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subsidiary merger. Simultaneous with the acquisition by CC
Holdings of Cruze's stock in petitioner, CC Acquisition was
merged into petitioner with petitioner surviving the merger.
As a result of the reverse merger, CC Acquisition did not
remain in existence, and petitioner became a wholly owned
subsidiary of CC Holdings.
According to the plan of acquisition and under the merger
agreement, petitioner became liable for debts of CC Acquisition,
including the $26 million loan obtained from FNBB. The $16.75
million used to pay Cruze for the stock in petitioner was part of
the $26 million received as a loan from FNBB.
After the LBO and under various supplemental agreements
relating to acquisition of the stock in petitioner and to the
continued employment of the senior employees of petitioner,
Mezzanine Capital and Panzica, Battistella, Navarra, and other
employees of petitioner acquired shares of stock in CC Holdings
for $500 per share.
Further, on August 25, 1989, in connection with the $26
million loan made by FNBB, FNBB received from CC Holdings options
to purchase, over the course of 10 years, shares of stock in CC
Holdings representing up to 12.5 percent of the equity in CC
Holdings. The options will expire on August 31, 1999, and the
exercise price was set at $500 per share, the same price per
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