ASA Investerings Partnership, Alliedsignal Inc., Tax Matters Partner - Page 8

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               directly reducing ABN's involvement to $500mm.                         
               First week of December 1990, the * * * [corporations']                 
               interests will be further reduced by $300mm., either by                
               direct buy-down or distribution of assets from the                     
               partnership, to $200mm.                                                
               First week of May 1992, the * * * [corporations] will                  
               be taken out of the partnership fully.                                 
          Mr. den Baas described the purpose of the transaction as "the               
          same as all the other Curacao based partnerships".  The                     
          memorandum further stated:                                                  
               AlliedSignal Inc. has a capital gain tax liability and                 
               this will cure their liability.                                        
               The remuneration will be 30 bps. on the loan * * * to                  
               the * * * [corporations] plus a fee directly from                      
               Allied Signal Inc. to ABN New York representing an                     
               additional 45 bps. over the outstanding amounts bringing               
               the total to 75 bps. over LIBOR.  Furthermore Allied                   
               Signal Inc. will make ABN whole for the difference between             
               * * *[commercial paper] and LIBOR * * * upfront.  The net              
               income will be $5.5mm. received partly over time in the                
               loan and partly in fees from Allied Signal Inc.                        
               ABN knew that the partnership's income allocations alone               
          would not provide the requisite return (i.e., 75 b.p. over LIBOR            
          on funds transferred to the partnership).  AlliedSignal would               
          have to supplement these allocations with direct payments to ABN.           
          As Mr. den Baas stated in another internal memorandum:                      
               Since the * * * [partnership] structure itself will not                
               carry the possibilities for * * * [a return of 70-80                   
               b.p. over LIBOR], income will be received by ABN New                   
               York in upfront payments made by * * * [AlliedSignal].                 
               Although generally comfortable with the venture, ABN                   
          officials expressed concern regarding a potential loss relating             





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