded, after extensive investigation and
analysis of the investment, that a 14.361-percent equity
investment in PCC was worth more than the approximately $8 million
cash petitioner could have received from a secondary market sale.
Contrary to petitioner's argument, the value of the blocked
deposits on the secondary market is not relevant to the value of
petitioner's PCC equity interest and does not represent a ceiling
on that value. While we acknowledge that had petitioner sold the
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