- 5 -5 capital loss. The tax-exempt foreign partner would be allocated most of the capital gain, and AlliedSignal would realize the capital loss. Merrill Lynch representatives further explained that the proposal was a package deal. Merrill Lynch would serve as the partnership's2 financial adviser and, for a $7 million fee, recruit the foreign partner and arrange for the issuance and sale of the PPNs and LIBOR notes. To ensure a market for such issuance and sale, Merrill Lynch would structure and enter into the requisite swap transactions. Merrill Lynch would also serve as the partnership's financial intermediary, earning an additional $1,060,000 to $2,130,000 on the PPN sale and $212,000 to $425,000 on the LIBOR note sale. The foreign partner, for its participation in the transaction, would charge AlliedSignal the greater of $2,850,000 or 75 basis points (b.p.)3 on funds advanced to the partnership. In addition, AlliedSignal would pay all of the partnership's expenses. Merrill Lynch estimated that AlliedSignal's total expenses for the entire venture4 would be 2 We refer to ASA as a "partnership" and AlliedSignal, ABN, ASIC, Barber, and Dominguito as "partners". These terms are used for convenience and are not intended to have any legal significance. 3 One basis point is equal to 1/100th of 1 percent. 4 We refer to the entire series of transactions as the "venture". This term is used for convenience and is not intended to have any legal significance.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011