- 7 -7
not yet been told, Merrill Lynch had already chosen Algemene Bank
Netherlands N.V. (ABN) to serve as the foreign partner.
ABN, one of The Netherlands' largest commercial banks, had
participated in several similar Merrill Lynch-designed
transactions. ABN and AlliedSignal already had a lending
relationship, but ABN believed it could strengthen that
relationship by participating in the venture and being a
compliant partner.
Mr. Johannes den Baas, Vice President of Corporate Finance
for ABN New York, an ABN affiliate, was responsible for getting
the venture approved. In seeking such approval, Mr. den Baas
followed ABN's standard procedures for processing loans in excess
of $25 million. Accordingly, the transaction was processed
through and approved by ABN's North American Credit Committee,
Foreign Credit Department, and headquarters.
On April 5, 1990, Mr. den Baas sent ABN's Risk Management
Division a memorandum, credit proposal, and AlliedSignal's
financial statements. He requested authorization to enter into
the venture with AlliedSignal, form two corporations, and lend
$990 million to these corporations. The corporations would
contribute the $990 million to the venture. Realizing that ABN
officials would be concerned about repayment dates, he attached
to the credit proposal the following "calendar of events":
First week of August [1990], Allied Signal Inc. will
purchase $490mm. of the * * * [corporations'] interests
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