ASA Investerings Partnership, Alliedsignal Inc., Tax Matters Partner - Page 16

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             Poor's rated Mitsubishi AA+ and BFCE AAA.  In exchange for the                                       
             PPNs, ASA received $681,300,000 and 11 LIBOR notes.  ASA used the                                    
             $681,300,000 to purchase time deposits and 30-day commercial                                         
             paper.                                                                                               
                    The LIBOR notes had a total notional principal amount of                                      
             $434,749,000.  Each of the 11 LIBOR notes required 20 quarterly                                      
             payments of an amount equal to 3-month LIBOR (i.e., determined at                                    
             the beginning of each payment period) multiplied by approximately                                    
             25 percent of the note's notional principal amount.  Payments                                        
             were to commence on August 31, 1990, and end on May 31, 1995.                                        
                    ABN entered into a complex series of Merrill Lynch-designed                                   
             swap transactions involving itself, Barber, Dominguito, and                                          
             Merrill Lynch.  These swaps fully hedged ABN's interest rate risk                                    
             relating to the LIBOR notes.  Merrill Lynch also structured and                                      
             entered into swap transactions with Mitsubishi and BFCE to induce                                    
             their participation in the venture.                                                                  
                          1.  Cost of Selling the PPNs                                                            
                    Merrill Lynch initially told AlliedSignal that the sale of                                    
             the PPNs would cost between $1,060,000 and $2,130,000.  On April                                     
             13, 1990, 3 days before the executive committee meeting, Merrill                                     
             Lynch told AlliedSignal that the PPN sale would cost                                                 
             approximately $4,250,000.  Merrill Lynch ultimately imposed a                                        
             cost of $6,375,000 on the PPN sale.  This cost was imposed                                           
             through a reduction in the value of the consideration received by                                    





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