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CC Acquisition was made available to CC Acquisition under 3 lines
of credit with various interest rates and terms, as follows:
Lines of Credit Amount Interest Rate Term
Tranche I $9,000,000 Prime Plus 2.0% 5 Years
Tranche II 9,000,000 Prime Plus 1.5% 7 Years
Working Capital 8,000,000 Prime Plus 1.5% 5 Years
By selling debentures issued by CC Holdings to Mezzanine
Capital and Income Trust (Mezzanine Capital), CC Holdings
obtained an additional $7 million to assist in financing the LBO.
Prior to the LBO, CC Holdings contributed to CC Acquisition the
$7 million received from sale of the debentures along with an
additional $500,000 that CC Holdings had raised through sale of
its stock.
The following schedule summarizes the source and amount of
funds obtained by JC Investors through its two controlled
corporations, CC Acquisition and CC Holdings, in connection with
the LBO:
Source of Funds Amount
FNBB Line of Credit $26,000,000
Sale of Debentures to Mezzanine Capital 7,000,000
CC Holdings Contribution 500,000
Total $33,500,000
On August 25, 1989, pursuant to the plan of acquisition and
using the funds that had been obtained by CC Acquisition, CC
Holdings acquired Cruze’s stock in petitioner in an LBO that, for
Federal income tax purposes, took the form of a taxable reverse
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Last modified: May 25, 2011