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$210 million. Acquisition-related debt had been reduced to less
than $30 million.
The Restructuring Plan
In 1987, the board of directors of HEI (the HEI board)
decided upon and implemented a plan of corporate restructuring
(the restructuring plan). A subsidiary corporation (Waldorf II)
was to be formed and the Waldorf business contributed thereto in
exchange for all of the stock of the subsidiary. Subsequent to
that contribution, the remaining indebtedness to GECC was to be
refinanced from a larger borrowing, and a substantial
distribution was to be made to HEI.
The Shareholder Agreement
In connection with the restructuring plan, on October 1,
1987, the shareholders entered into an agreement (the shareholder
agreement). Among other things, the shareholder agreement
(1) recites that, effective October 1, 1987, HEI had transferred
substantial assets (the Waldorf business) to its wholly owned
subsidiary corporation and (2) provides for the division of HEI
into four divisions:
(1) Frey Investment Division. The stated purposes of this
Division (Investment Division I) include maintaining the
“investment account/portfolio” of the Eugene U. Frey interests in
any “dividend” paid by Waldorf II. Decision making for
Investment Division I is by a subcommittee of the HEI board of
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