- 20 -20
AlliedSignal used proceeds from the loan to extinguish the
commercial paper it had issued on August 2, 1990. AlliedSignal
and ASA, in a series of extensions, changed the maturity of the
AlliedSignal Short-Term Notes from December 28, 1990, to December
31, 1993.
VI. ASA Distributes the LIBOR Notes to AlliedSignal
On August 21, 1990, the ASA partnership committee met in
Bermuda and authorized a distribution of assets. The minutes of
this meeting state:
The Representative of Dominguito Corporation N.V.
expressed concern over the volatility of the
investments. He stated that Dominguito would prefer
cash in any distribution from the Partnership. The
Representative of Allied-Signal Inc. and Allied-Signal
Investment Corporation voiced his opinion that they
expected favorable interest rate fluctuations. He
stated that they would prefer to receive Installment
Purchase Agreements in any distribution of assets of
the Partnership.
Following this meeting, ASA distributed $167,469,860 of LIBOR
notes to AlliedSignal, $2,866,140 of LIBOR notes to ASIC, and
$116,279,033 in cash and commercial paper to Dominguito.
For purposes of the distribution, ASA valued the LIBOR notes
at $170,336,000. The value of the LIBOR notes reflected a
$6,372,000 increase in value since August 2, 1990, and included
$6,375,000 attributable to the cost of selling the PPNs. The
distribution of LIBOR notes resulted in AlliedSignal bearing the
entire $6,375,000 cost of selling the PPNs (i.e., such cost was
embedded in the value of the LIBOR notes). In addition,
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